Airlogix aims to up the ante

Wednesday, August 31, 2005

DALLAS, Texas -- A company that puts its money where its mouth is has set a precedent that some say points to vast changes in the future of home respiratory services.
Airlogix, an 11-year-old company servicing multiple regions with 10 different private payers, guarantees savings for its payer-customers. If Airlogix doesn't meet its financial goals, the company returns some of its fees to the payer.
Over the past three years of a contract with a major West Coast payer, President Susan Riley said her company has saved the payer $20 million net per year on 3,000 to 4,000 COPD patients. Those savings accrue as Airlogix provides COPD patients with education and lifestyle suggestions that keep beneficiaries out of the hospitals and emergency rooms.
If the government succeeds in boosting the percentage of managed Medicare beneficiaries from 11% of the Medicare population to 50% or 60% in the next five years, as former CMS administrator Tom Scully predicts, then private payers could pay premiums to providers like Airlogix for the management of their patients and delivery fees to equipment jockeys for the delivery of oxygen concentrators, say industry watchers.
Rotech has already pioneered a program that drop-ships CPAP to the home, heralding a day when common couriers deliver everything from beds to concentrators and clinical providers step in for the service. Airlogix employs 210 respiratory therapists to handle house calls around the country.
"I've always thought the future of home care would be for HMEs who are service providers, not equipment dealers," said Bob Fary, Inogen's vice president of sales.
Airlogix reduces hospitalizations and emergency room visits by preventing exacerbations of patients' conditions. If a patient is sleeping with a big hairy dog in the room, they try to persuade a patient to change the sleeping arrangements. Therapists urge smokers to stop and generally rearrange the home environment so that patients don't fall victim to their disease.
Disease management is nothing new. But Airlogix's sophisticated modeling program that allows the company to project savings and then promise savings is singular.
"Susan's program, to me, is the Cadillac," said Fary.
As the Cadillac takes to the street, heads are likely to turn, especially if the chauffeur delivers the proof in the pudding. Home oxygen suppliers tout their work as cost-effective, and of course, it's cheaper to keep a patient in the home but that message is starting to fall on deaf ears as the industry fails to produce meaningful data to back up its hunches.
"To just conclude that you are saving money because you are delivering oxygen is a very far reach," said Riley. "With our customers, they would laugh us out of the door if we tried to say that."
Riley is an HME industry booster. She doesn't believe reimbursement for home oxygen should be cut. "Oxygen is not [the government's] problem. COPD is their problem," said Riley.
But at the same time, she makes no bones about where the savings are in home respiratory therapy.
"Quite frankly, I don't think oxygen is the answer. It's lifestyle, organization and making sure [patients] have the tools they need," she said. "Oxygen is one of those tools. But oxygen in and of itself is not going to create those savings."
The HME provider recognizes this. In the mid-1990s, he quit calling himself a durable medical equipment dealer and cast himself as a home medical equipment provider. But to the extent that the provider cannot measure outcomes and not prove his value, he is still just a dealer.
Riley reckons that about 40% of her COPD base is on supplemental oxygen. HME providers currently deliver that oxygen. But Riley's intervention begs the question: Are dealers or providers delivering that oxygen? And if they are dealers, do they deserve the current level of reimbursement?
While the industry's claims to save Medicare money may fall on deaf ears, so do calls for the integration of outcomes monitoring and disease management programs among HME suppliers.
"I've set up fewer disease management programs in the past year than I have previously," said Roberta Domos of the Domos HME Consulting Group in Redmond, Wash.
Part of the reluctance to invest in disease management can be blamed on reimbursement cuts. But while pricing pressure may inhibit investment, the trend toward more managed Medicare may make disease management a more urgent need for HME providers. Or make that dealers.