15th Annual Big 10
Once again, we proofile 10 trends that will shape the HME industry this year. The far-reaching impact of Covid-19 is undeniable, but it’s not the only factor that will define 2022.
- By David Kopf
- Feb 01, 2022
Image © DamienGeso/depositphotos.com
For the past 15 years, HME
Business has used its
January issue to summarize
10 trends that we believe
will not only impact that
year, but pretty much define
the year for HME providers.
For 2022, it’s no surprise that many of
the trends we’ve identified can be traced
back to the Covid-19 pandemic. Like the
virus itself, the public health emergency
is far-reaching and finds its way into just
about every corner of healthcare as a whole.
That said, there are other issues that have
nothing to do with the public health emergency,
but will also shape HME’s 2022.
So, with no further introduction necessary,
let’s take a closer look at 2022’s Big 10:
1. THE ONGOING PANDEMIC
The root cause of most of the industry’s
challenges is, of course, the Covid-19 pandemic
and ongoing public health emergency.
So, what will this mean for 2022? We
might be hitting a turning point in terms
of the disease’s severity.
Two years ago, on Jan. 20, 2020, the
CDC recorded the first U.S. diagnosis.
Since that time, the United States has experienced
more than 75 million Covid-19
cases and more than 890,000 deaths (as of
press time). However, the Omicron variant
doesn’t appear to be as deadly as previous
variants. The data is still being crunched,
but early report summaries are generally
agreeing that while the Omicron diagnosis
spike was roughly twice as large as last fall’s
Delta variant spike, the rate for mortality
and severe cases was substantially lower.
And with omicron accounting for nearly
every Covid case sequenced by the CDC (it
hit 95 percent for the weekend ended New
Year’s Day, according to the CDC), it’s likely
omicron will be the dominant variant for at
least the majority of 2022.
That said, the patient volumes are still
low. While the omicron spike is less than
half what it was at its peak, as of press time,
the CDC’s seven-day moving average of
daily new cases was at 596,860. While that
figure is expected to continue to decline,
it’s clear Covid will be a fact of life for the
industry and healthcare as a whole during
2022. While the severity might not be as
immediate of a concern as with previous
variants, all the infection control and
related operational measures will still be in
place given the patient groups the industry
2. TELEHEALTH AND REMOTE CARE
Even in the early days of the pandemic,
building the business case for supporting
telehealth received a lot of pushback in
HME — it costs money and providers don’t
get reimbursed for it. Since then, well …
things have changed.
To begin with, we saw CMS waive any
limitations on the types of clinical practitioners
that can furnish Medicare telehealth
services. Now CMS’s telehealth list includes
both two key clinical partners/staff for HME providers: Physical Therapists (PTs) and
Occupational Therapists (OTs), for instance.
Plus, many providers, such as oxygen
providers, readily adopted telehealth
practices in their efforts to help hospitals
discharge Covid-19 patients to the home
setting where they where the received
And when it comes to referral partners,
similar policy changes have made it much
easier for physicians to confer and consult
with their patients via telehealth, rather than
in person, to minimize contact. And their
patients like it too, since they don’t have to
drive to the doctor’s office for a simple consult.
With patients and referrals often preferring
telehealth, HME providers can assume
it isn’t going anywhere in 2022. This means
they must not only adopt it, but learn to
use it strategically. And to that end, there
are a variety of services popping up, such
as rtNOW and TeleHealth Clinical Evals,
which provide outsourced clinical staff to
provide telehealth consults for sleep and
complex rehab evaluations, respectively.
3. THE SUPPLY CHAIN
As we all know, the supply chain issues
caused by the Covid-19 pandemic have
resulted in huge burdens for healthcare as
a whole and HME providers in particular.
The Health Industry Distributors Association
recently summarized transportation
issues impacting medical products noting
some key bottlenecks for HME providers:
- Shipping times are 2.5 times longer, with
two- to three-week backlogs at Asian
ports and shipping containers costing
four times higher.
- Once ships arrive on U.S. shores, they are
anchored eight to 11 days while waiting
for dock space, and worker shortages
mean offloading takes three times longer.
- The 62 percent increase in ecommerce
during the pandemic has created driver
shortages, with driver availability at its
lowest point in three years.
Plus, HME manufacturers are seeing component
equipment costs skyrocket due to short
supplies. For instance, the cost of foam used
in medical devices has gone up 240 percent.
And the real kicker is that the HME
industry essentially absorbs the resulting
increased costs because reimbursement
remains the same. Yes, programs such as
the CARES Act and CMS’s recent 5 percent
CPI-U increase helped, but the underpinning
reimbursement rates for DMEPOS
suppliers are still based on rates from 2016
and don’t compensate at all for the considerable
cost increases that HME providers
have experienced due to these supply
chain programs. And, of course, Medicaid
programs and private payers base their
reimbursement largely on Medicare rates.
So the industry is working to secure better
reimbursement (see page 24).
4. THE MICROCHIP SHORTAGE
Narrowing our focus on supply chain issues
impacting HME, there is one specific
shortage that is having a profound effect
on some of the most-needed equipment in
homecare: the dearth of semiconductors
and microchips used in many medical devices,
such as oxygen concentrators, CPAPs
and ventilators. Without those chips, the
devices can’t get produced. Plus, given that
other industries and products ranging from
automobiles to consumer electronics use
the same chips, the demand and supply is
completely out of balance.
How bad is the shortage? Researchers
AutoForecast Solutions estimated the world lost 11.3 million units of production in
2021 and will likely lose 7 million more
units in 2022.
What’s causing the shortage? The two
central factors are that the United States
doesn’t make many chips these days, and
the pandemic’s impact on the supply chain.
But there are other factors, such as the
recent U.S.-China trade war, fires at some
key production facilities, and weather-related
So what are the fixes? There are a couple
approaches: First, the United States needs
to implement legislation that will foster the
domestic manufacturing of semiconductors
and microchips. To that end, key pieces of
legislation such as the America COMPETES
Act and the U.S. Innovation and Competition
Act to create and fund grand programs to
help manufacturers restart U.S. production.
However, that production won’t reverse
the current supply problem overnight.
So, the second fix must be for the federal
government to implement some kind of
triage for determining which manufacturers
get first dibs on microchips. We can expect
to see various segments of U.S. healthcare,
including HME, push for legislation
or regulation that would implement that
5. CMS’S CPI-U ADJUSTMENT
In December 2021, CMS published its
DMEPOS fee schedule adjustments for the
calendar year 2022, and while the adjustments
differed depending on whether the
items serviced were competitive bidding
program items or in former competitive
bidding areas (CBAs), they were generally
higher than in the past.
Based on the Bureau of Labor Statistics’
Consumer Price Index for Urban Consumers
(CPI-U), CMS’s rate increases were:
- Competitive bidding program items in
former CBAs increased 5 percent.
- Competitive bidding program items in
non-CBAs increased 5.4 percent.
- Non-competitive bidding program items
were up 5.1 percent.
The adjustments are made to ensure
DMEPOS reimbursement adjusts for inflation.
Typically, CMS’s CPI-Y increases for
DME come in between 1 percent and 3
percent. Last year, for example, the inflation
adjustment was less than 1 percent.
Those increases might at first seem like
good news for 2022, but when factoring in
the aforementioned cost increases ushered
in by Covid-19 and the supply chain problems,
HME providers are working under
much stiffer cost structures this year.
6. THE DME PAYMENT RULE
The HME industry might consider offering
orthodontia services, because getting CMS
to release its final DME payment rule was
like pulling teeth. As the story starting on
page 18 shows, the industry had to wait a
very long time — from October 2020 to
December 2021 — to get CMS to release its
final payment rule.
Finally unveiled at the tail end of 2021,
the final rule offered the following:
- It would continue the 50/50 blended rate
for rural HME suppliers. Other non-bid
area suppliers would be paid at 100
percent of the adjusted fee schedule.
- It did not finalize CMS’s earlier HCPCS
coding recommendation limiting manufacturers
to only two submissions; a win
for DME makers.
- It did not finalize CMS’s earlier
Continuous Glucose Monitors coding and
payment recommendations that would
have changed the classification and
payment for CGMs under Part B.
- It expanded the classification of external
infusion pumps as DME.
final rule didn’t include two key provisions
the industry had asked for during
the public comment period when the rule
was first proposed:
- Extend the 75/25 blended rate for nonrural
areas beyond the end of the PHE.
- It did not base rates in former CBAs on a
90/10 blended payment formula.
Given the aforementioned cost structures
and reimbursement rates the industry must
currently contend with, the industry must
now move to secure those two objectives by
7. REIMBURSEMENT LEGISLATION
So, industry advocates including the American
Association for Homecare (aahomecare.org) have worked with lawmakers to start
moving legislation down the road that would
secure those two reimbursement goals.
Firstly, Reps. Markwayne Mullin (R-Okla.)
and Paul Tonko (D-N.Y.) have drafted legislative
language that would apply the 90/10
blended Medicare reimbursement rate for
items in the 13 product categories whose
bid results were not implemented in Round
2021. These increased rates would apply
from Jan. 1, 2022 to Dec. 31, 2023.
AAHomecare has started a campaign
calling on providers to help support draft
legislation by urging their Representatives
to become original co-sponsor of the
nascent legislation. Providers can help by
Concurrently, AAHomecare has
launched discussions with its Senate
champions to develop legislative language
that would keep some of the 75/25 relief
rates for non-rural areas from the CARES
Act in place beyond the end of the public
health emergency, since the challenges
impacting providers are not going to go
away. The 75/25 reimbursement would
represent a significant reimbursement gain
for non-rural providers. CMS did an estimate
that was published by non-partisan
analysis group Medicare Payment Advisory
Commission (MedPAC), and the analysis
showed that the 75/25 blend represented a
33 percent reimbursement increase.
Supporting those legislative efforts will
be a key feature of 2022 for advocacy-minded
8. INCREASED AUDITS
While CMS only offered a brief pause on
audits during the public health emergency,
it has quickly resumed and, in some cases,
expanded its program integrity efforts.
CMS indicated that it intends to
audit claims filed during the COVID-19
pandemic. That said, it has instead been
auditing mostly non-pandemic related
claims such as wheelchairs, hospital beds
and urological supplies. Audit expert
Wayne van Halem, president and founder
of the audit consulting firm The van Halem
Group, believes that is changing this year,
and understanding what could happen will
be important for suppliers who have filed
claims with CR modifiers during the PHE.
There are other audit factors that will
impact HME providers in 2022, as well.
First, the ALJ backlog is nearly caught
up, and the chances are high that once it
is, CMS might loosen some of the restrictions
it has had in place with the Recovery
Audit Contractors causing an increase in
audit activity. Also, a new SMRC contract
with CMS’s Program Integrity Group hit the ground running in 2021 with audits on
thousands of claim lines at one time.
And those are just a few of the audit issues
for 2022. On Feb 10, 2022 van Halem presented
an HME Business webinar outlining 2022’s
audit trends and how providers can contend
with them. It is online as a free archive for a limited time at
9. EPRESCRIBING HME
Of course, one way to help ensure claim
accuracy and claims acceptance is through
eprescription. There has been a lot of
talk about eprescription for HME, and
there have been forays into implementing
it on specific billing software systems,
but it hasn’t taken off. However, a recent,
industry-driver effort might change that.
In September, a collection of HME
industry leaders formed DMEscripts
LLC (dmescripts.com), a healthcare
e-prescribing company that offers a platform
for prescribers to electronically
transmit HME/DME orders to any participating
provider. Better yet, it comes from
the HME industry.
The alliance of investors forming
DMEscripts includes the American
Association for Homecare, VGM & Associates, AdaptHealth LLC, Apria
Healthcare Group LLC, Lincare Inc.
and Rotech Healthcare Inc. The venture
combines the leadership and resources of all
founding members, as well as other digital
health experts, to administer an industry-owned
and operated e-prescribe platform.
DMEscripts says its ultimate aim is to
improve the current order-to-delivery
process by empowering and accelerating
the widespread adoption of an electronic
ordering application for DME. To accomplish
that, DMEscripts uses proprietary
e-prescription software to operate an open
network for any DME supplier to join at no
cost to prescribers or patients.
10. OUTSOURCING SOLUTIONS
Lastly, outsourcing will be a continuing
trend for 2022. Driving efficiency has been
a business imperative for HME ever since
CMS decided to continually hack away at
reimbursement. While providers demonstrate
their value via their patient services,
they can’t do that if they are spending too
much time trying to keep every component
of their workflows in-house.
So, providers are starting to more
frequently “look within” and assess whether
or not staff-intensive workflows are truly
aligned with the value they deliver, or
whether they are instead a costly distraction
that can be fulfilled by outsourcing.
So we will continue to see that comes from
the HME industry. Obviously, that means
more outsourcing to billing and claims
processing services. Also, we are seeing
new outsourcing options come online as
technology is applied in creative ways. As
mentioned above in the telehealth section,
services such as rtNOW and TeleHealth
Clinical Evals are using telehealth to create
all new types of outsourced services. And
we’re also seeing clever staffing solutions
such as Tactical Back Office that aren’t
exactly outsourcing, but rather using technology
to create dedicated remote teams
that work for the provider.
Increased challenges naturally bring
more solutions, so we can expect that the
range of outsourcers is likely to expand over
2022 and beyond.
This article originally appeared in the Jan/Feb 2022 issue of HME Business.