Managed Care: Locate the haystack

Q. How do I know whether my HME company is built for a managed care world?
Friday, September 25, 2015

A. Shifts in the market point to continued growth in managed Medicaid. This is the place where most HME providers will need to be prepared to play. So whether you get a direct contract or become part of a network, success requires that your company be built for a managed care world. The following are key elements in being a sustainable HME managed care provider.

Cost: We often focus on product costs but this is about operational efficiency and bringing service costs in line with revenue. This includes process, overhead and technology costs.

Pricing: Do you know how to use your operational costs to create a fair price for your services?

Service level agreements: Can you financially afford to meet the commitments you have made? Are current SLAs even reasonable or necessary for patient well-being?

Utilization management: In the old Medicare resupply world the calendar largely decided when the next sale could be made. That won’t fly in this new world.

Quality: We all believe that we provide it. But it is not our definition that counts. What counts is how the health plans, patients, physicians, caregivers and governing bodies define it. So all you have to do is meet each stakeholder’s unique definition and you are home free. The catch is that the payer is only going to pay you for meeting its definition while expecting you to meet the rest. It is one thing to be asked to find a needle in a haystack. It is quite another when you don’t know the location of the haystack.

Lynn Everard is managing director of Valumatrix, LLC. Reach him at