2005 looks promising for the HME industry

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Sunday, October 31, 2004

Every industry has challenges – and the home medical equipment (HME) industry is no exception. In my opinion, the following are the key issues impacting our mutual businesses as we look to the future:

1. Power wheelchair access and reimbursement: Through our industry coalition RAMP – Restore Access to Mobility Partnership, which Invacare helps to fund – we have worked this year to ensure that the Medicare program appropriately pays for power wheelchairs that seniors and people with disabilities need. While it has been a tumultuous year for those providing power wheelchairs, with the K0011 market being driven down 30-40%, I believe that greater stability is on the horizon. In addition, we will continue to work with clinicians, consumers and other stakeholders to ensure appropriate access. The Centers for Medicare and Medicaid Services (CMS) is slated to soon finalize guidance to the national coverage policy for power wheelchairs. This new guidance should be effective January 1, 2005. Once guidance is clear, I predict a rebound in the power wheelchair market. Also, CMS will soon finalize new codes to replace the K0011 code so that technology with functional similarities will be under one code. The new codes are scheduled to be effective next July.

2. FEHBP-based cuts for certain HME items, including oxygen: Under the assumption our industry must live with the cuts, Invacare has been working to ensure that CMS only uses reliable and comparable data to determine the specific payment cuts. At the same time, bill H.R. 4491, to repeal these cuts, has about 80 co-sponsors, and the list is growing monthly. If you have not asked your representative to be a co-sponsor, do it today! CMS has announced that the cuts to certain DME items based upon Federal Employee Health Benefit Plan (FEHBP) information reported by the Inspector General will vary by state, depending upon where the current Medicare payment amount lies in relation to the median FEHBP rate. Therefore, states with lesser payment rates will receive less of a cut. Following are some of the national average cuts, by item: Oxygen concentrators (11%); Portable oxygen (9%); K0011 power wheelchairs (2%); K0001 manual wheelchairs (3%); Powered Air Mattresses (5% ); Nebulizers (14%); and Beds (13%).

3. National competitive bidding (NCB): While I am adamantly opposed to NCB, we are pleased to represent the HME industry as a member of the advisory committee to CMS as it makes plans to implement competitive bidding. This Provider Advisory and Oversight Committee, which first met on Oct. 6, 2004, will provide ongoing counsel to CMS as it prepares to implement competitive bidding, under the current statutory mandate. Under this scenario, we will attempt to ensure the plan provides for small HME businesses to fully participate. At the same time, Invacare’s number one legislative priority in 2005 will be to persuade Congress to repeal the competitive bidding provisions.

4. The HME industry continues to grow: The future for the HME industry is still promising, and I project a healthy 10 % growth in provider revenue for next year. There remain many business opportunities for providers who are light on their feet and can adjust and adapt to the changing economic, reimbursement and business climate. At Invacare, we are constantly looking for ways we can help providers grow and thrive. HomeFill is one example of a product we have spent considerable time and resources developing as the answer for providers who wish to ensure continuing strong profitability in oxygen. According to a recently released survey by AAHomecare, 58% of homecare providers plan to significantly re-engineer their future oxygen service business. HomeFill is the right business model to adapt, as it virtually eliminates cylinder deliveries and reduces provider operating-costs by over 50%.

5. New market and product opportunities: In addition to pioneering revolutionary products such as HomeFill, we are constantly looking for new markets for Invacare to enter, such as the HMV and sleep markets. We believe that competition is healthy, and through Invacare’s entry into the Sleep market with the design and launch our Polaris EX CPAP with SoftX Technology and the Twilight Mask, traditional CPAPs are now obsolete. With the HMV, traditional scooters also are a thing of the past. And again, Invacare has led the way to better serve your patients while increasing your profitability.

Yes, every industry has its challenges. However, I believe 2005 looks promising for the HME industry. We are on the right side of the curve as more and more members of Congress understand that home care can help reduce health care costs. However, it is a never-ending battle and we need to keep working together to fight the good fight!

- Mal Mixon is chairman and CEO of Invacare Corporation

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