That legal life: MCOs, PE and TPEs

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Monday, February 3, 2020

YARMOUTH, Maine – If you’re sitting at healthcare attorney Jeff Baird’s desk, the issues consuming your billable hours include how to work around managed care plans.

Baird, the chairman of the Health Care Group at Brown & Fortunato, says 70% of Medicaid recipients are now on managed care and 35% of Medicare beneficiaries are now on Medicare Advantage, making it an increasingly formidable foe for HME providers.

“What’s happening is they’re serving as the PBM for the DME industry,” he said. “They’re the middle man: They inject themselves between traditional Medicaid and Medicare on the one hand and the supplier on the other.”

A big challenge for suppliers around MCOs is closed networks. By Baird’s count, 27 states have any willing provider statutes, but few of those statutes apply to HME providers.

“The most realistic and logical solution providers have is to work with their state DME association and their state legislature to either pass new AWP laws for states that don’t have them, and if they do have them, expand them to include DME,” he said.

Another challenge around MCOs is sole-source contracts, especially for supplies, like incontinence products. Again, Baird recommends working with state DME associations and state legislatures to require, as part of their licensure, providers having a brick-and-mortar presence.

“States like to protect their own,” he said.

Other issues on Baird’s desk:

An increase in private equity ownership

“The curse is they can focus on the bottom line (above all else), and because of that, we’ve seen some PE-owned DME companies not be real serious about compliance issues, which (ironically), can affect the bottom line,” he said.

An increase in Targeted Probe and Educate audits

“Enough time has passed now for companies to go through the first three rounds and if they’ve failed we’ve found it doesn’t necessarily mean the death sentence,” he said. “CMS is being fairly flexible, in terms of not coming in and revoking or suspending suppliers.”