The Big One

Wednesday, April 30, 2003

The home medical equipment industry has a big problem. It’s got a great hypothesis: home medical equipment is cost-effective and patient-preferred, but when the rubber meets the road (i.e. when a legislator is about to vote yea or nay, when administrators look for cost-saving opportunities) the industry really can’t prove it.

The inability to marshal persuasive data to support the hypothesis became all too frustrating in March when Medicare’s trustees reported to Congress that durable medical expenditures had surged 20% in 2002 over 2001. That rate of growth within the Medicare program is twice as fast as hospital growth — which would seem to support the industry’s contention that it can do more for less in the home.

The industry wants to stick that 20% increase in its cap, like a feather, but this feather doesn’t fly. Why? Because CMS Administrator Tom Scully watches television. He sees commercials that market to Medicare beneficiaries and then he sees red. The industry needs him, and other legislators and bureaucratic officials, to see black. They don’t, not now, and it’s the industry’s responsibility to see that they do.

That point was driven home last month by Tom Connaughton, the outgoing AAHomecare CEO, as he responded to a question referencing the industry’s Achilles’ heel. (See interview) Where is the industry most vulnerable?

It’s most vulnerable when it’s asked to prove that homecare is cost-effective. That study does not exist. And until a definitive look at the real value that home care brings to the continuum of care is hammered out, the industry’s shield is less effective. You can talk about being cost-effective, but how effective is that?

Take, power wheelchairs. Scully sees red. The industry, and rightly, can argue that providing geriatric mobility to seniors keeps them from nursing homes and thus, from taxing an already over-burdened Medicaid budget. The industry can make equally compelling arguments for the provision of albuterol (fewer emergency room visits), diabetes supplies (same thing) and home oxygen. These arguments are superficially attractive. They engender sympathy. But where’s the beef?

Since Connaughton took over at AAHomecare, there’s been some beef. The industry countered the CBO’s contention that competitive bidding would save $7.7 billion in 10 years with a PriceWaterhouseCoopers study that claimed it would not. A Lewin Group study found that the average wholesale price of drugs is small when compared against the total cost of providing those services, hence the need to keep from slashing reimbursement levels.

But these studies are reactive. They aim to put out fires, but they’re hardly the sort of forged steel needed to break down the Medicare silos that would keep the home medical equipment industry from growing at the expense of hospital expenditures.

What’s wanted in this industry is yes, the reactive studies on the tactical level, but the big strategic study that affirms the industry’s hypothesis that home medical equipment just plain makes sense. Then, instead of cringing over the revelation of a 20% surge, the industry can, without reservation, congratulate itself for a job well done. HME