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by: Liz Beaulieu - Tuesday, June 14, 2016

I was putting the finishing touches on our Databank page for the July issue this morning, and the updates to the Medicare Market Marker hit me like a ton of bricks.

The marker, in case you don’t know, is where we keep track of the number of allowed beneficiaries for five popular DMEPOS products: E1390 (oxygen concentrator), E0260 (semi-electric hospital bed), E0601 (CPAP), K0001 (standard wheelchair) and K0823 (power wheelchair).

We track the data using line graphs, giving you one month of new data each month, but keeping a year-long view.

For the July issue, the month of data we added was January 2016, when CMS rolled out competitive bidding to non-bid areas and implemented the first of two reimbursement cuts that each amount to about 25%.

I blogged not too long ago about the impact of the bid program on access to HME. In that blog, I used data from our HME Databank, but I was a bit limited because the most recent year for which we have data is 2014 (2015 is coming Oct. 1).

Our Medicare Market Marker is narrower (only five codes, only number of allowed beneficiaries), but more up to date.

Here’s a sneak peek at the updated graphs, which speak for themselves:

by: Liz Beaulieu - Friday, June 3, 2016

I hate to give you a checklist, and on a Friday.

But here’s where my brain is at, at the end of this short, but very long, workweek.

Have you filled out and submitted an application for this year’s HME Excellence Awards? The deadline is quickly approaching, and there’s nothing that warms my heart like a plethora of HME Excellence Awards applications to choose from. Look at last year’s smiling winners—you want to be like them!

Have you filled out and submitted this year’s HME Financial Benchmarking Survey? This one’s a little more time-intensive than the HME Excellence Awards application, but the ROI is huge. All the providers who fill out this survey get the results for free. Added bonus: Attend the HME News Business Summit, Sept. 18-20 in Charleston, S.C., and hear industry analyst Rick Glass give color to the numbers.

Speaking of the Business Summit, have you registered yet? Just this week I had a conversation with our keynote speaker, Dr. Patrick Cawley of the Medical University of South Carolina Health. You guys, this is a smart guy. You definitely want to hear what he has to say about this health system’s more aggressive approach to how it works with post-acute care providers.

Let’s see, what else?

Oh, of course, the No. 1 thing on your checklist should be contacting your members of Congress to co-sponsor bills in the House of Representatives and the Senate to delay a second round of Medicare reimbursement cuts slated for July 1. As AAHomecare’s weekly bulletin screamed this week: “Fight to get rural relief legislation passed enters final month.”

If you’re anything like me, you like a list, and you like to check things off. Now get to work (Monday is fine by me)!

by: Liz Beaulieu - Tuesday, May 24, 2016

This is what it must be like to work in the HME industry.

In the same day (today), I received an email from a provider that exemplifies all that is wrong with the HME industry, and another that exemplifies all that is right.

First the wrong.

A provider in Florida emailed me about how it received a call from a CMS rep looking for a provider to supply a hospital bed for a Medicare beneficiary in the U.S. Virgin Islands. The CMS rep said the only provider in the area had withdrawn from the program.

“He asked if we could drop ship a hospital bed, to which I responded, ‘No, we could not comply with the CMS Provider Standards by drop shipping a hospital bed,’” the provider said.

The provider says competitive bidding-influenced pricing has everything to do with this void.

“I wonder what the residents of this area will do for HME products and services?” the provider asked.

We all know, of course, that this scenario is playing out in dozens of areas across the country, non-contiguous and contiguous.

Now the good.

Another provider emailed me about how it was able to customize a wheelchair for a junior high school student, who due to his condition must remain in a prone position, that was life-changing. She’s not kidding.

“Every morning the bus driver would call the teacher five minutes before arriving to let her know they were on their way, so she could help him with the student, and there would be crying in the background,” the provider told me when I called her. “The first day the student used the new wheelchair, the teacher didn’t get a phone call. The bus driver just rolled him into the classroom and everyone was happy.”

I’ll keep both of these stories top of mind tomorrow at the AAHomecare Legislative Conference, as I listen to industry leaders and lawmakers outline their efforts to bend the curve more toward the right.

by: Liz Beaulieu - Thursday, May 19, 2016

The goal of this year’s HME News Business Summit is to change the way you see the HME industry and, more importantly, your business.

To help us do that, we’ve brought in some important “outsiders.”

Dr. Patrick Cawley is the CEO of the Medical University of South Carolina. As the person who oversees all clinical matters for the health system and its affiliates, he knows the value of outcomes. He believes you can help him do his job, and so do we.

Brain Holzer, president of a division of Highmark Health, has some tough love for you: You’re probably not on the radar of giant health insurance companies, but he believes you can be, and he’ll tell you why.

Tech experts Nick Knowlton and Jeff Gartland will give you insight into the macro healthcare trend of interoperability, and how it not only increasingly applies to you but also helps you do business better.

Healthcare attorney Ross Burris will give you an inside look at how hospitals have stared down audits and other regulatory pressures, and have become better for it.

Closer to home, our “maverick” HME providers will give you ideas for shaking up what it means to be in the HME industry with their outside-the-box takes on sleep therapy, retail and capitation.

When you look at your business in the mirror, what do you see?

With the help of these speakers, it will be the smartest business of them all.

See you Sept. 18-20 in Charleston!

by: Liz Beaulieu - Wednesday, May 11, 2016

I had a provider email me this week who was asking if we could use our trusty HME Databank to show how the competitive bidding program has affected access to home medical equipment.

“I am reading about CMS boasting about saving so much money through the bid process,” he wrote. “I believe the savings are bogus and the real savings are coming from Medicare clients finding it easier to pay cash than deal with Medicare.”

The provider suggested that we take a look at three items that have been put out to bid—walkers, wheelchairs and hospital beds—and compare the number of claims submitted two years before and after the original Round 2 kicked off on July 1, 2013.

I took a common code for walkers, E0143, and dug in. Here’s what I found:

2014: 705,831 Medicare beneficiaries received the product

2013: 781,894 Medicare beneficiaries received the product

2012: 859,767 Medicare beneficiaries received the product

2011: 860,736 Medicare beneficiaries received the product

2010: 878,973 Medicare beneficiaries received the product

2009: 874,265 Medicare beneficiaries received the product

A few notes:

  • The most recent year for which we have data right now is 2014, so I could only look one year past the Round 2 implementation date (technically a year and a half, since Round 2 kicked off in July). When we update the Databank with 2015 data in October, we’ll have a better post-picture.
  • I also looked farther back than two years prior to the Round 2 kick off to include 2010 and 2009, because, well, we have the data.

You’ll notice that the number of bennies who received the product was relatively stable until Round 2 hit, then we saw a 9% decrease from 2012 to 2013 (the bid program would have been in effect for only half of 2013), and another 9.7% decrease from 2013 to 2014.

I shared the data with the provider.

“The 2014-2015 full year will probably show a 30% to 40% reduction in beneficiaries served,” he wrote. “So obviously, the need is increasing not decreasing (due to demographics), but the new rules have restricted access to the point where clients are paying cash. The dollar amount is at least $20 million to $40 million just on one item. Surely, nothing to brag about from a federal agency: Stealing $20 million to $40 million from beneficiaries.”

For total reimbursement for E0143, I found:

2014: $38,313,467

2013: $49,818,669

2012: $61,249,335

2011: $59,594,543

2010: $61,915,859

2009: $61,072,838

That’s a 18% decrease in reimbursement (or savings in Medicare parlance) from 2012 to 2013, and another 23% from 2013 to 2014.

The provider continued: “This confirms what I see as a DME dealer who is not taking the bid. There has to be pushback against these stupid policies. The average Medicare client will not complain, but the government is wrong. This is what needs to be written about.”

Yes sir. Yes sir, indeed.

by: Liz Beaulieu - Tuesday, May 3, 2016

I just heard Managing Editor Theresa Flaherty apologizing to someone on the phone for not reaching back out to them yet regarding some news that we initially reported on late last week (Sorry Lisa!).

That’s pretty representative of this week so far.

Some days the news cycle seems so slow, it’s hard to string together a couple of briefs to update our website.

Other days, when it rains, it pours (This is also a literal description of the weather in Maine at the moment; I shudder to look at the 10-day forecast).

CMS announces the contract suppliers for the Round 2 re-compete.

VGM reports that a bill to delay an upcoming second round of Medicare cuts is on its way to the House floor.

AAH reports that “positive guidance” on vents is expected from the DME MACs this week.

The O&P community succeeds in getting a bill introduced in the House that would halt dramatic changes to coverage for prosthetic devices.

Hollister and Byram agree to pay $20.7 million combined to resolve allegations that they engaged in a kickback scheme designed to increase sales and profits.

It goes on and on.

This got thrown into the mix this afternoon: A law firm, Kotchen & Low, is soliciting stories from HME providers about how ResMed is “hurting” their businesses.

“Lend your voice to 3B Medical’s fight to level the playing field and open the market to competition,” the firm says.

One provider commented on the news on twitter with the hashtag #gangster.

Theresa said: “Not sure we want to touch this with a 10-foot CPAP hose.”

Add to all of this that our educational program for this year’s HME News Business Summit should go live at this week (woo hoo!), that our annual HME Financial Benchmarking Survey should go live this week, too (please participate), and that we’re seeking applications and nominations for this year’s HME News Excellence Awards (Thanks, Katherine Sims, for the nomination this morning!).

Is it 5 o’clock yet?

by: Liz Beaulieu - Tuesday, April 26, 2016

It’s a busy week for those of us who cover the few public companies that do business in the home medical equipment market.

This week both Invacare and ResMed report financial results for the first quarter and third quarter of 2016, respectively. A little farther out, on May 9, Inogen will report financial results for its first quarter.

The conference calls hosted in conjunction with these financial results are always interesting, but I expect this round of calls to be especially interesting.

From Invacare’s last call, for its fourth quarter and year-end 2015 results, we know that an independent auditor has issued a certification report for the third phase of the company’s consent decree with the Food and Drug Administration.

Enquiring minds want to know: Has Invacare submitted its own report to the FDA yet? Has the FDA accepted both reports? Has the FDA made plans to conduct a re-inspection?

On a side note, Invacare has been pretty vocal in previous calls about its efforts to retrain its sales force to be less generalist and more specialists. The company is also hiring sales reps who better fit this mold—you might have seen a number of its postings on the RESNA job board. I talked to Lara Mahoney, Invacare’s senior director of investor relations & corporate communications, about that for a story for our June issue.

For ResMed, this week’s call will be the first since the company bought Brightree. While ResMed hosted a specific conference call in the wake of that news, I expect investors and analysts still have questions about what the short-term and long-term plays are for a combined ResMed-Brightree.

Additionally, from ResMed’s last call, we learned about the company’s plans for a previous acquisition, Inova Labs, a manufacturer of integrated stationary and POC system.

In general, with two big deals announced within about a month of each other, I expect investors and analysts to be tuning in even more closely to ResMed’s financial results.

Check our HME Newswire on Monday for all the details.

by: Liz Beaulieu - Thursday, April 21, 2016

Managing Editor Theresa and I were talking yesterday about the news that United Healthcare will be pulling out of the Obamacare exchanges in all but a handful of states.

The reason: The health insurance giant is losing money in the health exchanges. Just how much money? Oh, an expected $650 million this year alone.

There’s obviously a lot of buzz about this news in the mainstream media, but Theresa and I were scratching our heads over whether or not there’s an angle for our little niche-y publication.

We didn’t come up with anything yesterday, but I was still scratching my head about it this morning.

I don’t know that there’s an impact on HME providers from United Healthcare’s decision per se, but there may be a message in it for them.

(Before I continue, please put all politics about Obamacare and United Healthcare aside, and bear with me.)

As a $157.1 billion operation (As Theresa says, “That boggles the mind”), United Healthcare has the luxury of making a number of decisions that HME providers can’t afford to make, but on a basic level and from a business perspective, there’s something to be said about a company deciding to forgo a line of business because it has led to losses.

This seems to be a predicament that a lot of HME providers find themselves in these days, with another round of competitive bidding pricing delivering even steeper reimbursement cuts than the last.

A recent HME Newspoll asked HME companies if they accepted the competitive bidding contracts they were offered, and there were a lot of comments to the effect of: We accepted them because we had no choice.

Tell that to Josh Temple at OxyMed, who emailed me yesterday. He considers the company a “mom-and-pop,” with two locations. It lost about 45% of its business, when the original Round 2 hit the area.

“That was when we were forced to look into different avenues to remain profitable and, most importantly, in business,” he says.

Temple says OxyMed significantly increased the business it does with commercial insurances and with private-pay customers. It has hanged its hat on offering a service-intense respiratory and sleep program that includes a wide variety of products, one-on-one education, and follow-up care.

“Since we opened in 2010, we have doubled our size, moved into a bigger location and added employees, all while not receiving a Medicare bid,” he writes.

United Healthcare and OxyMed may be miles apart, but they have one thing in common: They’ve learned to say no, either by choice or necessity.

by: Liz Beaulieu - Thursday, April 14, 2016

When I’m on the phone with someone from outside the HME industry—most likely from an investment firm—he or she often wants to know how big of a player Medicare is in the market.

Ten years ago, when I started working for HME News (who am I kidding, it’s probably longer ago than that, actually), I would always cite the 80/20 rule. Traditionally, HME providers relied on Medicare for 80% of their business, and the remaining 20% was a mix of Medicaid, private pay, cash, etc.

Answering that question now, I usually guess about 60/40.

It turns out that’s way too conservative.

Based on the first round of data from AAHomecare’s HME Audit Key, the average percent of Medicare business is 33% for companies in the $0 to $10 million revenue range; 31% for $1.1 million to $3.5 million; 41% for $3.6 million to $10 million; and 29% for $10.1 million and more.

Overall, that’s an average of 33.5% for Medicare.

So it looks like we’re talking more about a 30/70 rule, with Medicare in the minority.

I also found the makeup of the companies that submitted data to the HME Audit Key interesting:

17.4% were in the $3.6 million to $10 million or $10.1 million and over range.

The lion’s share was in the $0 million to $1 million (34.8%), or $1.1 million to $3.5 million (30.4%) range.

Put another way:

34.8% are in the $3.6 million and up range

65.2% are in the $0 million to $3.5 million range

I would not have guessed that there were still so many smaller HME providers out there.

Of course, I don’t know the sample size for the results (Got an answer, Gordon?). Nonetheless, the results are an interesting look at not only audit activity in the market, but also the makeup of the market.

by: Liz Beaulieu - Thursday, April 7, 2016

We’re a day or so into our most recent Newspoll question:

In general, have you accepted the majority of the contracts that you’ve been offered by Medicare as part of the competitive bidding program?

So far, with more than 60 respondents tallying their votes, the results are almost 50/50 yes/no, with a slight edge to no.

Parsing through the submitted comments to the open-ended question to the poll (share why you have or haven’t accepted contracts and how you’ve been able to make that work for your business), I’ve noticed some pretty interesting themes:

*A number of HME companies that are part of a hospital or health system responded how in previous rounds of the competitive bidding program they were not offered or did not accept contracts and it significantly slowed down the discharge process, resulting in longer lengths of stay. It also increased the chance of re-admission because often more than one provider was required for discharge. One of these companies said it was more aggressive with its bids in the Round 2 re-compete as a result. “While the margins are thin, the outcomes will counter the risk associated with fragmented providers,” the provider wrote.

*A number of HME companies responded that they were picky about the contracts that they accept. One of those companies wrote:

“We did not receive any contract offer in the previous round but were able to preserve our profitability due to our payer mix and by diversifying into other product lines, which allowed us to maintain our staffing levels. This round, we received contract offers in all three CBAs but not in all contract categories. We declined half of the contracts due to price (all contract offers were at rates that were less than what we bid) and a lack of contract category synergy. We also factored in the audits that would surely follow. The ones we accepted were at numbers, we believe, are workable for our business plan. For the rest, Medicare can look for some other sucker. We're stupid but we're not that stupid.”

*A number of HME companies are defiant about the bid program. One company wrote: “We were very nervous about declining the contracts, but business is good. I will not allow my reputation of service and quality products be threatened by low reimbursement.”

Check an upcoming HME Newswire for the final results and full story.