Opening Note

HME's Big Swing

The home medical equipment industry swings like the pendulum do.

• By Karen Cavallo, David Kopf
• Apr 01, 2013

Marketplaces and public policy are often subjected to pendulum swings from one extreme to another. One needs only to look at the housing market’s recent, massive boom and bust cycle, or the jarring gear changes between centrism and extremism in American politics to see how much pendulum swings impact nearly ever aspect of our daily lives. And certainly, the home medical equipment is undergoing an incredibly wide swing of the Medicare reimbursementpendulum.

HME Business magazine was originally founded 20 years ago as Home Health Products in Dallas by Stevens Publishing, and back then, HME providers were enjoying the salad days of the Centers for Medicare and Medicaid’s Durable Medical Equipment, Prosthetics/Orthotics, and Supplies program. This was the era of the so-called “golden commode,” when reimbursement for HME was veering into “silly money” territory. They were theproverbial salad days for HME providers.

And that sizable reimbursement providers were earning wasn’t squandered, either. It ushered in an incredible number of equipment, care and service innovations that radically overhauled the entire definition of home medical equipment. Advances in power mobility and respiratory equipment, for example, were the reason why HHP was launched. Providers needed to stay on top of the innovationsthey could offer to patients.

But with that money came fraud. There’s no denying the fly-by-night providers that weren’t really providers, but were really slick fraudsters who bilked the Medicare program out of millions upon millions of dollars, and if they weren’t caught, they faded away into the shadows leaving taxpayers and legitimate providers equally irate, but for different reasons. The former were angry because they had truly been robbed, and the latter were upset because they knew they’d almost certainly belumped in with the rip-off artists. (And they were.)

That fraud and lush reimbursement, partnered with a massive infl ux of Baby Boom-age beneficiaries, ushered in the pendulum swing the HME industry has been experiencing. Now we are approaching the extremity of that arc’s negative half: implementation of Round Two of competitive bidding, which will effectively take the program national. Think of it: we’ve gone from abundant funding to an average 45 percent cut to reimbursementfor DME.

That pendulum swing is exactly why we re-launched Home Health Products as HME Business magazine five years ago. With CMS revving up competitive bidding Round One at the time, as well as implementing programs such as the 36-month rental cap for oxygen, we knew that while providers were still going to need to know about innovative DME, they also were going to need to know much more about innovative business strategies that would help them survive and thrive — surthrive — what were sure to becomeextremely difficult times.

Well, the difficult times are here, and the industry continues to slug it out on Capitol Hill in hopes of stopping the competitive bidding program and replacing it with an alternative, such as the Market Pricing Program, which is actually market-based and competitive. And while all that is happening, HME Business will keep serving up ways to drive new efficiencies, cut costs, and explore new revenue opportunities in order to surthrive the extreme end of CMS’s radical reimbursement swing. The pendulum will swing back.We’ll be here. So will you.

This article originally appeared in the April 2012 issue of HME Business.