Has DME cap altered biz?

Saturday, March 31, 2007

WEST AMHERST, NY - The 13-month capped rental rule for Medicare DME observed its first "anniversary" in February, giving HME providers a chance to contemplate the impact on their businesses.
Judging by the tempered reaction of two prominent company leaders, the cap hasn't caused any dramatic changes--not yet, anyway.
"It's a rent-to-own system now, which is actually much simpler to explain to beneficiaries," said Don White, president of Associated Healthcare Systems in 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," he 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."
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."