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On the Editor's Desk

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.

by: Liz Beaulieu - Wednesday, March 30, 2016

I heard from a reader in the wake of CMS releasing the new payment amounts for the Round 2 re-compete.

The reader wondered if there was a Freedom of Information Act request that someone (anyone!) could file to find out who submitted low bids, whether or not they accepted them, and if they did, were they able to successfully serve patients at those amounts.

The reader wrote:

“I’m beside myself with the belief that other providers have bid even lower than the first time in Round 2. I cannot imagine that someone who is responsible for not just their own family, but those families of employees that work for them, saying that the ROI on these types of bid amounts they are placing is going to work. This is just about as simple as 2 + 2 math to see it is not. I just wanted to see if that was even a viable option to get information that is being withheld.”

Unfortunately, it is not. Mark Higley at VGM backed me up on this one, saying, “You cannot receive by FOIA (or by lawsuit for that matter!!!) the bid submission data.”

So much for transparency.

I thought it was interesting that this reader began the email with:

“Hope you are doing well, since the release of the Round 2 re-compete has come for payments. I’m sure you are hearing a lot, so here is mine.”

Actually, reader, you’re the only provider who has reached out to me since the news came out.

Now, I don’t take that to mean this reader was the only reader who has been throwing his or her hands up over the new payment amounts. Far from it. You’re all just too busy hot-lining your representatives and senators to email me.


by: Liz Beaulieu - Thursday, March 17, 2016

We hosted the Home Health Technology Summit earlier this week in New Orleans, and I had the event in the back of my mind when I was reading a New York Times article yesterday about South by Southwest, an “annual festival of tech, music, film, barbeque and tacos,” according to the newspaper. But mostly, tech.

If you’re not familiar with the Technology Summit—we gathered a group of C-level execs in home care (home health, hospice, visiting nurse and HME) to examine the opportunities that technology creates in reducing costs, increasing efficiency and improving care.

One of the major take-aways from the event, as you’ll see in my wrap up in the HME Newswire on Monday, is the “behavior change”—thanks for the term Bob Barker of Philips Respironics—needed to successfully implement and leverage technology in businesses.

In essence, if you don’t have the right frame of mind (that the lack of specific reimbursement coverage for these technologies, for example, won’t hold you back), forget about learning what’s out there, what it can do and how it can transform your business and the way you care for patients.

The author of the Times article wrote: “This year, SXSW, as the festival is known, feels like a story of how the tech ethos has escaped the bounds of hardware and software. Tech is turning into a culture and style, one that has spread into foods and clothing, and all other kinds of nonelectric goods. Tech has become a lifestyle brand.”

Tech may be a lifestyle brand at SXSW and increasingly in our daily lives (one stat from the Technology Summit: 40% of Americans don’t even have landlines anymore), but I’d argue it’s stagnating in many businesses, especially in home care. There are still companies out there with offices with file cabinets and fax machines.

Speakers were almost shouting from the front of the room: Technology needs to be a culture and style in your businesses.

Dr. Steven Landers of the VNA Health Group called the problem “a leadership challenge.”

Jim Reilly of Connect America challenged attendees to do like GM leaders once did and “put your business out of business”—meaning stop doing things the way you've always done them and start new.

If, as Jeremy Malecha of ResMed said, “Post-acute care is the Internet of the 90s,” hold on, because all of this is going to change very, very fast.

by: Liz Beaulieu - Wednesday, March 2, 2016

Tim Purpura, the publisher of our sister publication, Security Systems News, has started gathering all company employees in our production department for a five-minute meeting at 10:55 each day.

In the event that you lose track of time, Tim’s advertising coordinator, Cath Daggett, travels the halls of our little cubeland dinging a bell to remind everyone.

To keep the meeting limited to five minutes, Tim sets the timer on his iPhone.

The purpose of the meeting: Share something positive about your work (a story that has gotten so many hits on the web, an account representative who has sold so many ads), share a motivational quote (a recent contribution of mine: “Nothing great was ever achieved without enthusiasm,” something I’m light on some days), share an interesting word (today’s: williwaw—it’s windy up here in Maine)…you get the idea.

Although our meetings are, at least right now, much less formal, the inspiration behind them is a recent article in Inc. Magazine titled “This Study Says Stop Working and Do This at 11 a.m. Every Day.”

Managing Editor Theresa Flaherty will attest that I dislike meetings (how productive are they most of the time?) and I dislike warm-and-fuzzy meetings even more. Theresa can’t make fun of me for this because she feels the same, probably more strongly. In fact, she hasn’t showed up for one of these meetings yet. Associate Editor Tracy Orzel, on the other hand, is often the first person to show up. In this morning’s meeting, Tim even let her lead.

We’ve had these meetings for a couple of weeks now, and I have to admit, I’m a believer (I’m also, since Justin Bieber’s new album dropped, a Bieleber – I don’t even know who I am anymore).

If nothing else, these meetings are a great exercise in reflecting on what you’re doing at work and finding out what’s going right. And five minutes is the perfect length for a meeting, IMHO (Did I just use a text abbreviation in a work blog? Sigh).

All of this got me to thinking about the rites and rituals that you have incorporated into your businesses.

We write a lot about reducing costs, increasing efficiency and other goals of running an HME business, but these more personal touches of management and leadership can have just as much of an impact. When your employees are focused on the positive and feel energized (I’m not kidding: Every meeting ends in a huddle), it can only help you reduce costs, increase efficiency and tick off every other goal you have for your business.

So what are you doing tomorrow at 10:55?

by: Liz Beaulieu - Wednesday, February 24, 2016

It’s been interesting to see the headlines this week related to the news that ResMed plans to buy Brightree for $800 million

Here’s a sampling:

ResMed, the software company?

Is ResMed’s $800M health IT buy a pivot away from devices?

ResMed announces blockbuster $1.1 billion US acquisition

ResMed takes out Brightree for $800M

The news has been covered well beyond our HME industry, from the mainstream press (the San Diego Union-Tribune in ResMed’s hometown in the U.S. and the Sydney Morning Herald in its hometown globally), from trade publications in other industries (Home Health Care News), from the financial press (Dow Jones, StreetInsider).

If Lincare hadn’t recently bought American HomePatient, I’d say it’s been a very long time since the HME industry got this kind of attention.

Even though we knew Brightree was shopping for a buyer, I’m not sure we were expecting ResMed to be in line with an offer. Maybe a larger provider of health IT solutions trying to round out its offerings to include HME, home health and hospice, especially with the attention on post-acute care, like a Cerner or Epic? But ResMed?

Based on the questions from analysts during a conference call this week to discuss the details of the acquisition, we were in good company.

But after ResMed officials connected a few dots, a vision began to take shape.

With the roles and responsibilities of different types of healthcare providers continuing to meld (hospitals being responsible for what goes on outside of their four walls for one), seeing a manufacturer of respiratory equipment that values connected health care buying a vendor of business management and clinical software applications doesn’t seem that far fetched.

There’s also the very real and tangible benefits of Brightree’s $113 million in revenues and 80%-plus recurring revenues in 2015, and its customer base outside of HME, in home health and hospice.

It will be very interesting to see how this deal, once it’s closed, plays out.

One thing’s for sure: ResMed, you have our attention.