Care Quality

Bridging the Gap Between Care and Cost

Although caps, cuts, competitive bidding and audits have forced oxygen into heavily cost-conscious business models, there are many savvy ways to maximize patient care as well as efficiency.

One of the major concerns of HME oxygen providers has been the dilution of patient care due to the need to negotiate the ongoing fallout caused by caps, cuts, audits and competitive bidding. The question becomes, how can you keep up a high standard of care via patient services when lower oxygen reimbursement rates have a trickle down effect throughout the company, forcing oxygen providers to contemplate cutting patient-oriented services?

“Respiratory patient care is not lost in the current homecare marketplace,” says Steve Ackerman, CEO of Spectrum Medical Inc. in Silver Spring, Md. “It is, however, heavily diluted from what it used to be. Patient care, as it relates to the provision of oxygen therapy products, has always been a non-reimbursed, value-added benefit of a well-run respiratory program.

“The draconian payment reductions experienced as a result of competitive bidding have reduced most patient care programs to bare bones training and some compliance monitoring,” Ackerman continues.

“Any add-on service above buying and installing equipment has suffered as companies look for ways to survive with the new reimbursement levels.”

Part of the challenge in answering if patient care is lost with the provision of oxygen therapy products and services is that prior to competitive bidding and other oxygen payment reduction initiatives, there really wasn’t a recognized standard of clinical care that all oxygen providers were measured against.

“The types of technology, care and service of home oxygen patients varied greatly from market to market and often, provider to provider,” says Joe Lewarski, BS, RRT, FAARC, executive vice president of ExactCare Pharmacy in Valley View, Ohio. “Based on my experience working with myriad providers, for some their standard of service has remained steady through the changes, and for others, they have substantially changed their model of service.

“Anecdotally, I would say many providers have reduced clinical services, delivery services and other non-reimbursed activities in response to payment cuts,” he adds. “However, others have changed approaches and have added clinical services to focus on readmission reduction and patient adherence to therapy. However, I think the later are still the minority.”

Lewarski says that many oxygen patients are receiving a lower quality of service compared to years past, when there were more local competitors and reasonable payments. He has heard this both from patient groups and referral sources. The unfortunate problem for many new patients, he says, is that you have no reference point for quality, so it is difficult to measure reductions in service quality based on patient experience. This has actually worked in favor of CMS and competitive bidding, as naïve patients have no point of reference for quality and care, so they don’t often complain.

Ackerman says that patient care and follow-up that used to be provided by respiratory companies is now either defunct or being provided on a limited basis. Larger companies with a high number of active patients are still providing basic levels of patient care but that also is beginning to wane. He says providers are now being paid to be “equipment jockeys.”

Bob Messenger, BS, RRT, manager of Respiratory Education for Invacare Corp., sees the catch-22 that oxygen providers are in: Most providers will always strive to put patient safety first, but they have to find ways to optimize their business, so that they can continue to maximize patient care.

“One of the founding principles of most HME businesses is a desire to improve the lives of their customers,” Messenger says. “To this day that desire remains strong. It is the limited ability to fulfill that desire that drives the frustration.”

And Ackerman agrees: “The sad truth about our industry is that we have been reduced, by virtue of reimbursement cuts, from fully engaged professional providers, who were part of the healthcare delivery team, to simply suppliers who get equipment there on time and pick it up when medical necessity ceases. This is not what a lot of us got into this industry to do.”

So to ask if an HME oxygen provider can have both an efficient oxygen business and still be in the patient care business, Messenger says “an efficient oxygen business is essential to being able to provide patient care. Without an efficient business strategy a provider simply cannot afford to pay clinicians and offer the services that they provide.”

Can Care and Business Efficiency Co-exist?

Lewarski says it is possible to provide some level of quality clinical services, such as patient education, a clinical assessment and titration to the O2 device. However, to support such, a business has to get very lean and drive out all of the non-value-added activities, such as delivery-related expenses, which he says is the most costly element of home oxygen therapy. They also need relief from the poorly administered and very punitive audit processes that generate significant work and expense that steals resources from patient care and other service activities.

“It is possible to have both [care services and efficiency] if you are a high-volume provider,” says Ackerman. “Economies of scale have put the resources necessary to run a patient care program out of reach for many smaller suppliers. Industry consolidation — the result of competitive bidding — has led to a shortage of local companies available to provide oxygen therapy services. Those remaining are using patient care programs to increase market share but at some point will decide this essentially free service can’t continue to exist at current reimbursement rates.”

How can Providers Increase Clinical Care?

Since providers get payment for clinical services and quality care, Lewarski says it is truly only a value-added benefit if the market perceives it as such. He says using your clinical team and services to objectively impact critical measures, such as 30-day readmission rates for COPD, pneumonia and CHF, is a major value to health systems.

“This year, 75% of US hospitals received some level of penalty fines associated with high readmission rates for these indexed diagnoses,” Lewarski says. “The market is still competitive, so if you can turn your clinical service into referrals and contracts with facilities that value such, it may pay for itself.”

Lewarski believes that providing patient care adds to the bottom line. By focusing on care, providers can improve outcomes and obtain additional referrals. His caveat is the provider still needs to be running as lean as possible.

Ackerman suggests that portable and home-fill concentrators, careful delivery routing and on-line training are several ways companies can bring oxygen provision costs down. However, the efficiencies that allow for good clinical care are driven by high-patient volume.

“It takes a large patient census to dedicate both clinical and clerical personnel to patient care activities, which are not reimbursed,” he said. “Small and rural companies in particular are feeling this pressure.”

And like Lewarski, Ackerman believes that patient care adds to the bottom line.

“Providing patient care that is above and beyond normal will always add to the bottom line in the form of ongoing referrals from loyal and appreciative discharge planners,” he said. “Balancing the cost of that level of care with the realistic potential for increased business is one of the toughest challenges for managers working in this new reimbursement environment.”

For Messenger, efficient oxygen providers first and foremost are the ones that have embraced a non-delivery business model. As a result, he says they are able to redirect resources to educate referral sources, collect needed documentation and audit-proof claims. That frees up a greater percentage of revenue to support patient care.

“We probably should define patient care,” he says. “Patient care is titrating the setting of a conserving device, making sure patients know when and how to use their inhaled medications and reinforcing the importance of diet and activity to cite just a few examples. Simply going over how to use oxygen equipment is not patient care; it’s customer training.”

Messenger says there are two ways in which providing care can improve profits: “First, patients who understand their disease and the benefits of oxygen have been shown to be almost twice as compliant as those who received standard ‘this-is-your-oxygen-system’ training. When that training is combined with a titrated portable oxygen system, patients not only understand the benefits of oxygen, they experience the benefit in the form of less shortness of breath during activity and are less likely to tell their doctor that they don’t use the oxygen system anymore. The second way in which providing care can improve profits is by simply proving to the referring hospitals that the care that’s being provided is reducing COPD readmissions. The key is in providing proof.”

When asked about a resupply solution for increasing sales and servicing patients, Lewarski said the solution has been out there for some time. He says the home transfilling systems and POCs can meet the clinical and lifestyle needs of the majority of ambulatory home O2 users. At this point in the game, he says they seem to be the only logical, clinically and economically viable methods that both meet patients and referral requests for portability, while concurrently delivering a financially sound model.

Messenger says the best resupply strategy is to not have to resupply.

“Non-delivery is the trifecta of supplying oxygen to COPD patients,” he says. “Patients that have an unlimited supply of ambulatory oxygen don’t have to ration their cylinders and as a result may be more active. More active patients have a reduced possibility for hospital readmission, which benefits the hospital. Finally, providers are able to reduce their operating cost while improving care and collecting the bump in reimbursement associated with transfilling and POC HCPCS codes.”

Documenting Patient Care to Grow the Bottom Line

Like most novel ideas, the thought leaders and early adopters are using patient experience measures, in conjunction with clinical and lifestyle improvement, to create sound business models. Lewarski says that in many markets, these are the companies shifting market share in their direction. However, it is competition that often drives such innovation. “If we keep down this path with competitive bidding,” he says, “the lack of competition in some markets may drive away the creative methods.”

Messenger says that forward thinking providers recognize how the ACA is impacting the hospitals and they “smell opportunity.”

“Knowing that in October hospitals will be financially penalized for excessive COPD readmissions, these providers are not only documenting satisfaction but even more importantly they are measuring the impact of their patient care efforts on reducing hospital readmissions,” he says. “Sharing favorable results with the right hospital executives is positioning these providers to receive a greater share of the referrals.”

Most providers are doing some level of patient satisfaction sampling, Ackerman says. “Preventing unnecessary hospital re-admissions is becoming a closely watched benchmark of a good oxygen program. Setting up the ability to monitor this outcome is essential if you plan to participate with an Accountable Care Organization.”

Finally, Ackerman is closely watching oxygen in the Round 2 Re-Compete. “CMS has lumped CPAP and Oxygen into the same bid category,” he says. “There are quite a few very good oxygen suppliers that currently don’t provide CPAP and quite a few very good CPAP suppliers (including a number of mail order providers) that don’t provide oxygen. Whatever the outcome, it can’t be good for the patient.”

This article originally appeared in the March 2015 Respiratory Management issue of HME Business.

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