Observation Deck

The Stakes Have Never Been Higher for HME

Various developments have aligned to set the stage for the industry to undertake its most aggressive advocacy campaign yet.

COVID-19 cases are falling, masks are coming off, and social distancing is being replaced by handshakes and hugs. As the pandemic fades, we are all cheered as everyday life edges closer to back-to-normal. I know everyone in the HME community is proud of our outsized contributions during the pandemic: providing exceptional support to patients under challenging conditions, reducing the stress on overwhelmed hospitals and clinicians, and treating individuals with coronavirus-related respiratory issues at home. The value of homebased care has never been more apparent than over the last 18 months.

But the relief HME suppliers are feeling is tempered by the reality our industry will still be facing once the COVID-19 public health emergency officially ends: a Medicare reimbursement policy that is disconnected from the market conditions we face as an industry.

The American Association for Homecare and other HME stakeholders encouraged CMS to provide a meaningful adjustment for Medicare rates in the wake of the cancellation of competitive bidding Round 2021 for most product categories. While allowing all qualified HME suppliers to continue to serve Medicare beneficiaries as the COVID-19 pandemic continued has proven to be the right decision in the interests of patients and healthcare providers alike, the better reimbursement rates for many products that resulted from hard-won improvements in the bidding methodology have been sorely missed.

While we hope that CMS will provide meaningful rate adjustments in the next iteration of DME rulemaking (which is overdue for release), AAHomecare has been working with our champions on Capitol Hill to develop legislation that would significantly boost Medicare reimbursement rates in Competitive Bidding Areas (CBAs). Extending the current 50/50 blended Medicare rate for rural areas and the 75/25 blended rate for non-rural, non-CBAs suppliers is also a priority for AAHomecare.

The Case for Realistic Rates

While Congress supplied welcome support to help suppliers during the pandemic through healthcare provider relief funding for suppliers based on their volume of Medicare and Medicaid care, as well as a pause for 2 percent Medicare sequestration cuts, our industry has had to contend with rising product costs stemming from high demand for medical equipment, raw material shortages, and supply chain issues.

Those higher product prices, coupled with increased costs associated with new operational requirements, higher delivery and labor costs, and new expenses for personal protective equipment and sanitizing showrooms and delivery vehicles, are keeping margins slim or pushing them into negative territory for suppliers.

While some of these expenses will diminish when the pandemic recedes, the overall cost structure for most HME suppliers will almost certainly be higher thanks to lingering supply chain issues and demands for raw materials. Some of these costs may even increase as the U.S. and international economies rev up over the next year; higher-than-usual inflation in the United States is also widely expected.

Yet through all this, HME rates remain substantially unchanged since 2016 except for small CPI adjustments. HME suppliers serving Medicare beneficiaries (as well as individuals covered by Medicaid plans and the large segment of other payers who peg their rates to the Medicare fee schedule) have no way to pass along their cost increases for products, fuel and labor, real estate, or any other short- or long-term changes to their cost structure.

It’s Time to Win

The confluence of the three issues discussed above — HME’s proven impact during the pandemic, higher costs for suppliers, and the lack of significant Medicare rate adjustments since 2016 — all underscore the urgency for our industry to take its most aggressive campaign yet to get substantial relief for our industry over the next six months.

AAHomecare will be spearheading HME industry efforts to convince policymakers to significantly increase rates for suppliers in former CBAs and keep the current relief in place for suppliers in rural and other non-CBA locations on a permanent or long-term basis. While we will make this case to the new leadership at HHS and CMS, I suspect that the road to higher rates will ultimately run through Capitol Hill.

We have already laid the groundwork for this effort by engaging a highly capable media relations firm to reinforce and expand the reach of our messages on the value of homecare and the crucial need for realistic reimbursement policy. And, as I noted earlier, we have spent months working with established allies on Capitol and building relationships with new legislators and staff.

Generating the kind of awareness and support needed to stand out among other competing advocacy interests and convince Congress to give our industry the most substantial rate increases in memory will require our most sustained and aggressive advocacy campaign to date. The HME community needs to be united and “all-in” like never before.

The time for this campaign will never be better, and the stakes have never been higher. You will hear more about this effort web sites and publications such as HME Business, from AAHomecare, our partners at VGM, CQRC, NCART, and state and regional HME associations. As this campaign moves forward, we’ll need you to reach out to your lawmakers to make a case for Medicare rates that will let us effectively serve our patients and communities. It’s time to fight for sustainable and marketbased Medicare reimbursement rates, and it’s time to win.

This article originally appeared in the May/June 2021 issue of HME Business.

About the Author

Tom Ryan is the president and CEO of the American Association for Homecare (Washington, D.C.), the industry's national association.

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