Twilight Zone

Friday, December 31, 2004

Editor, HME News

Those guys in the media, huh? You never know what they’re going to do next.

This month, the guys in the mainstream news business pointed their camera and held up their microphone to report on two issues at the center of the typical HME supplier’s Medicare business - the K0011 power wheelchair (see story) and the oxygen concentrator (see story).

National Public Radio ran a legitimate, well balanced story about K0011 utilization, and an ABC news station in Columbus, Ohio, took on the issue of capped rental fees for oxygen concentrators.

Of course, there are so many points of view in each of these issues that a news report could slant one way or the other. In each of these stories, the reporter’s decision to focus on particular seniors with particular troubles determined the takeaway for the reader.

In the NPR report, listeners witnessed the delivery of a power wheelchair to a 72-year-old, retired farmer. Within a couple of heartbeats, it’s obvious that the man needed a power wheelchair. In Ohio, on the other hand, the reporter focused on the gripes of an elderly couple who can’t understand why Medicare doesn’t cap rental fees on their oxygen concentrators.

Tim Pontius, president of Young Medical Equipment and chairman of AAHomecare, provided one defense for home oxygen reimbursement, pointing out that the cost of the equipment is but 28% of the cost of servicing the patient.

Sometimes I think HME suppliers are doing business in a Twilight Zone, impervious to rational comprehension by people beyond the pale. Pontius, no doubt, can make a compelling case for why the cost of goods is 28% the total cost of servicing the patient. He’ll talk about the costs associated with payroll for RTs, driver/techs and billing people, the costs of maintaining his delivery trucks, the costs of maintaining accreditation, his G&A, and so on. But for some reason, this doesn’t seem to light the bulbs of very many people beyond the industry.

Take the PAOC committee on Dec.6 – 7. The Research Triangle Institute presented an analysis of several competitive bidding programs, including the VA, that RTI believed demonstrated the feasibility of competitive bidding for HME. But again, there was little recognition to the service costs that are built into an HME’s reimbursement but not built into the VA’s expenditures for equipment.

For example, the VA pays one HME supplier in New Hampshire $100 to deliver a hospital bed and $100 to pick up a hospital bed. But nowhere in RTI’s presentation, according to those in attendance, or their slides were these factors in evidence.

Who knows why? Is it simply a matter of ignorance, or one of impiety? John Gallagher, the VGM Group’s vice president of government relations, doesn’t buy the ignorance argument.

“It’s not that they don’t understand the costs,” said Gallagher, who attended the PAOC meeting as a spectator. “They don’t give a damn. It fits their modus operandi, so they can justify to Congress what they want to do by holding up the VA as a Competitive Bidding Success model.”

In a story this month about the costs of providing CPAP, John Goodman notes that 20% of every dollar he spends is for chasing down his reimbursement from payers.

It’s real money to chase down payers, and deliver oxygen concentrators or power wheelchairs. Just ask the guys who employ the two guys who delivered the power chair to the retired farmer featured on the NPR report. Their employer, the Scooter Store, laid off hundreds of people last year. That was in Texas, not the Twilight Zone.