Products & Technology

Mobility's Great Leap Forward

• By Joseph Duffy
• Aug 01, 2015

As HME providers struggle with lower reimbursement rates, today’s power mobility products evolve to meet key industry and care trends. Like most of the HME industry, the power mobility market has been hit by many challenges over the last several years, including competitive bidding, audits and removal of the first-month purchase option. At the same time, however, its potential customer base is predicted to skyrocket. Recent estimates include:

• Approximately 10,000 people are turning 65 every day.
• The number of Americans 65 and older will almost double by 2050.
• Those 85 and older will double by 2036 and then triple by 2049.

“The power mobility market is not without significant opportunities,” says Dave Jones, ATP, regional vice president of power mobility sales for Drive Medical, “While the Medicare utilization and reimbursement rates have continued to drop over the past decade the rate of seniors who are aging, and require some type of mobility assistive equipment, continues to soar at record rates.

“The key is to recognize the unique clinical and environmental needs that a patient has and tailor the correct category of MAE [mobility assistive equipment] and particular product to that individual,” Jones continues. “This is where it becomes imperative to match all MAE, not just power mobility, to the patients’ needs. Additionally, retail opportunities for consumer power devices are becoming more prevalent as there are more bottlenecks with Medicare claims submissions, as well as fewer local providers to help beneficiaries navigate the PMD documentation process.”

Although anchored by piles of paperwork, administrative mayhem, stifling caps and reimbursement cuts, the power mobility market continues to try to navigate through these challenges and changing market conditions to fulfill patient needs and grow revenue. But it’s not a sprint — it’s an enduring march down a road lined with obstacles for both providers and manufacturers.

“With all of the challenges facing providers today and new challenges from CMS being handed to us on almost a monthly basis, it is very difficult for the manufacturers to completely understand the impact to the provider and exactly how to assist them,” explains John Wright, executive vice president of sales management and business development for mobility device maker Shoprider Mobility Products. “We are in this together but historically the manufactures were asked to reduce their pricing or otherwise assist the providers with financing and other programs to help ease the pain. Today the manufacturers have reduced pricing to the lowest levels in history, tightened up credit lines, and in some cases reduced the quality of their products. At Shoprider, we refuse to compromise on the quality as we feel that this is false economy due to the need for products to hold up well so that the Providers can reduce service calls, especially within the first 13 months where most problems occur.”

What Needs to Change

Greg Packer, president of the U.S. Rehab division of VGM Group Inc., says the power mobility market today is obviously different than in the past. Competitive bidding has not only reduced provider payments — it has also reduced the overall number of providers, even as the patient base grows.

“The process of providing equipment has changed as well,” Packer said. “With some items going to capped rental and being paid over 13 months, it has forced people out of the rehab business when this was not their main focus. The discontinuation of the Scooter Store has also left a big hole in delivery and advertising programs that were of somewhat suspect means of communication. Now this has opened its own can of worms in the repair side of the industry. There are many beneficiaries who received a chair from defunct companies and now have nowhere to go for repairs. CMS has tried to fix this, but the fix has done little to build confidence in the industry to go ahead and repair the equipment.”

John Storie, National Director of Field Sales, Quantum Rehab, also pointed out that as Group 2 power chairs went from a coded purchased item to a capped rental, a contraction of the market occurred.

“Many weren’t prepared to shift their business models with the changes,” he said. “Competitive bidding has caused further consolidation, impacting beneficiaries and providers. However, those providers who made the transition, building up other areas like complex rehab and retail sales, have weathered the storms well.”

According to Brian Sharpe, regional vice president of power mobility sales for Drive Medical, documentation requirements have become as cumbersome as they are for complex rehab, post-payment audits seem to be more prevalent than ever, reimbursement rates continue to be reduced and the responsibility to educate patients and physicians on the processes involved in qualifying for MAE has largely fallen to the provider. But after all that, he sees a bright side for providers who want to grow their business.

“These challenges create significant opportunities for power mobility providers, specifically with regard to branding themselves and the DME industry at large,” he says. “How can a provider differentiate themselves and create a true partnership with their customers? By proving that there is a relationship between a selection of DME products and clinical outcomes. Providers who put the patient at the center of what they do and the decisions they make are rewarded with more satisfied patients, more loyal referral sources and clinicians more willing to learn about documentation to get the patient not only what they qualify for, but what they need to achieve better quality of life and clinical outcomes.”

Storie said he sees tremendous growth and opportunity on the complex rehab side. “After 25 years of the ADA, social inclusion of those with complex rehab needs is rightfully better than ever,” he said. “Complex rehab users are accessing education, employment and community at ever-increasing rates — and needs for complex rehab technology likewise keep growing. User demand for more and better complex rehab technology is driving innovation and growth.

Audits drag the industry as well. “The threat of an audit hangs heavy over the heads of power mobility providers and there has been a reluctance to proceed with any transaction where the provider has difficulty obtaining the proper documentation from the prescribing physician,” said Wright. “Providers have the additional burden of severely reduced profitability, cash flow problems due to the capped rental reimbursement, and the tightening of credit within the industry by the vendors.”

State of power mobility manufacturing

According to Wright, the revenue-diminishing challenges previously discussed in this article are significant factors on how the power mobility industry will grow.

“In the Group 2 space there is not much product innovation by the manufacturers because the providers are unwilling to spend any extra due to reduced reimbursement and the cash flow issues mentioned earlier,” said Wright. “Some manufacturers have introduced new products that are obviously cheaper to produce but touting them as ‘new and improved’ and they are not.”

Jones said it is challenging to all manufacturers to continue to improve the quality of patient’s lives. “To achieve success you must build a breadth of products both coded and non-coded to give patients choices when selecting a mobility product based upon their daily activities. Quality cannot be sacrificed and education to the patient is imperative when making a selection on their mobility needs.”

Storie said that manufacturing has been less about adapting and more about listening and learning. “Any time that our providers or consumers are impacted by market conditions, our only question is, ‘How can we best support them?’ Sometimes it’s with new services, product innovations or better tailoring our business to meet their needs. We want consumers to have the highest quality of life and providers to succeed, and we stay responsive toward delivering solutions as needed.”

According to Packer, in the Group 2 market, the beneficiaries who need power mobility are divided between the ‘haves’ and ‘have nots.’

“If you can afford a product, you will have one of quality and durability,” he said. “If you cannot afford a product, you will take what Medicare or Medicaid will give you and have to be happy. Power mobility providers will be few and far between if the reimbursement is not adjusted in some way from the current competitive bid arena. The beneficiaries in rural America will not be able to receive a product delivery on a timely basis. The large city dwellers will possibly be able to get equipment, but quality will be an issue.”

Packer said that the complex rehab technology (CRT) accessory issue is one part of mobility that must be addressed by Congress to protect access to equipment.

“Complex rehab and CRT accessories were carved out as a separate category in the Medicare Improvement for Patients and Providers Act of 2008 (MIPPA) that Congress passed,” he said. “The only item bid at that time was motorized wheelchairs, so the law states only Group 3 or higher. This addressed the issue of accessories. Now with manual wheelchairs and other items in the bid system, CMS is again using the confusion of not understanding the market and/or products to benefit themselves versus the beneficiary. With the recent decision to charge the same for complex rehab accessories as standard power accessories, access to complex rehab products will be limited in the future. This change will take effect in January 2016 unless it is addressed by Congress. This will not be a great decision for the market or the beneficiaries who have paid into a system for years and would no longer be covered for CRT accessories.”

Since this issue may be confusing to people who do not understand the market, Packer has given some examples that bring this discrepancy to light: “The competitive bid Group 2 chairs are for beneficiaries who have good upper body strength and have non-complex issues, and who have trunk and head control. These types of beneficiaries are unable to walk due to a condition that does not affect the function of the body. This type of mobility product is like an alternator on a standard car; it can be universal with a lot of models in the same line, like Ford. It may fit a Chevy, but you may have to drill a hole or change the wire pattern. This modification is generally not a big deal and the two types of parts typically cost the same. This accessory possibly could be bid and not be a big deal as the part is very similar and could be procured for around the same cost.

“But as the program continues, what if alternators for road transportation in general are bid? The lowest bid was for automobiles and the providers involved in competitive bidding said they would take the bid. Great, we have a completed process and we can get cheaper alternators for our cars now due to the big volume and the other profits that were falsely involved, right? Well, maybe. Let’s now look at a farmer who comes in with a Ford F250 truck and wants an alternator. The dealer would ask for more money as the Ford F250 alternator is much larger and requires more manufacturer cost; a car alternator would not function on this type of vehicle. The farmer would say, ‘No way, I need my truck,’ and the fight begins. This is exactly what has happened with headrests, for example. A complex rehab head rest that was not bid has much more function than a standard padded head rest and is quite a bit more expensive; therefore, no one will be able to supply the correct medically necessary product if the CRT Accessory issue is not fixed by Congress. Not being able to provide the correct product would be going against your professional oath as an ATP and a provider of complex rehab. Hence, there is a problem that is about to occur that will limit deliverables in CRT if it is not fixed by Congress very soon.”

The Future of Power Mobility

So where is the market going? With the potential of a massive customer base, you wouldn’t think that the crystal ball would be foggy. But providers are still digging out from bureaucratic roadblocks and manufacturers must tread carefully in helping an industry under duress.

“Retail products have become more prevalent and providers are selling more mobility products for cash than ever before,” Sharpe notes. “This cash market is the driving force behind new technologies the manufacturing community is examining. The products in this segment have a recreational look that fit a patient’s lifestyle based on their needs and do not necessarily give the appearance of medical mobility devices. Providers should carry a wide variety of retail product on their showroom floor to educate patients on good, better and best options based upon the patient’s needs.”

Storie says the key is to always think consumer. On the complex rehab side, quality-of-life functionality is vital to consumers, so looking to meet not just medical needs, but quality-of-life needs, is a priority, he said. On the retail side, consumers want affordable, transportable solutions, so compact power chairs remain a trend on the rise. Be well tuned to consumer needs and business will thrive.

“Quality-of-life is the key driver in power chair development today,” he explains. “Manufacturers have long met medical need. However, we know that those with disabilities live full lives, and they need mobility technology that addresses that full spectrum. For example, while our iLevel seat elevation technology has clinical benefits, it likewise serves so many quality-of-life roles, from reaching grocery shelves to conversing with standing peers, so we wish to serve the entirety of one’s life.”

Storie suggested that aspects that fit seamlessly into users’ lives are fueling advancement. “Whether it’s something as simple as cell-phone chargers or as cutting-edge as iLevel elevating seating technology, power chair technology is moving toward meeting the entirety of an individual’s lifestyle. It’s this awareness that will continue improving consumers’ quality of life,” he says.

Finally, Wright said that declining reimbursement stifles true product advancement and innovation in the third-party reimbursement world. As providers move to more of a retail strategy, the manufacturers will need to assist providers with retail-oriented products and programs that appeal to the consumer.

“Within the third-party reimbursement world few advancements will occur other than cost cutting,” he said. “In the retail space the market will drive demand for the latest in technology and accessories for the higher featured (and priced) products. Think about the standard features automobiles have currently vs. just five years ago.”

This article originally appeared in the August 2015 issue of HME Business.