Subscribe to Executive Session RSS Feed

Executive Session

by: Mike Moran - Friday, July 9, 2010

This is the shortest blog I've ever written, but it's also very important.

As reimbursement goes down, HME providers need to become better at every single thing they do. That's why HME News and Steven Richards & Associates created the "HME Financial Benchmarking Survey."

The survey is anonymous and spotlights key financial benchmarks—such as DSO and revenue per FTE—for complex rehab, HME and respiratory providers. There's no better way to evaluate and improve your company's performance than to see how it compares to these important benchmarks.

Everyone who takes the survey (the 4th annual) will receive a copy of the data, which we'll also present at the HME News Business Summit Sept. 13-14 in Nashville.

Click here to take the survey. All surveys must be completed by July 16.

Mike Moran

by: Mike Moran - Wednesday, July 7, 2010

To do what we can to help providers avoid Medicare's audit trap, HME News has teamed up with Andrea Stark, one of the industry's top Medicare consultants, and will present a Webinar on this topic tomorrow.

Nearly 100 companies have already registered for this Webinar, but there are some "seats" remaining.

If you'd like to attend, here's the pertinent information:

2 Live Webcasts:
Thursday, July 8
11:00am - 12:00pm EDT
2:00pm - 3:00pm EDT

Medicare audits are on the rise, and successful HME providers now find themselves thrown into the spotlight of a MAC, RAC, or ZPIC audit without warning.

In this Webcast, industry billing and reimbursement expert Andrea Stark will show you how to take proactive measures to prepare for audits and help increase your chances of receiving a favorable decision.

You'll learn:
-    What DMEPOS claims are vulnerable for review
-    On-going state of prepay reviews and audits
-    The top reasons for claim denials.

Andrea will teach you how to:
-    Effectively respond to written inquiries
-    Prepare for a potentially unexpected on-site visit
-    Put together a successful response package
-    Appeal unfavorable decisions
-    Implement strategies to reduce your risk of being audited again

Cost per phone line: $99

To register, click here.

As always, never hesitate to call us at HME News if we can be of help.

Mike Moran

by: Mike Moran - Friday, July 2, 2010

Michael Matson is a senior analyst at Wells Fargo Securities and emailed out his analysis of the round 1.2 bids this morning (I'm on his email list). He follows the sleep and negative pressure wound therapy markets, but many of his comments and concerns regarding the round 1.2 bids apply to all HMEs. Here's a summary of his analysis:

* Summary. Yesterday, Medicare published the winning bid amounts from round one of its durable medical equipment (DME) competitive bidding program. On average, the bids are 32% below current reimbursement levels which is worse than the 26% that was seen in the previous aborted round one. And on average, CPAP bids are 34% below current reimbursement levels which is worse than the 29% that was seen in the previous aborted round one. There were no NPWT bids since NPWT was not included in round one (it may be included in round two). The new reimbursement levels go into effect on 1/1/11 in nine cities (9% of US). Medicare will conduct bidding for round two in 2011 with round two reimbursement levels going into effect in 91 cities (64% of US) on 1/1/13. At this point, we expect bidding to reduce ResMed's CY 2011E and CY 2013E EPS by $0.03 and $0.21, respectively, and KCI's CY 2013E EPS by $0.35 (if NPWT is included).

* Bid Levels A Bit Worse Than Expected. We think most investors expected the round one bids to come in 20-30% below current reimbursement. So at 32% below, we think that the bids may be viewed negatively. And since the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) required a 9.5% cut to DME, the new reimbursement levels are actually about 16% lower than those from the previous aborted round one. Here are the average reimbursement declines by category: oxygen, -31%; standard wheelchairs, -23%; complex wheelchairs, -14%; diabetic supplies, -56%; enteral supplies, -28%; CPAP, -34%; hospital beds, -36%; walkers, down 33%; and support surfaces, -49%.

* Medicare Addressed Other Criticisms Of Bidding Program. In the previous aborted round one, HMEs had complained that contracts were being offered to out-of-town firms and that the bidding process was biased towards larger HMEs. On a conference call yesterday, Medicare noted that 72% of the HMEs that will be offered contracts already have a market presence in the areas where they are being offered contracts. Additionally, 48% of the HMEs that will be offered contracts are “small” suppliers with revenues of less than $3.5MM.

* One Key Question Is How Private Insurers React To Medicare Cuts. The impact could be worse if private insurers also cut reimbursement. In our Q2 2010 HME Survey, 89% of respondents expect private insurers to follow Medicare's reimbursement cuts with cuts of their own.

Mike Moran

by: Mike Moran - Thursday, July 1, 2010

CMS has been confusing in everything it's said about PECOS, but this latest press release from the agency seems like good news for HME providers.

Here's the release that CMS posted to its Web site yesterday:


Medicare Working with Ordering and Referring Providers and Suppliers to Streamline Enrollment Process

The Centers for Medicare & Medicaid Services (CMS) is working with providers to address concerns about enrollment in the Provider Enrollment, Chain and Ownership System (PECOS) to ensure that Medicare beneficiaries continue to receive the health care services and items they need.  PECOS is the electronic system used to enroll physicians and eligible professionals into the Medicare program.

As part of those efforts, CMS will, for the time being, not implement changes that would automatically reject claims based on orders, certifications, and referrals made by providers that have not yet had their applications approved by July 6, 2010.   While more than 800,000 physicians and other health professionals have enrolled and have approved applications in the PECOS system, some providers have encountered problems.  CMS is continuing to update and streamline the process, and more providers have been enrolled in the past few days.

To read the full release, click here.

Many thanks to JT, who sent me this press release at 10:59 a.m. today.

Mike Moran

by: Mike Moran - Wednesday, June 30, 2010

John Shirvinsky, the executive director of the Pennsylvania Association of Medical Suppliers (PAMS) sent me this email a few minutes ago. This is such important information that I asked John if I could share his email and he said yes. So here it is:

I just received a call from the PA Medical Society telling me that they are receiving calls from physicians who are being advised by long term care facilities, pharmacies and HME providers that effective July 6, 2010, they will no longer accept prescriptions for oxygen and other DME from physicians who are not currently registered with PECOS.  This is apparently happening all over the country.  The AMA has advised the state medical societies to expect an announcement from CMS today on the subject.  They gave no indication what the announcement will be, but one would hope that they will finally clear up the confusion between the July 6 effective date and the January 3 implementation date.  It would be insane to enforce the earlier deadline at this juncture.

As you know, (industry attorney) Jeff Baird has weighed in that the discrepancy creates the likelihood that auditors will disallow claims paid between those dates.  In other words, we need something more than a wink and a nod from CMS.  PMS says that the Highmark Blue Shield, their Part B contractor, has advised them that January 3 remains the only date that CMS has officially advised them on and that they will pay all Part B claims that are submitted regardless of PECOS status.  PMS reports that the current backlog for obtaining a PECOS registration from CMS is 3-6 months; which is no better than it had been earlier this year.  During the May POE Advisory Committee meeting CMS advised us that PECOS warnings had dropped from 6 million per month to 3 million per month.  This is a big improvement, but 3 million is still a very large number.

This program has been badly mismanaged from the get-go.  We will watch for an announcement from CMS later today.

All I can add to this is: Stay tuned.

Mike Moran

by: Mike Moran - Friday, June 25, 2010

A lot of big time Wall Street investors and hedge fund managers think that competitive bidding is going to be very, very good to Lincare. That's because, they say, Lincare has the economies of scale that will help it operate profitably once competitive bidding slashes Medicare reimbursement to the bone.

Sounds a lot like what the industry has been saying all along: Competitive bidding will benefit Lincare and other national companies that have the scale and resources to weather the reimbursement cut and outlast smaller competitors. Here's my question to lawmakers and bureaucrats who support competitive bidding: Can any government program be considered good if it handicaps small companies, maybe even drives them out of business, but allows corporate giants to prosper?

I don't think so.

Here's what a hedge fund analysts told me recently: "People expect Lincare to be the last man standing, and that they are going to be able to gain market share."

In the short term, this analyst said competitive bidding will hurt Lincare's profits. But in the long run, he added: "I think they are in the best position in the marketplace. They are the biggest and have scale advantages."

He's not alone.

On June 22, Darren Lehrich, an analyst with Deutche Bank, upgraded Lincare to "Buy" from "Hold." That recommendation pushed Lincare's stock up 7%, making it one of Nasdaq's 10 biggest percentage gainers for the day.

In making his recommendation, here's what Lehrich said in a note to investors:

"We consider the company's initiation of a dividend as an important signal of strength, and we remind investors that competitive bidding will play-out over a multiyear timeframe that gives Lincare plenty of runway to continue to gain share."

You get the picture. Competitive bidding is great for Wall Street, but not so good if you are a small HME provider who works on Main Street.

Mike Moran

by: Mike Moran - Thursday, June 24, 2010

Actually, the headline on this blog is a bit misleading. What I've got here are the two single best pieces of business advice ever, and there will be more to come.

Earlier this week, I sent out the following email to all the speakers who will be at this year's HME News Business Summit, Sept. 12-14, in Nashville: "In 100-150 words, please explain the best single piece of business advice you’ve ever received or heard. It can relate to any facet of running a business, but it’s got to be something that really resonated with you—and that is still a guiding principle/belief today."

The speakers at this year's Summit are as good as they come. They are smart, successful and have tons of business experience. So I figured their answers to this question would be interesting and valuable to all HME providers. This is also a nice snapshot of the kind of high-quality education you'll find at the Business Summit. Here are the first two submissions:

Janice S Ahlstrom, CPHIMS, RN, partner/Wipfli LLP

When I was in nursing school, an instructor, Jean Wanderer, told us numerous times that in our careers we would be forced to make gray, ethical calls on how to best handle a situation. Her sage advice was to "do what the prudent nurse would do."  This message has stuck with me for all 29 years of my career as a nurse, then as a clinical systems manager, and now as a consulting partner.  I have been presented with many challenging situations over the years, and so many times I have heard Jean's voice whispering to me, "Do what the prudent nurse would do." Prudent by definition is careful, cautious, discreet, sensible, practical, wise and far sighted.  Much of my success in business is the result of making prudent decisions based on careful analysis and just being practical—no fairy dust, just prudent thinking and actions.

Scott Lloyd, Extrakare LLC

In a changing business environment, managers often blame poor financial performance on "outside influences" like lower reimbursement rates, new competitors, costs associated with accreditation, etc. But managers have a responsibility to make the tough decisions required to improve the financial performance of their business regardless of outside influences. Benchmarking is key to achieving that goal, but many managers don't understand the process. In short, benchmarks are guides to the annual budgeting process. They must be updated when there is a major change to the business (such as when you exit an entire business segment). They also help remove emotion from making business decisions. Benchmarks are not the same as an operating budget and should not be changed annually. Nor are they the highest achievable performance level. Finally, benchmarks are useless unless employees are aware of them and understand how their actions impact the performance of the business relative to the benchmarks.

As more "best business advice ever" submissions come in from Business Summit speakers, I'll share them with you through my blog. We'll also run some of them in our August and September issues. Remember, these are just snapshots. If you want the big picture, you've got to come to the Summit. I promise: You won't regret it.

Mike Moran

by: Mike Moran - Friday, June 18, 2010

Just over 100 companies tuned in this week for our Webinar, "The Pulmonologist Speaks," which HME News and Emerge Sales presented twice on Wednesday and twice on Friday. We created this Webinar with the help of top-notch HME providers who wanted more insight into what pulmonologists want from their HME partners. If you know this information (market intelligence), the reasoning goes, there's a good chance more referrals will follow. Makes sense, right?

In all, our researchers spoke to 166 pulmonologists (of the 600 we called). Here's a summary of what we learned:

1. Overwhelmingly, pulmonologists prefer HME  providers that offer multiple modalities.

2. 98% of docs monitor their patients' ongoing  need for oxygen; 81% track hospital re-admissions; and a large majority want to be kept up-to-date with their patients (monthly for the high-risk  patients & quarterly for the stable patients).

3. The majority of physicians refer patients  directly to the HME providers rather than allow sleep  labs to make the referrals.

4. Pulmonologists want very much to be kept abreast of new products.

5. Most docs don't know the cost of providing  supplemental oxygen in the home.

6. Responsiveness and reliability remain the  most important factors pulmonologists  consider when selecting an HME provider.

7. As pulmonology practices get busier, doctors are embracing an electronic information exchange with HME providers to free up their staff.

8. The majority of practices refer to five or more HME  providers.

9. Sales reps are still an important part of the  process and need to be visible in the practices to gain their referrals.

That's just a summary of the research. The details are even more interesting and provide greater insight and understanding. What's important here is that as reimbursement continues to dwindle and regulatory oversight increases, HME providers must do everything possible to make themselves indespensable to referral sources. Going forward, more and more, the only way to do that is with this kind of market intelligence. Gut instincts and doughnuts aren't going to cut it.

Mike Moran

by: Mike Moran - Monday, June 14, 2010

A few weeks ago, I was sitting at my desk at HME News' world headquarters here in Yarmouth, Maine, when as often happens, my phone rang.

I picked up the receiver and said, "Hello, this is Mike."

The woman on the other end identified herself as the DME trainer for Jurisdictions A&B. She worked, she told me, for National Government Services (the Jurisdiction B MAC, which serves 19,500 DME suppliers) and also for the NHIC (the J14 MAC for New England). She seemed very nice and very competent.

After our brief introduction, she requested contact information for CMS's Jim Bossenmeyer. You know Bossenmeyer, right? He's the guy who confused most of the HME industry at a May open door forum. When asked several times during the forum if DME claims needed to be PECOS compliant by July 6 (they do), Bossenmeyer (the bureaucrat's bureaucrat) gave a rambling, convoluted answer that left me and everyone else, it seemed, wondering what he'd said.

Turns out, not surprisingly, that a bunch of providers called this DME trainer and asked her to clear up the confusion. She, in turn, called me for Bossenmeyer's contact information.

I just about had a stroke.

"Why the heck are you calling me?!" I said. "You're a Medicare contractor--don't you know how to get in touch with CMS?!"

I was fighting mad and had to remind myself to stay calm.

"I would like to talk to this Jim Bossenmeyer instead of going through three different contacts," she said.

Certainly, I felt her pain. As a reporter, I don't know how many times I've called someone only to be passed on to someone else and then to someone else and then on and on and on until I wanted to bang my head against a wall.

Still, I was incredulous. Here I had a CMS contractor asking me to help her reach someone at CMS. It's absurd that I should have to say this but here I go: No one who works for or with CMS should ever have to call HME News for CMS contact information.

Is that too much to ask from an agency that oversees nearly $500 billion a year in government spending? I guess so.

Something similar happened last September. That's when a guy from the GAO called me for market data on the HME industry. When I wrote a blog that called this inquiry strange (Why didn't he contact CMS directly?), some very polite guy who identified himself as "a former GAO analyst" called me an "idiot."

Well, if I was an idiot then, then I'm an idiot now, but if that's the case, what the heck is CMS?

Mike Moran

by: Mike Moran - Friday, June 11, 2010

For 15 years, HME News has been the "The Business Newspaper for the Home Medical Providers."  But I often think of us as a business/community newspaper. I say community because that's what it feels like whenever I'm at Medtrade or some other industry event, where people gather to do business and to catch up with old friends. In a relatively small industry like HME, especially one that always seems to be under siege, I think that sense of community and of pulling together is greater than in might be in a bigger industry. In the spirit of that community, here is an article that remembers Rick Echemendia, ATP, who passed away this spring. I did not know Rick, but after reading what his friends had to say about him, I wish I did.


Mike Moran

On Thursday, April 29, 2010, Rick Echemendia, ATP, sadly and suddenly passed away. The rehab industry has lost a patient advocate of 30 years, the community of south Florida has lost a caring soul, and MSL Associates, Inc, has lost a dear team member.

In his lifetime, Rick was a passionate and charismatic presence. He had a heart larger than life and an incredible passion for helping others. He was tenacious, he was sincere, and he had a smile that lit up a room.

Rick started his career at Abby Medical 30 years ago where he met his wife Debbie. He pursued his passion of pediatric rehab as an RTS for quality providers in south Florida, before joining our team in early 2009.

The memorial service for Rick was a celebration of his life.  People from all over the community gathered together in Rick's honor. Family members, friends, school board members, therapists, providers and clients were among some of the attendees.

Rick's legacy lives on through his wife Debbie and two children, Josh and Rachael. Rick dedicated his life to his family. He took great pride in the successful young adults that his children had become.

Rick touched many lives and will be missed by all.

Jill Girard, Director of Sales
MSL Associates, Inc.

(MSL Associates, Inc. is a marketing, sales and logistics company that has been in business since 1998.)