Have POC, will travel

Friday, August 31, 2007

SAN DIEGO - SeQual Technologies stuck a feather in its cap in late June--and further validated the market for portable oxygen concentrators--when it signed on as a preferred vendor with The VGM Group. SeQual signed a similar agreement with The MED Group earlier this year.
"You can't walk in there with just any piece of junk," said Ed Radtke, SeQual's former vice president of sales and marketing, who retired in July. "In both instances, they have some really outstanding people on board that do a wonderful job of evaluating the contributions that a particular product line can make to the members, which is what it's all about."
VGM attempts to limit contracts with competing manufacturers, but with portable concentrators that's not an issue, said Tom Pontzius, president of The VGM Group's Nationwide Respiratory. The member service organization also has contractual arrangements with Inogen and Respironics; both companies make POCs.
"There isn't one product that will fit everyone," Pontzius said. "We stress the need to be careful in selecting equipment. You have to look at it from a clinical aspect--the amount of oxygen that each unit produces. Someone who may not qualify for one conserving device will qualify for another."
While some providers have begun migrating to POCs as the modality of choice, others see it as an attractive cash item, often accumulating a pool of POCs and renting them to traveling oxygen patients, Pontzius said.
"We try to stress that Medicare pays for DME for patients use in and around the home," he said. "You don't have to provide oxygen for people to go to the grocery store. You don't have to provide oxygen for people to go to bingo."
That creates a business opportunity for providers. Instead of automatically giving patients all the portable oxygen they need (either tanks or POCs), providers can limit the supply to what's needed inside the home each month. For additional oxygen, providers can charge patients extra by using the advanced beneficiary notice (ABN), aka the patient upgrade provision, Pontzius said.
Kelly Riley, the MED Group's National Respiratory Network, expressed a similar sentiment.
With the ratcheting down of reimbursement for oxygen, "Medicare is trying to send a clear message," she said. "We're going to have to push some of the cost to the client. Savvy members are going to quickly realize that they are going to have to analyze their costs: 'Can we still afford to provide the Mercedes of oxygen?' I think the answer is going to be no."