Business Solutions

The HME Thrill Ride

Can providers keep their businesses and industry on the rails?

• By David Kopf
• Oct 01, 2013

Ever since the Centers for Medicare and Medicaid Services began testing its competitive bidding program, providers have been on a roller coaster trying to stop the program. They’ve seen some bright points, such as the delay through the Medicare Improvements for Patients and Providers Act, but they’ve seen even more terrifying plummets, such as the Round One implementation, and now the even more precipitous Round Two implementation.

Currently, CMS’s roller coaster has catapulted the HME industry toward a very uncertain 2014. Where are providers headed and how can they stay on the rails? It’s tough to say. Providers do have a bill in-hand, H.R. 1717, which would replace CMS’s national competitive bidding program (NCB) with the industry’s market pricing program (MPP). At press time, the bill has attracted 150 co-sponsors.

That’s a good sign that provider still have a serious chance to fight back and reverse the NCB tide, but there’s a good chance the industry will be forever changed. Because of audits and other funding cuts, Medicare funding is not the fertile soil for running a business that it once was. Providers already striving to source new revenues through retail sales, private payor insurance, VA and other avenues will need to continue their efforts in order to remain stable, successful businesses.

So, as providers continue to fight competitive bidding while re-shaping their business strategies, the next 12 to 14 months will continue to offer them a thrill ride they all would prefer to sit out. However, they are strapped into the HME roller coaster, and the ride is in motion. To help get a sense of what trends will impact the industry over the next year or so, and how providers should prepare, HMEB spoke with various members of its editorial advisory board to get their expert insights across a variety of issues.

“It’s a time of profound uncertainty,” says PAMS executive director John Shirvinsky. “I don’t think anybody has a really good crystal ball right now.”

Shirvinksy notes that CMS is placing providers under incredible pressure, and added that private insurers wont be far behind to enact policies and requirements similar to Medicare. Moreover, while Medicare is heaping regulatory and audit requirements on home medical equipment providers, it’s also cutting the reimbursement they get by massive amounts. Competitive bidding Round Two cut reimbursement for the covered categories by an average of 45 percent, for example.

The net effect of all this increased cost and declining funding? Some providers are simply getting out of the game.

“We’re seeing more and more consolidation like we haven’t,” he says. “It’s probably unprecedented the amount of consolidation we’re seeing right now. And that’s a part of the uncertainty.”

“What we do know is that this can’t last forever, and something is going to give,” he adds.

And what’s going to give? The competitive bidding program for starters. With Round Two slashing reimbursement so badly, multiple bid winners not ready for prime time in their CBAs, and patients not having adequate access to care, the house of cards will tumble. So the goal remains to advance the MPP through H.R. 1717. Can the industry advance legislation fast enough?

“This is an effort that truly does continue to gain momentum,” Shirvinsky says. “There is a general recognition within the committees of jurisdiction that CMS has really screwed the pooch on this. There is some confusion within the committees as to what MPP is and how it would work, and a lot of that confusion is being sewn by CMS. … and that delays action.

“… It’s a tough situation to work around, but this is a battle that has been waged for several years now,” he continues. “The list of sponsors keeps growing; the list of active supports keeps growing; the list of CMS screwups keeps growing; so the momentum truly is in our favor right now. The question is, will the power that be in Congress permit these reforms to go through this year?”

One thing is for certain, it will take providers doing the yeoman’s work of grassroots lobbying — calling lawmakers, meeting with lawmakers, engaging their patients and professional peers to do likewise — to pull it off. And that’s tricky, because it’s safe to say that there is a large portion of providers that are in the business for the long haul, and while realizing the lobbying effort is critical in preserving their businesses, their industry and their patients’ access to care, haven’t participated in industry advocacy beyond sending an email or two.

“There are a lot of people who just aren’t convinced they can have an impact on the process,” Shirvinsky says. “It really is the truth that you can. Any one voice, at any point in time can change the course of events — that one person who’s able to communicate what’s going on with their business, with their employees, with their patients, and to do it with their Congress member at the right point in time, can make all the difference in the world.

“People really need to understand that,” he continues. “… The fact of the matter remains: if we don’t argue on our own behalf, who will argue for us? By not being engaged, we open up the field to our competition.”

While providers are feeling considerably queasy thanks to CMS’s thrill ride, the people truly feeling the point of the spear are the patients, notes Blue Chip’s Ron Resnick. At the end of the day, audits, competitive bidding, face-to-face and all these other programs decrease funding while increasing cost, which creates a situation in which patient care suffers due to diminished access to quality care.

“I really feel for the senior citizens,” Resnick says. “They’re not getting the service they deserve. And the dealers will back that up, because they can’t provide that service. They can’t even deliver a folding walker anymore.”

Resnick recalls a recent trip to a well-established pharmacy/home healthcare provider business, as an example:

“A woman walks in with a prescription for a rollator,” he says. “The dealer looked at her very dejectedly, and said, ‘I’m sorry, I can’t fill this script.’ She asked ‘Why not? You’re my pharmacy.’ Well, he explained about Medicare competitive bidding, and he gave her a print out of the five dealers in the area that could service her.

“Two said they were out of stock,” he continues. “One said it could have it for her the next week. Another said, ‘Medicare doesn’t pay enough, so it’s a hundred dollars on top of whatever Medicare charges.’ The fifth says, ‘I can do it, but you have to come pick it up.’ Where’s this guy? Eighty miles from her house — she’s over 70-years-old!”

Ultimately, the woman bought the rollator retail for her husband, and the provider offered to adjust it for them. This is a situation Resnick says he sees played out again and again now that competitive bidding is in place.

“What’s going to happen is patients are going to get really sick and they’re going to go back into the hospital,” he warns. “And that’s going to cost [Medicare] money, but we haven’t seen that, yet. … Wait until it gets really cold out; wait until the inclement weather hits.”

Because of the small number of contract holders in Round Two paired with an average 45 percent cut to funding in the product categories covered by NCB, the tiny margins will force what remaining DMEPOS providers there are to source DME that might not be optimal for the best outcomes. The resulting situation is one in which contracted providers have just as uncertain a future as providers that lost their Round Two bids. However, providers can bring some certainty to their prospects through one word: diversification and differentiation.

“I don’t think there are enough dealers that can provide quality service,” he says. “This has forced dealers to use low-quality product.

“… The dealers who won the bid, I don’t know if they did win,” Resnick continues. “That remains to be seen. And the dealers who lost the bid have to reinvent themselves. … There are insurance carriers. There is hospice care. There are dialysis centers. There are chemo centers. There are hospitals. Maybe they can pick up a different product line. While they are currently home healthcare providers, they are medical providers. Why can’t they pick up a couple hospital-type products, and use some of the relationships they have to gain entrance into a long-term care facility or a hospital facility? … They have to learn new tricks.

“The survivors are not necessarily the winning bidders,” he adds. “It’s the winning bidders and the dealers that reinvent themselves. Don’t watch the parade go by; better get in the parade and figure out a different float.”

For seasoned HME sales and marketing expert Ty Bello of sales coaching firm Team@Work, one of the key tricks providers will need to learn is how to sell and market to these new customers. Whether hospitals or private payor insurance carriers, providers will need to understand the appeals that will resonate with these new partners and clients.

“Most of us can remember 20, 25 years ago that there was a line drawn in the sand, and many providers moved away from HMOs, PPOs and TPAs,” Bello recalls. “And went more toward Medicare and Medicaid. It’s kind of funny now that we’ve come full circle.”

But while the industry might have moved away from those funding sources, it developed sales practices and specialization that could help providers as they begin to diversify their funding sources, Bello says. “Back then, we had dedicated individuals — a little bit higher than a sales rep level — that would go out and begin relationships with managed care organizations, PPOs and TPAs as a representative of the organization,” he explains. “They would go out and not only find out who the managed care contracting entity was, but also find out who the other providers were, the other types of services they were expecting, what the pay scale would be like, and how to implement the service. They were more of a managed care contracted sales rep, and they would go out and make sales on behalf of ownership.”

Bello says that in more recent years, he’s also seen ownership take on that role itself and leave the reps to focus on calling physicians, discharge planners and social workers. However, because provider management is so focused on retail sales, diversification and developing business plans that keep the provider business afloat, they might be looking for help in that role. This could spell a return to that higher-level sales representative.

“Maybe we have a rising star as a sales rep that we can push toward this managed care entity and have them more focused in that area,” he says, adding that such as star needs to be articulate, professional, polished and able to work with much higher level titles.

“This is a call where we’re going in; we’re trying to build a relationship; we’re giving features and benefits of our organization; we’re giving them, for lack of a better term, a SWOT analysis of the organization; and saying, ‘Here are the things we can do for you,’” he explains. “We need to get a dedicated person out there who gets up every single day and is focused on that entity.”

There’s another lesson providers need to keep in mind when it comes to the private payor carriers, Bello advises: While many of those organizations might have a local presence, they might not have a local corporate office. That means provider management and the Top Gun rep might have to engage in a fair bit more travel to remote headquarters of key contract prospects.

Of course the trick with all this re-shaping, re-tuning and re-strategizing is that it is taking place in the here and now, and the here and now offers some considerable challenges that cannot be ignored. Case in point: Medicare claims audits.

After more than two years of a steady onslaught of RAC, CERT and ZPIC audits, providers are becoming savvier at how to work with their referral partners to ensure that claims have air-tight documentation. Also, many have learned how to respond quickly to audits and also how to appeal them (a process that has a high rate of success in favor of providers). However, CMS has had enough success with audit programs that it is going to expand the program even further, which means the “here and now” continues to pose a clear and present danger, so to speak.

“I hate to be the bearer of bad news,” audit expert Wayne van Halem says, “but the RAC program is being expanded in DME; supplemental medical review contractors are working on looking into expanding into other areas including O&P; CMS is transitioning the workload of the zone program integrity contractors to something called unified program integrity contractors, which will bring Medicaid into the fold; and then just in the last year, we are starting to see — and I anticipate it will be a growing trend — managed care plans are auditing their Medicare patients. So, I don’t think things are going to get better, unfortunately.”

That said, there are some positive improvements. For instance, van Halem notes that the program integrity manual was revised this year to reflect that physicians that don’t comply with providers’ request for documentation could open themselves to MAC and RAC reviews.

But the bottom line is that providers need to start working now in order to survive what will only be an increasingly difficult audit environment, and in fact try to regain some normalcy so that they can continue working strategically.

“[Providers] have to implement process, and assume every claim that they are going to submit is going to get audited,” van Halem explains. “Their liability is so high that they need to think that every claim is going to get audited and have internal controls that are considering that before any claim gets submitted.”

Another present danger to providers akin to audits is CMS’s expansion the face-to-face requirement for a large set of DME.

Originally a requirement for certain power mobility claims, face-to-face has been broadened so that for claims for many DME items, the patient must meet with the physician who must then document the medical necessity of a claim in specific ways in order for the claim to be valid and accepted by Medicare.

That requirement, when announced, sent jaws across the industry straight to the floor, as providers tried to comprehend the logistical and procedural impact this would make on their business. Not surprisingly, CMS pushed the original enforcement deadline from July 1 to Oct. 1, and has since pushed enforcement into a date yet to be set in 2014.

However, that delay is no reason for providers to breathe easy. In fact, the face-to-face clock is still against them. The reason for this is that their referral partners simply aren’t prepared. According to a recent HMEB online Provider Poll (see “News, Trends & Analysis,” page 8), it turns out that 93 percent of respondents said their partners weren’t prepared. Moreover, 29 percent of providers stated that even their business wasn’t prepared for the program.

This leaves billing and reimbursement experts such as Peggy Walker concerned — especially when there doesn’t seem to be a unified front coming from Medicare and its agents, some of whom appear ready to audit providers based on face-to-face claims.

“One of my members received a letter from Noridian asking for face-to-face information and doctor signature on PA notes,” she reports. “The date of bill was Aug. 20, and date letter was sent out was Sept. 3.

“This is really awful because it is very scary to providers since there is no way this was done on that date,” she explains. “We were assured there would be no ‘active’ reviewing of claims till after Oct. 1, and this was extended to ‘A date in 2014,’ but this shows that someone is not getting the message out to the complex review nurses.

“Remember, what CMS says and what gets down to the DME MACs can be completely opposite,” Walker, a veteran of that system, explains. What this goes to show is that regardless of any delay, HMEs still run the risk of getting an audit. They must prepare. And that’s going to be tough due to reticence on the part of some referrals. For instance, Walker says hospital physicians simply won’t do it.

“[Providers] should be ready,” she advises. “You should be continuing to educate referral sources now. … One thing we have in our favor is that they hospitals are being audited by the RACs now, as well. So they’re more prepared to help us know that we’re going through the same thing we’re going through. This is the first time they’ve every been hit like we have.

“The other motivation of it is, that the average patients are being held because they can’t get their DME anyway from two to four days, and some even five days,” she adds. “This is very costly for Medicare.”

Competitive bidding, reimbursement and revenue diversification, audits, face-to-face, driving cost from the business — these are all Ferris wheel-sized plates providers are simultaneously spinning.

Increasingly, information technology and software designed specifically for HME providers to help them not just process claims but manage their entire businesses have become indispensable elements of their infrastructure.

And, as providers continue to work more closely with their referral partners, the need for interoperability is going to be even more important, according to software expert Dave Cormack. This will be a key to driving referrals in the future and the time is now to lay the groundwork, he says.

“The revenue generating opportunity is connecting with acute patient care systems so that when a patient is discharged, that hospital has transparency over what happens with that patient once he or she leaves the hospital,” he says. “At a higher level, market consolidation is happening, people are embracing this change, and it will be survival of the fittest. And the fittest will be people who do two things: find new revenue sources, and ways of optimizing revenue.”

Cormack explains that providers need to remember that the DME market is part of a larger post-acute care marketplace, and is $45 billion big and growing at a 5 percent compound annual growth rate every year. He puts hospice and home health at $100 billion and growing at 8 percent. This post-acute care is going to become critical in controlling healthcare costs.

“Post acute care, versus acute care, or ambulatory care is the most underadvanced market of all three in terms of technology,” he says. “For every dollar that a hospital spends on information technology, home health, DME and hospice companies are spending 25 cents.”

Simultaneously there is a push on the part of private and public payor healthcare to ensure that acute care facilities deliver optimal outcomes for an optimal price. One need only look to the currently evolving Accountable Care Organizations for proof of this future. This means, that over the next few years providers will need to be able to cater to that requirement by demonstrating that they will help achieve that optimal care and therapeutic outcome, and technology is the tool to help them do it.

“In many cases now, and we’re hearing it very clearly, you will not get a referral from an acute care setting or a physician setting unless there is transparency so they can reach out and see how you are performing,” Cormack says. “[That demand] is not there tomorrow, but in three years time you won’t get a referral unless there’s a transparency.

This means that providers must review their current systems now in order to ensure that they will be prepared for that quickly approaching interoperability landscape. That can require a good deal of integration — integration work that’s already well underway, Cormack says.

“In the acute care setting, you have systems like Epic, Cerner, Allscripts, McKesson, and we’re working on interfaces to all these right now,” he explains. “There is an interoperability standard called HL7, but it’s going to require millions of dollars of investment by software vendors to do this on a real-time basis.”

For veteran HME professional and industry advocate Georgie Blackburn, much of providers handle the HME thrill ride will come down to how most people endure or enjoy a roller coaster. In other words, the ride might be scary, but if you can adopt a healthy attitude and not give in to fear, you might be able to take control of the situation. Speaking as a representative of a Round One provider that has advocated striving for compliance well before Medicare accreditation, Blackburn says there are points for providers to turn the industry’s current situation on its head and find some positives.

“I think there’s life after competitive bidding and the regulations that we are forced to follow,” Blackburn says. “I think that many of us who have embraced corporate compliance and understand the guidelines, understand moreso that some of these rules and regulations actually help us to run our business better.”

Blackburn says that Blackburn’s Pharmacy is a proponent of prior authorization, and also sees some advantages of to face-to-face implementation.

“Because we have been a rehab dealer for almost 30 years now, we have had to embrace the power mobility face-to-face guidelines, which differs a bit, but it’s the same premise: you have to have all your I’s dotted and your T’s crossed before you take that order,” she explains. “So, I think providers should actually join in this reduction of fraud and abuse by understanding what it means to us.”

However, she explains that there has been too much uncertainty in the way CMS has tried to roll out the program, with too many unanswered questions that CMS will hopefully rectify during the re-enforcement delay. She suggests CMS might have had the right idea, but “didn’t think it through.”

And where competitive bidding is concerned, she says providers can’t give up, both in terms of reshaping their strategies and in terms of working to advance H.R. 1717.

“I think the demographic tells us that there is life after competitive bidding,” she says. “There are people out there that need goods and services from ethical firms that want to provide service 24 hours. Some of us don’t get to play in the competitive bidding arena, but that’s okay, because there are people who will pay for the service.

Blackburn says that if competitive bidding isn’t changed “it’s going to implode,” and in the meantime providers should be pursuing other funding sources and also trying to maximize the business that they have.

“We already have a large rehab business and a business with wheelchairs,” she relates. “We have different people coming to us asking for different types of wheelchairs, and we know in order to give them the services they need we have to take a look at the other things that we possibly in the past were allowing other providers to offer, because we were so busy doing these other things. Now we have to look at being more comprehensive.”

And in the meantime providers need to get their patients involved.

“If you can, get one or two of your patients telling their story and get that on paper, and secondly explain how it affects your business,” she says. “Like it or not, business is what makes this world turn, and we’re not social service agencies; we’re for-profit agencies. But we provide a vital service to patients who need them in order to stay out of skilled care and hospitals. When our lawmakers make that connection, it’s powerful.

This article originally appeared in the October 2013 issue of HME Business.