Unbundling: What makes sense?

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Tuesday, April 30, 2002

YARMOUTH, Maine — MED Group CEO David Miller's proposal to create higher HME supplier standards and to rework the Medicare fee schedule (see HME News, April 15, 2002) turned heads at AAHomecare's Leadership Conference in February and has kindled opinions among HME providers that both parallel Miller's proposal and diverge from it.

In follow-up interviews with a handful of HME industry leaders, HME News found a consensus of opinion on at least two points: that the Medicare program must acknowledge and, by definition, pay for services provided by HME suppliers and that a national conversation on the subject needs to take place now, especially now when the industry's bridges to the Medicare's program's administrators have never been stronger.

Opinions diverge when the talk turns to how aggressively the industry should reappraise the fee schedule, and for two reasons:

"It's difficult to negotiate a new type of fee schedule, especially with the government, and feel like you come out the other end at the same level or ahead," said Steve Knoll, president of Knoll Patient Supply and incoming chairman of AAHomecare. "Generally, you enter and leave those negotiations being reimbursed less than before."

The other reservation about changing the fee schedule involves Miller's suggestion that reimbursement on the fee schedule be split for product, service and a functional needs assessment.

"As soon as someone starts paying you separately for those services, they begin to want to micromanage how those services are provided," said Don White, CEO of Associated Healthcare and past chairman of AAHomecare.

White, whose business also includes a home health agency, said that one of the happiest days for HHAs in recent memory was the day that Medicare transitioned from a reimbursement model based on cost-reporting to the prospective payment system, which essentially provides a bundled reimbursement.

Medicare has for decades reimbursed DMEPOS suppliers with a rate that does not explicitly acknowledge a service component in the delivery of product. In the past, when reimbursement rates were higher, providers grumbled less about service.

Today, they argue, the absence of a service component has fostered the development of an industry where services provided vary widely. To bring some sense of fairness back to the fee schedule, Mario La Cute, president of Seeley Medical and also a past chairman of AAHomecare, would develop fee schedule add-ons.

"If one homecare company provides an oxygen concentrator but not a respiratory therapist, he's reimbursed at one rate," said LaCute. "If another company provides the concentrator and the respiratory therapist, he's reimbursed at a different rate. You choose the level at which you want to participate." HME

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