13-month rule hits milestone: Has it altered business?

Sunday, February 25, 2007

WASHINGTON - Medicare's 13-month capped rental rule for DME observed its first "anniversary" this month, giving HME providers a chance to contemplate its impact on their businesses.

Judging by the tempered reaction of two prominent providers, the cap hasn't caused any dramatic changes--well, not yet, anyways.

"Now it's a rent-to-own system, which is actually much simpler to explain to beneficiaries," said Don White, president of Associated Healthcare Systems in West Amherst, N.Y. "That doesn't necessarily mean it's better for us, though."

Because the vast majority of beneficiaries will now take ownership of their equipment, some providers wonder if they should continue to invest in more expensive, durable products.

"Under the old system, you'd be more inclined to go with a heavier-duty product where the life expectancy would last long enough for multiple patients," White said. "Each time it came in you could tune it up, replace the fabric and rent it back out. You were willing to spend more for double-welded joints rather than single welds because of its durability. Now I'm wondering if the basic Medicare chair should be more of a disposable product."

(While many manufacturers don't expect to see an appreciable shift in the numbers of providers buying higher quality or cheaper products, they do expect providers to shop more wisely. See page 47 of the February 2007 issue of HME News.)

John Teevan, president of Home Care Medical in suburban Milwaukee, says the 13-month cap has changed his company's procedures somewhat, but overall, the effect has been minimal.

"The biggest change is that we now do a much more thorough job in researching what new clients say they have had in the way of equipment and how that impacts the remaining months we have available to us," he said. "In the past we'd take the beneficiary's word for it and maybe do a cursory check. Now we're digging much deeper. If they have had it less than 10 months, we go unassigned and the majority of the folks go along with it."

If there's an upside to the "rent-to-own" concept, it's that it relieves the headache associated with tracking equipment, Teevan said.

"People would think they owned it--they'd give it away, stop paying for it and change their secondaries," he said. "Sometimes trying to track down lost equipment can be more trouble than it's worth."