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Editor’s note: Kelly and Lisa wrote this for end users. As HME providers, this is a great tool that you can use to inform your patients and customers to advocate for themselves and, in turn, your businesses.

Imagine this: your HME company has closed, is no longer taking Medicare patients, is asking you to pay up front because they no longer “take assignment,” or you’re having fewer product options or are waiting longer for deliveries and service. You’ve called Medicare and/or Medicaid and gotten the runaround.

So, what’s your next step?

Why disability and senior advocacy is needed

Many HME companies that once have provided services and equipment to people with disabilities have gone out of business because of changing federal Medicare regulations. Poor policies with inadequate funding for HME have caused more than 40% of these traditional HME companies to go out of business or stop accepting Medicare entirely.

Others have had to significantly change the way they do business, due to the unsustainably low rates Medicare reimburses them. In many cases, these companies can no longer provide the same services and equipment as they did in the past or are having to turn to the individual who needs medical equipment to cover the differences in the cost of the equipment and the low amount that Medicare will pay.

Across the nation, this is causing decreased access for medically necessary equipment and services for people who need them, or forcing the individual to pay out of pocket to get what he or she needs, instead of being able to use their Medicare benefit.

Kelly Turner at People for Quality Care says, “With no other recourse, the individual has to go without or spend more of his or her own money, which they may or may not have, to get what they need. Often the person has to make a decision, ‘Am I going to continue to try and find someone to help me, or am I going to give up and not get the service or equipment I was told I would receive from Medicare?’”

These unintended consequences have a significant impact on overall health care and spending, as home care is a cost-effective and preferred alternative for most individuals.

How you can self-advocate for your health care using videos

The viral power of video is staggering. How many videos have you seen on social media that have opened your eyes about people with disabilities? In this video, produced by Cure Medical, My ThisAbled Life’s Andrew Angulo shares his take on the value of selfie videos, in terms of how your personal story can change lives, laws and perceptions: http://bit.ly/2h01YCe.

Andrew says, "I'm just someone who experienced a life altering accident in June of 2009 and I want to share the experience of my everyday situations through silly shorts of my daily life as a photographer, film maker, action superhero and a regular Joe. In a chair. Doing stuff."

People love what Andrew shares! More than 450,000 people have watched his videos on Youtube, and the number keeps growing every day.

Lights, camera, action! Share your own story

Not sure how to begin? Or what you should say when it comes to talking about your own personal experience?

Don't worry, you don't have to be a pro! Simply use your cell phone to create a quick video that talks about your healthcare concerns and why your friends and family should support you in asking for better access to Medicare benefits for people with disabilities.

Your video doesn't have to be long. It doesn't have to be complicated or professionally produced. It just has to be honest, from your point of view, to capture the hearts and minds of people in your community.

Take a look at this one, for example, filmed on the fly and on-the-go by the Rollettes, sharing their experience with United Spinal's Roll on Capitol Hill: http://bit.ly/2v5kLSU

How PFQC can help

PFQC believes in the power of one. Each person has a voice, and when those voices come together to educate legislators about their problems accessing HME, the wheels start rolling, and change can take place. Kelly says the first step in evoking change is, “To put the individuals having problems with obtaining the proper medical equipment, supplies and services directly in touch with their legislators in Washington.”

PFQC encourages people to reach out to their legislators not only through emails, but also through phone calls, Twitter, Facebook and all the vehicles available to them to let those they’ve elected know the problems they’re having receiving the products and services that Medicare is supposed to be providing for beneficiaries.

“Our key initiative at PFQC is to make sure that beneficiaries who aren’t having access to home medical equipment and services get connected to their legislators,” Kelly says. “They can explain to those legislators on a personal level what their issues are and ask their legislators to help fight for changes that will protect access to the HME benefit by providing sustainable reimbursement rates and ensuring that there are enough providers to serve the population of Medicare beneficiaries.”

So, if the disability community doesn’t make Congress aware of problems, then the men and women in Washington can’t and won’t address these issues.

Hint, hint: This is why we're encouraging you to share your own story online with a personal video!

Kelly Turner is the executive director of People for Quality Care. She can be reached at kelly.turner@vgm.com.

Lisa Wells is the vice president of marketing for Cure Medical. She can be reached at lwells@curemedical.com.

John Gallagher
vice president of VGM Government Relations

What are the most important things needed to break a nut loose from a rusty bolt? Some WD-40, a few good tools, and an abundance of elbow grease. Much like that rusty bolt, Health and Human Services Secretary Tom Price is working to break the bureaucratic rust loose within the agencies he oversees.

There are plenty of concerned providers who are worried that Secretary Price, a strong advocate for the HME industry during his time in Congress, has forgotten about problems that must be solved. While the urgency of real reforms increases every day and providers continue to struggle to keep the lights on, the industry must recognize the machine that Secretary Price is working against and the steps his department has taken to make incremental improvements already.

Secretary Price has already had an immediate impact on DME

Round 1 2019 of competitive bidding was pulled shortly after its introduction because of Price’s actions prior to being confirmed as Secretary. Something equally as important, the industry is seeing a much different CMS since Secretary Price took over the reins. We are seeing the leadership at CMS, including the new Administrator Verma herself, beginning to be much more willing to respond to inquiries, something that we have never seen from CMS or HHS.

Reduced staff numbers slow down change

Secretary Price, as well as many other agency heads, is working with greatly reduced staff numbers. This is largely due to politics in Congress playing out with confirmations and budgets, but it is having an impact. This translates into battling with career CMS employees who are working to protect their positions and who are married to flawed programs that are harming providers and patients. An encouraging response that we have heard from more than one official within CMS is that senior staff that came with Secretary Price is quickly gaining the respect of the rank-and-file employees.

Where is the magic wand?

Many are wondering why Secretary Price cannot just snap his fingers and solve the problems facing the industry. Unfortunately, there is no magic wand to wave over everything to be solved. While he has overall authority of the direction that these agencies take, there are still rules and statutes in our government that prevent him from having complete unilateral power. There are lawyers and career staff that follow lockstep with the bureaucrats and leadership already in place at CMS, and they aren’t the most friendly when it comes to interpreting the intent of congressional action.

Agencies need a mandate for quick action

For a department or agency to act swiftly, they need to be pressured, or shown the demand for change by Congress. We are seeing an increase in congressional inquiries coming from key committees and leadership that raise red flags with the status quo going on within CMS. This continued concern from Congress is a direct result of the constant outreach from grassroots providers calling into offices, attending meetings, and messaging members of Congress through the VGM Action Center, which sees thousands of individual advocates annually. Providers need to continue demanding change by CMS to keep that pressure on.

A lot of irons in the fire

Even though HME plays an extremely important role in the world of health care, we have to recognize that Secretary Price has countless “irons in the fire,” namely the repeal and replacement of the Affordable Care Act. The unknowns and delays in passing legislation to replace Obamacare have clogged the pipes of legislative and regulatory action. I have no doubts that Secretary Price has not forgotten the problems going on within the DMEPOS industry. The costs, readmissions, and health care problems that are prevented by this industry do not go unnoticed. This is especially true with Secretary Price as he is working to overhaul the health care system to put patients at the center of health care.

Have trust that the nut will break loose

The frustrations that providers hold are not doubted and absolutely understood. Providers have to channel that frustration to the people who will listen most, their members of Congress. It has been just over four months since Price took over as Secretary and he has worked with limited staff and resources at his disposal. It takes time and energy to break a nut loose from a rusty bolt and Secretary Price is doing just that. While the industry would love to sheer that rusty bolt off, Secretary Price doesn’t have that luxury because the agency has to still function and we don’t want CMS to actively work against him, which only makes things worse.

Grassroots HME providers are some of the most hardworking and driven individuals in health care because of high level of care they provide to their patients. The industry has to allow Secretary Price the time to create relationships and drive CMS down the correct road and trust that he is doing so. The industry has concrete changes to show that the nut is breaking loose from a very rusty bolt.

John Gallagher is vice president of VGM Government Relations.

In a recent HME Newspoll, we asked HME providers to share how their businesses have been impacted by the national roll out of bid pricing. More than 100 responded. Here is an excerpt of what they said.

This pricing has been the most devastating thing we've had to contend with in health care for the last 25 years. The caps and the cuts have left us completely crippled. We can’t sustain this for very much longer!

Dave Boroughs, Riverside Medical, Savannah Tenn.

 

We closed multiple locations and laid off 30% of our staff, mainly RTs.

 

The national roll out of bid pricing has been devastating to our business. We have had to cut employer paid benefits, reduce staff, remove multiple items from our products and services, become more aggressive in collection efforts, suspend ordering from multiple vendors and create our own competitive bid process for most items that we do currently provide. Vendors were invited to bid for our business as an all or nothing package by DME categories. In addition, we have had to turn to cash sale items into a way to supplement our losses and sustain business until the new administration fixes the damage that has been done. Many of our competitors have closed their doors. We have survived by the skin of our teeth due to the fact that we also provide pharmacy services and state bid contract medications. Had it not been for these private contracts, we would certainly be in a much different situation.

Melissa Hammett,
Professional Care Pharmacy, Monroe, La.

 

We have lost key employees and as a result we are not available to be in the patients homes like we were in the past. The patient is the one suffering and they don’t understand why Medicare has done this to them. We are having patients call us in our local area that were set up with companies in Nashville. Due to the distance, they are not servicing their patients. These patients want to change to our local company but they are in their cap and we will not take them. While I am on my soapbox, I do not understand how the advantage plans can say they are following Medicare guidelines when in actuality it is only the payscale they are following. We should not have to get an authorization every year nor every month. With the reduction in staff, this is putting a hardship on providers. I am an advocate for pre-authorization on DME and thereby eliminating the need for needless audits. It is time our industry unites. The best thing our company has done is become a member of AAHomecare. They have grass root efforts that are having a positive impact and gaining support of our Congress.

 

The reimbursement rates are very unrealistic and it is hurting not only people and businesses in rural areas but the entire industry.

Rodney Askay, West River Health Services, Hettinger, ND 58639"

 

Our biggest competitor is a national. They continue to provide less patient care and good service. We have patients trying to switch to us on a weekly basis. Unfortunately, because of the "capped" status, the patient is unable to switch. Of course, they know this and don't care about service.  

 

Although I am not in a rural area, what has transpired in our area is the majority of private insurance companies has lowered reimbursement to the rural price in our area, dropping reimbursement 30% to 45 %.

 

We are doing everything we can do to survive. This industry will fail at the current reimbursement rates.

Jeremy Killough, Southeastern Home Oxygen Service, Columbus, Ga.

 

We are using personal savings in the (futile?) hope that there will be some bid relief, or that at least the 2016 bid relief payments will help to alleviate some of that debt. We are also exploring options to sell or close the business because we can't survive operating as we are now.

 

CMS's assault on HME began in the 90s with the Medicare Modernization Act. It mandated that DME companies compete by bidding against each other. This became an auction—not against other providers, but a stand-off with CMS. Naturally, CMS won in doing Congress' bidding: Congress lacked the backbone to admit they wanted to defund DME. It’s been a slow, painful death. But they've gotten what they wanted: the shutdown of an industry of small, service-oriented businesses. Another fiendish arrow in CMS's quiver since the war began has been the accompanying Kafkaesque bureaucratic documentation requirements. Those alone made our services marginally profitable without even considering the very first fee cuts, not to mention the auction. They've won.  We all need to face it, close up shop and get a life.

Kathleen Weir Vale, HOPE medical Supply, San Antonio

 

New bid pricing has caused us to stop providing many items. In most cases, the customer tells us that they can not find anyone to supply the items or do the necessary repairs. It looks as though it may get worse in June. Our government wants to destroy our industry and it looks like it has succeeded.

 

We will be billing non-assigned from now on.

 

We have debt now of $100,000, (when) we were debt free before the price reduction. I have not received a salary for over 11 months as an owner. We still cannot pay for our equipment and have to continue to finance. With rent, utilities, payroll, insurances and bonds, we still cannot pay the bills. Why does CMS not cut on their administration costs. I am sure there is a lot of waste there. Also, the patients pay for Part B monthly, but they are the ones that really get cheated—no service, cheaper equipment, etc.

Diane Friend, Valley Home Health Care, Roanoke, Va.

 

As a result of the pricing cuts, we have reduced staff to a skeleton crew, dropped products and services offered/billed, and can no longer care for our patients as efficiently or thoroughly as we previously did. We as a company are hurting; the patient is suffering as well.

Rich Waltman, HealthCare Plus, Polson, Mont.

 

Cash flow has really gone down. When payroll and credit card roll around, it is really tough. We are completely debt free and pay credit card off monthly, but have had to take money from company savings twice this year. We have had a few employs leave and haven't rehired.

 

We have laid employees off and have had to borrow money to stay open. If things keep going as they are, we will not be able to provide equipment to our customers much longer. We service a very rural, impoverished are.

Lana Cochrane, Personal Medical Equipment, Anna, Ill.

 

A lot of our clients and referral sources are upset that we no longer accept assignment on products affected by the roll out. It has resulted in a drastic drop in referrals and sales.

 

We have been really impacted with the decrease in our TriCare contract, which is based on the Medicare non-rural rate, with a further 20% discount. Now MediCal is looking to do the same.

 

We have always run a lean staff. We have had to lay off two clinical staff. No one has insurance as costs have increased over $50,000 in the past three years. My 64-year-old partner was on a call out last evening from 0100-0500 hrs. Anyone looking to buy a good used DME?

Bob Forbes, Advantage Home Oxygen, DuBois, Pa.

 

We are located in San Antonio, and the continued decrease in reimbursement affects all areas. We are a military city and the Medicare patients are always on a waiting list and no one even wants to do business with Tricare due to their contact of 65% of the Medicare allowable, which is already ridiculous. We service the military and are applying for Medicare and Medicaid, but in reality what for, with the way the reimbursement is going. You can't run a business like this and service patients’ medical needs. We are a minority, veteran-owned company just trying to stay afloat.

Brandy Hill, Patient Solutions, San Antonio

 

Hopefully we will still be in business within six months. Pray for our industry.

 

The 50%-plus cuts within six months in the rural areas during 2016 have seriously affected cash flow and margins. We are currently working on a 0% operating margin, depending on the month.  Additional cuts to oxygen are devastating!

 

We’re losing a substantial amount of revenue, causing serious changes in business practices, including decreasing product lines, going non-assigned, decreasing deliveries.

Brian Dirksen, Genesis Home Medical Equipment, Davenport Iowa

 

The biggest impact has been a reduction in customers. We receive near daily complaints from past and potential customers of lack of service and response form bid winners.

 

We have had to push more of the expense onto the beneficiary. Many people cannot afford extra expenses in a rural area. How can I be expected to deliver equipment in a rural area on such slim margins? My costs have not decreased, but my income sure has. We are the only locally owned DME in the area with our doors still open. Soon the nationals will have all the business and be able to dictate cost.

Gary Morris, GME Medical, Lynchburg, Va.

 

We moved out of the Medicare business in July of 2016. It's been tough, but we're gaining ground.

Michael Wofford, Appalachian Medical Services, Calhoun, Ga.

 

I have been in this industry for almost 40 years and I have seen a lot of crap come and go from CMS, but this is by far the worst I have ever seen. CMS can change reimbursement rates in the middle of a rental period, but we cannot change our assignment decision in response? What BS. I have laid off long-time employees and cut benefits like health care, but there is no way to make up for 50%-plus cut in Medicare.

Don Chrysler,National Home Health Care, Amarillo, Texas

 

We will be letting go of an RT and cutting on service.

 

We've dropped hospital beds/trapeze/lifts/air mattresses, cut our staff by over a third, shelved expansion plans, and gone into debt. Even with these changes we may not survive.

 

We had to stop accepting new referrals from Medicare and all the HMOs (because they pay even less than Medicare now), effectively closing our business. We delivered products 60-90 miles away on a daily basis, but we could not continue to do so because we were losing money on 80% of the items we were delivering.

S. Holland, Eleos Home Medical, Mobile, Ala.

 

I feel that the patient is the one that will suffer from the way the bid works. We have a location in a bid area and our main office is in rural area. We have had tons of patients in the bid area that can't get the services they need and are being turned away by the bid winners because they can't keep up. It is increasingly difficult to keep going with the cuts—some below our cost—especially for the capped rentals that we have to bill for over a year and maintain the equipment. It is ridiculous to expect us to keep taking care of people at that rate.

Kathy Driver, Mike's Medical, Clinton, Okla.
 

We simply cannot accept Medicare assignment on most items currently outside a very narrow service area. You are supposed to do the same amount of work for a 50% reduction in revenue; it is impossible

Al Neumann, Corner Home Medical, St. Paul, Minn.

 

We have had significant downsizing of staff, impacting patient care. In some scenarios, reimbursement is not covering cost of goods. Patients get upset and want immediate service, but you simply cannot staff. Medicare demands the same touches and service levels, and has broad medical necessity requirements, but it has reduced fee schedules to barely cover or not cover basic cost of goods, delivery, and claims costs.

 

We are billing unassigned for some product lines. Patients will have much higher out-of-pocket expenses. There are some products where our purchase price is higher than the reimbursement. We are also cutting value-added services. The only reason our DME has stayed in business is that it is part of a multi-service line home care agency. If we were a stand-alone DME, we would have been out of business at the end of 2016.

 

We have consolidated three locations into one. We no longer take assignment on walkers and bedside commodes or anything else under $50. We have also had to reduce head count and gotten further into debt.

 

We have cut down on service, reduced staffing hours and reduced inventory. We do not take any chances with questionable documentation. Our priority has shifted from taking care of the patient first, to trying to keep ours doors open.

 

The bid pricing will force us to eliminate positions, drop contracts and change our business model completely to remain viable.

 

The biggest impact has been meeting the cost of the items dispensed with the current bid pricing. We are losing money on each order dispensed.

 

The bid pricing is not sustainable and is evidence of misguided government.

 

We have been hit from all sides and the matching commercial fees are just starting to take the biggest toll. We are seriously considering dropping some of our third-party contracts. It's a tough decision when you've lost so much business already. Overall, we continue to search for ways to increase our overall bottom line, increase our retail presence and find profitable sweet-spots within the third-party payer world.

Lori Sears, Active Home Medical Supply, Lapeer, Mich.

 

With cuts in reimbursement, rigid Medicare guidelines for respiratory machines, and taking on more clients from locations closing or from winning the bid, it is hard to supply the new equipment and enteral products. There is not room for profit or error and we have continually been in the rears, continually trying to dig out. We keep hoping that our privately owned hometown company will make it. The national and hospital companies are crushing us. I do not understand how any company can get away with fraud, when we cannot even get our patients that need the equipment qualified by the rigid guidelines and let alone get a legitimate claim paid.

DeAnn Bauer, Belleville, Ill.

 

We are in a rural area of western Oklahoma. We are the only DME in our town now, as there were three at one time. These cuts have impacted us tremendously, to the point of having to get a loan to keep the doors open, and I am not sure how long that is going to help. We desperately need help quickly. If we are not able to keep going, I am not sure what out patients are going to do. These cuts have caused us to cut staff hours, reduce products we would normally carry, and not accept all new patients. Patients are having to wait on items longer, as the funds are just not available to purchase all items needed. Please help save the business. We love what we do and care for our patients, and don't want to see them have to do without.

 

There are insufficient profits from Medicare sales to cover overhead, make deliveries, and provide choice. We are especially damaged by a large number of Medicare/Medicaid referrals from other providers that are not providing equipment or services as the non-payment of deductibles and co-pays puts us immediately in the red. We have curtailed our catchment area and products as a consequence, and will file claims non-assigned when ever possible.

 

We live in a rural area and cover many counties that have no other DME services available to them. We are going to have to reduce our coverage area due to bid pricing. Bid pricing has eliminated our profit margin so we can not afford to deliver and service patients in other counties. What will those patients do then?

 

There has been over a 60% decrease in oxygen reimbursement over the last year and we’re getting paid less than those in bid areas. I don't think I have to explain the IMPACT. It's devastating. 

 

When reimbursement is less than cost, you can't stay in business. We serve residents in rural Kansas and can't continue to be in business under the current plan.

 

We are lucky to be diversified into other products and retail. It’s the patients that are suffering with poor quality service, poor quality equipment, sometimes no service. I cant believe that there is not more complaining coming from patients. They are just letting it happen. We as suppliers can complain all we want; CMS does not care about us. 

 

We are in a metro area, but all of our plans followed the Medicare rates and some even lower. We have had to adjust our service line and are still loosing money each month. No one seems to want to talk about this part of the deal. In six to 12 months, we will be gone.

 

The biggest impact has been a reduction of value added services and patient care.

 

We service a county in Montana that is bigger than the state of Rhode Island with a population of 7,000 people. I have laid off an employee (leaving it up to me and one other person to service this massive area). We have cut where we go and the services we provid, and are not breaking even with these rates. We are dying for the money from the Cures Act and praying that rates get established where we can service the patients we love. We are the only DME in the county and we can not increase profit by more patients. There are no more people. If we close, I am not sure how these patients will discharge out of the two hospitals we serve.

Jenn Morrisroe, Dillon Medical Supply, Dillon, Mont.

 

We have looked real hard at what services to continue/discontinue. Staffing cuts are on the table at this time also, which will further limit what services we can offer.

Tim Martin, ATTENTION Medical Supply, Newport, Ariz.

 

As a small town, locally owned business, the hardest part is telling the customers that you cannot afford to take care of them. I am having to say no all the time.  As an example, the quality of hospital beds I use cost me more than Medicare pays. However, with the audits, very very few people "qualify" for a bed through Medicare.   They need one, but the rules are over the top. I rent more privately than ever before.  It is sad for the clients.

 

We stopped servicing Medicare patients. The transfer of patients has been costly and time consuming, so I'm not sure we are loosing less money. Regardless, we can't sustain the cut in the long run. The years we have serviced our patients are no value at all to the government. As long as they think they are saving money (even though time will show they are making things worse), they do not care about patients and the access issues that they are experiencing. It's taking months for these patients to get the supplies that they need.

 

We have one location in a non-bid area. The biggest impact for us has been to drop certain categories, i.e. nebulizers/hospital beds/walkers, and only bill them unassigned for Medicare beneficiaries. We do enough cash business and non-Medicare business to most likely stay in business, but the patients have suffered as no one will take assignment on a lot of Medicare business.

Jim Lehan, Lehan's Medical Equipment, Rockford, Ill.

 

Bid winning companies are refusing to service areas (like ours) with extensive driving distances. We're getting cash sales in those areas because the beneficiaries are frustrated.

 

Our business has suffered greatly financially. We have also taken substantial reimbursement cuts from Medicaid and commercial insurances. I have had to decrease staff and cannot afford to provide raises or benefits any longer for existing staff. Cutting staff, costs, and service is the new norm for our 32-year-old business. Sad and frustrating. 

Randall Cramer II, All-Med Equipment & Services, Cottonwood, Ariz.

 

Luckily we have a retail pharmacy to pay the bills while our DME division tanks. We've been able to eliminate positions due to employees quitting without laying anyone off. We've switched to non-assigned billing for lots of equipment, which has hurt us with referral sources.

 

We have simply stopped taking all Medicare jobs impacted by the 2016 rate changes. Clients must now private pay, and we file non-assigned if we have the proper documentation to do so. No providers in our areas are taking Medicare, except for oxygen jobs by Apria. Medicare clients are being told to change health plans. Clients are not happy. Ironically, we are doing financially better now than before we stopped taking Medicare claims. Plus, billing staff is reduced due to less audits and difficult claim documentation.

Paul Gammie, Gammie HomeCare, Maui, Hawaii.

 

I purchased this business in August of 2015. It has been established for more 20 years and we are located in the most heavily populated senior area in NJ and my nearest competition is about 40 miles away. I basically have no competition and operate from a beautiful showroom. My revenue in 2016 was reduced over $340,000 due to the Medicare cuts. I may not be able to keep my doors open and have put everything I have into this business, including liens on my home. I have between eight to 10 employees that rely on this business, along with hundreds of seniors. My projected revenue should have been sufficient to sustain and grow the business. Now I may lose everything I have, including my home and all personal assets. I would be more than happy to sue Medicare for my financial situation if I lose the business.

 

We have learned to deal with the stupidity of the government and no longer are we dependent of their stupidity. While we have compassion for the elderly, we have learned to take them unassigned and if they cant do that, we send them down the road. The most loyal and easiest patients stay with us. We have found that the biggest challenges are personality wise and unreal expectations wise—they move on to other options and then come back asking us to take them back, which we don't do. We are a profit business and the government is expecting us to act as a nonprofit, but they tax us like a for-profit. When they get their heads out of their asses, maybe we will consider taking these things back on, but probably not. Life is much better without the government shit.

 

We have been able to grow our volume but not quite enough to cover the cuts. The biggest thing is that we need to look at outsourcing some of our operations, such as billing, and cut the workforce.  It's the only way to make it work. Unfortunately, we are like most DME companies who have a hard time dealing with that fact and have a hard time pulling the trigger.

 

Our patients have more to pay out of pocket. Those that are not capable of paying out of pocket drop their therapy, thus causing undo harm to their body and unnecessary hospitalizations.

 

These cuts have made it impossible to keep doing business in the rural areas. We have had to change our delivery systems, stop carrying certain products, and are looking to have layoffs of employees. It takes all the employees we have to do the mountains of paperwork and keep up with the regulations Medicare requires.  You pay more to watch cable television than we get paid to provide life saving oxygen in a patient's home. We are already using our savings to keep the company going. I don't know how much longer we can survive. Then what happens to the patients? What happens to my employees? With these cuts everyone loses!

 

Lots of ABNs. Lots of non-assigned sales. Medicare beneficiaries can pay the difference. Medicaid patients are not allowed to, and THAT will be when bad outcomes hit the fan.

 

We have had to change our hours of operation, and have became much tighter on who we will accept for patients. We are no longer accepting assignment for most products and dropping those that are a loss.

 

We are no longer billing Medicare for DME as of March 15th. Not sure how this will impact my job since that was one of my responsibilities. Customers are having a difficult time finding locations that will bill Medicare. 

Diane Dean, Jefferson Pharmacy

 

We were doing OK up until competitive bidding rates hit the Tricare contracts. How can you accept a nebulizer or CPAP on rental at 60% of bid rates? Now we are considering any means of reducing our expenditures and buying the cheapest equipment possible. We are trying to draw attention to this issue with both the Department of Defense and HealthNet, but so far no one is interested.

Victoria Peterson, Respiratory & Medical Homecare, El Paso, Texas

In a recent HME Newspoll, we asked HME providers to share how their businesses have been impacted by the national roll out of bid pricing. More than 100 responded. Here is an excerpt of what they said.

 

This pricing has been the most devastating thing we've had to contend with in health care for the last 25 years. The caps and the cuts have left us completely crippled. We can’t sustain this for very much longer!

Dave Boroughs, Riverside Medical, Savannah Tenn.

 

We closed multiple locations and laid off 30% of our staff, mainly RTs.

 

The national roll out of bid pricing has been devastating to our business. We have had to cut employer paid benefits, reduce staff, remove multiple items from our products and services, become more aggressive in collection efforts, suspend ordering from multiple vendors and create our own competitive bid process for most items that we do currently provide. Vendors were invited to bid for our business as an all or nothing package by DME categories. In addition, we have had to turn to cash sale items into a way to supplement our losses and sustain business until the new administration fixes the damage that has been done. Many of our competitors have closed their doors. We have survived by the skin of our teeth due to the fact that we also provide pharmacy services and state bid contract medications. Had it not been for these private contracts, we would certainly be in a much different situation.

Melissa Hammett,
Professional Care Pharmacy, Monroe, La.

 

We have lost key employees and as a result we are not available to be in the patients homes like we were in the past. The patient is the one suffering and they don’t understand why Medicare has done this to them. We are having patients call us in our local area that were set up with companies in Nashville. Due to the distance, they are not servicing their patients. These patients want to change to our local company but they are in their cap and we will not take them. While I am on my soapbox, I do not understand how the advantage plans can say they are following Medicare guidelines when in actuality it is only the payscale they are following. We should not have to get an authorization every year nor every month. With the reduction in staff, this is putting a hardship on providers. I am an advocate for pre-authorization on DME and thereby eliminating the need for needless audits. It is time our industry unites. The best thing our company has done is become a member of AAHomecare. They have grass root efforts that are having a positive impact and gaining support of our Congress.

 

The reimbursement rates are very unrealistic and it is hurting not only people and businesses in rural areas but the entire industry.

Rodney Askay, West River Health Services, Hettinger, ND 58639"

 

Our biggest competitor is a national. They continue to provide less patient care and good service. We have patients trying to switch to us on a weekly basis. Unfortunately, because of the "capped" status, the patient is unable to switch. Of course, they know this and don't care about service.  

 

Although I am not in a rural area, what has transpired in our area is the majority of private insurance companies has lowered reimbursement to the rural price in our area, dropping reimbursement 30% to 45 %.

 

We are doing everything we can do to survive. This industry will fail at the current reimbursement rates.

Jeremy Killough, Southeastern Home Oxygen Service, Columbus, Ga.

 

We are using personal savings in the (futile?) hope that there will be some bid relief, or that at least the 2016 bid relief payments will help to alleviate some of that debt. We are also exploring options to sell or close the business because we can't survive operating as we are now.

 

CMS's assault on HME began in the 90s with the Medicare Modernization Act. It mandated that DME companies compete by bidding against each other. This became an auction—not against other providers, but a stand-off with CMS. Naturally, CMS won in doing Congress' bidding: Congress lacked the backbone to admit they wanted to defund DME. It’s been a slow, painful death. But they've gotten what they wanted: the shutdown of an industry of small, service-oriented businesses. Another fiendish arrow in CMS's quiver since the war began has been the accompanying Kafkaesque bureaucratic documentation requirements. Those alone made our services marginally profitable without even considering the very first fee cuts, not to mention the auction. They've won.  We all need to face it, close up shop and get a life.

Kathleen Weir Vale, HOPE medical Supply, San Antonio

 

New bid pricing has caused us to stop providing many items. In most cases, the customer tells us that they can not find anyone to supply the items or do the necessary repairs. It looks as though it may get worse in June. Our government wants to destroy our industry and it looks like it has succeeded.

 

We will be billing non-assigned from now on.

 

We have debt now of $100,000, (when) we were debt free before the price reduction. I have not received a salary for over 11 months as an owner. We still cannot pay for our equipment and have to continue to finance. With rent, utilities, payroll, insurances and bonds, we still cannot pay the bills. Why does CMS not cut on their administration costs. I am sure there is a lot of waste there. Also, the patients pay for Part B monthly, but they are the ones that really get cheated—no service, cheaper equipment, etc.

Diane Friend, Valley Home Health Care, Roanoke, Va.

 

As a result of the pricing cuts, we have reduced staff to a skeleton crew, dropped products and services offered/billed, and can no longer care for our patients as efficiently or thoroughly as we previously did. We as a company are hurting; the patient is suffering as well.

Rich Waltman, HealthCare Plus, Polson, Mont.

 

Cash flow has really gone down. When payroll and credit card roll around, it is really tough. We are completely debt free and pay credit card off monthly, but have had to take money from company savings twice this year. We have had a few employs leave and haven't rehired.

 

We have laid employees off and have had to borrow money to stay open. If things keep going as they are, we will not be able to provide equipment to our customers much longer. We service a very rural, impoverished are.

Lana Cochrane, Personal Medical Equipment, Anna, Ill.

 

A lot of our clients and referral sources are upset that we no longer accept assignment on products affected by the roll out. It has resulted in a drastic drop in referrals and sales.

 

We have been really impacted with the decrease in our TriCare contract, which is based on the Medicare non-rural rate, with a further 20% discount. Now MediCal is looking to do the same.

 

We have always run a lean staff. We have had to lay off two clinical staff. No one has insurance as costs have increased over $50,000 in the past three years. My 64-year-old partner was on a call out last evening from 0100-0500 hrs. Anyone looking to buy a good used DME?

Bob Forbes, Advantage Home Oxygen, DuBois, Pa.

 

We are located in San Antonio, and the continued decrease in reimbursement affects all areas. We are a military city and the Medicare patients are always on a waiting list and no one even wants to do business with Tricare due to their contact of 65% of the Medicare allowable, which is already ridiculous. We service the military and are applying for Medicare and Medicaid, but in reality what for, with the way the reimbursement is going. You can't run a business like this and service patients’ medical needs. We are a minority, veteran-owned company just trying to stay afloat.

Brandy Hill, Patient Solutions, San Antonio

 

Hopefully we will still be in business within six months. Pray for our industry.

 

The 50%-plus cuts within six months in the rural areas during 2016 have seriously affected cash flow and margins. We are currently working on a 0% operating margin, depending on the month.  Additional cuts to oxygen are devastating!

 

We’re losing a substantial amount of revenue, causing serious changes in business practices, including decreasing product lines, going non-assigned, decreasing deliveries.

Brian Dirksen, Genesis Home Medical Equipment, Davenport Iowa

 

The biggest impact has been a reduction in customers. We receive near daily complaints from past and potential customers of lack of service and response form bid winners.

 

We have had to push more of the expense onto the beneficiary. Many people cannot afford extra expenses in a rural area. How can I be expected to deliver equipment in a rural area on such slim margins? My costs have not decreased, but my income sure has. We are the only locally owned DME in the area with our doors still open. Soon the nationals will have all the business and be able to dictate cost.

Gary Morris, GME Medical, Lynchburg, Va.

 

We moved out of the Medicare business in July of 2016. It's been tough, but we're gaining ground.

Michael Wofford, Appalachian Medical Services, Calhoun, Ga.

 

I have been in this industry for almost 40 years and I have seen a lot of crap come and go from CMS, but this is by far the worst I have ever seen. CMS can change reimbursement rates in the middle of a rental period, but we cannot change our assignment decision in response? What BS. I have laid off long-time employees and cut benefits like health care, but there is no way to make up for 50%-plus cut in Medicare.

Don Chrysler,National Home Health Care, Amarillo, Texas

 

We will be letting go of an RT and cutting on service.

 

We've dropped hospital beds/trapeze/lifts/air mattresses, cut our staff by over a third, shelved expansion plans, and gone into debt. Even with these changes we may not survive.

 

We had to stop accepting new referrals from Medicare and all the HMOs (because they pay even less than Medicare now), effectively closing our business. We delivered products 60-90 miles away on a daily basis, but we could not continue to do so because we were losing money on 80% of the items we were delivering.

S. Holland, Eleos Home Medical, Mobile, Ala.

 

I feel that the patient is the one that will suffer from the way the bid works. We have a location in a bid area and our main office is in rural area. We have had tons of patients in the bid area that can't get the services they need and are being turned away by the bid winners because they can't keep up. It is increasingly difficult to keep going with the cuts—some below our cost—especially for the capped rentals that we have to bill for over a year and maintain the equipment. It is ridiculous to expect us to keep taking care of people at that rate.

Kathy Driver, Mike's Medical, Clinton, Okla.
 

We simply cannot accept Medicare assignment on most items currently outside a very narrow service area. You are supposed to do the same amount of work for a 50% reduction in revenue; it is impossible

Al Neumann, Corner Home Medical, St. Paul, Minn.

 

We have had significant downsizing of staff, impacting patient care. In some scenarios, reimbursement is not covering cost of goods. Patients get upset and want immediate service, but you simply cannot staff. Medicare demands the same touches and service levels, and has broad medical necessity requirements, but it has reduced fee schedules to barely cover or not cover basic cost of goods, delivery, and claims costs.

 

We are billing unassigned for some product lines. Patients will have much higher out-of-pocket expenses. There are some products where our purchase price is higher than the reimbursement. We are also cutting value-added services. The only reason our DME has stayed in business is that it is part of a multi-service line home care agency. If we were a stand-alone DME, we would have been out of business at the end of 2016.

 

We have consolidated three locations into one. We no longer take assignment on walkers and bedside commodes or anything else under $50. We have also had to reduce head count and gotten further into debt.

 

We have cut down on service, reduced staffing hours and reduced inventory. We do not take any chances with questionable documentation. Our priority has shifted from taking care of the patient first, to trying to keep ours doors open.

 

The bid pricing will force us to eliminate positions, drop contracts and change our business model completely to remain viable.

 

The biggest impact has been meeting the cost of the items dispensed with the current bid pricing. We are losing money on each order dispensed.

 

The bid pricing is not sustainable and is evidence of misguided government.

 

We have been hit from all sides and the matching commercial fees are just starting to take the biggest toll. We are seriously considering dropping some of our third-party contracts. It's a tough decision when you've lost so much business already. Overall, we continue to search for ways to increase our overall bottom line, increase our retail presence and find profitable sweet-spots within the third-party payer world.

Lori Sears, Active Home Medical Supply, Lapeer, Mich.

 

With cuts in reimbursement, rigid Medicare guidelines for respiratory machines, and taking on more clients from locations closing or from winning the bid, it is hard to supply the new equipment and enteral products. There is not room for profit or error and we have continually been in the rears, continually trying to dig out. We keep hoping that our privately owned hometown company will make it. The national and hospital companies are crushing us. I do not understand how any company can get away with fraud, when we cannot even get our patients that need the equipment qualified by the rigid guidelines and let alone get a legitimate claim paid.

DeAnn Bauer, Belleville, Ill.

 

We are in a rural area of western Oklahoma. We are the only DME in our town now, as there were three at one time. These cuts have impacted us tremendously, to the point of having to get a loan to keep the doors open, and I am not sure how long that is going to help. We desperately need help quickly. If we are not able to keep going, I am not sure what out patients are going to do. These cuts have caused us to cut staff hours, reduce products we would normally carry, and not accept all new patients. Patients are having to wait on items longer, as the funds are just not available to purchase all items needed. Please help save the business. We love what we do and care for our patients, and don't want to see them have to do without.

 

There are insufficient profits from Medicare sales to cover overhead, make deliveries, and provide choice. We are especially damaged by a large number of Medicare/Medicaid referrals from other providers that are not providing equipment or services as the non-payment of deductibles and co-pays puts us immediately in the red. We have curtailed our catchment area and products as a consequence, and will file claims non-assigned when ever possible.

 

We live in a rural area and cover many counties that have no other DME services available to them. We are going to have to reduce our coverage area due to bid pricing. Bid pricing has eliminated our profit margin so we can not afford to deliver and service patients in other counties. What will those patients do then?

 

There has been over a 60% decrease in oxygen reimbursement over the last year and we’re getting paid less than those in bid areas. I don't think I have to explain the IMPACT. It's devastating. 

 

When reimbursement is less than cost, you can't stay in business. We serve residents in rural Kansas and can't continue to be in business under the current plan.

 

We are lucky to be diversified into other products and retail. It’s the patients that are suffering with poor quality service, poor quality equipment, sometimes no service. I cant believe that there is not more complaining coming from patients. They are just letting it happen. We as suppliers can complain all we want; CMS does not care about us. 

 

We are in a metro area, but all of our plans followed the Medicare rates and some even lower. We have had to adjust our service line and are still loosing money each month. No one seems to want to talk about this part of the deal. In six to 12 months, we will be gone.

 

The biggest impact has been a reduction of value added services and patient care.

 

We service a county in Montana that is bigger than the state of Rhode Island with a population of 7,000 people. I have laid off an employee (leaving it up to me and one other person to service this massive area). We have cut where we go and the services we provid, and are not breaking even with these rates. We are dying for the money from the Cures Act and praying that rates get established where we can service the patients we love. We are the only DME in the county and we can not increase profit by more patients. There are no more people. If we close, I am not sure how these patients will discharge out of the two hospitals we serve.

Jenn Morrisroe, Dillon Medical Supply, Dillon, Mont.

 

We have looked real hard at what services to continue/discontinue. Staffing cuts are on the table at this time also, which will further limit what services we can offer.

Tim Martin, ATTENTION Medical Supply, Newport, Ariz.

 

As a small town, locally owned business, the hardest part is telling the customers that you cannot afford to take care of them. I am having to say no all the time.  As an example, the quality of hospital beds I use cost me more than Medicare pays. However, with the audits, very very few people "qualify" for a bed through Medicare.   They need one, but the rules are over the top. I rent more privately than ever before.  It is sad for the clients.

 

We stopped servicing Medicare patients. The transfer of patients has been costly and time consuming, so I'm not sure we are loosing less money. Regardless, we can't sustain the cut in the long run. The years we have serviced our patients are no value at all to the government. As long as they think they are saving money (even though time will show they are making things worse), they do not care about patients and the access issues that they are experiencing. It's taking months for these patients to get the supplies that they need.

 

We have one location in a non-bid area. The biggest impact for us has been to drop certain categories, i.e. nebulizers/hospital beds/walkers, and only bill them unassigned for Medicare beneficiaries. We do enough cash business and non-Medicare business to most likely stay in business, but the patients have suffered as no one will take assignment on a lot of Medicare business.

Jim Lehan, Lehan's Medical Equipment, Rockford, Ill.

 

Bid winning companies are refusing to service areas (like ours) with extensive driving distances. We're getting cash sales in those areas because the beneficiaries are frustrated.

 

Our business has suffered greatly financially. We have also taken substantial reimbursement cuts from Medicaid and commercial insurances. I have had to decrease staff and cannot afford to provide raises or benefits any longer for existing staff. Cutting staff, costs, and service is the new norm for our 32-year-old business. Sad and frustrating. 

Randall Cramer II, All-Med Equipment & Services, Cottonwood, Ariz.

 

Luckily we have a retail pharmacy to pay the bills while our DME division tanks. We've been able to eliminate positions due to employees quitting without laying anyone off. We've switched to non-assigned billing for lots of equipment, which has hurt us with referral sources.

 

We have simply stopped taking all Medicare jobs impacted by the 2016 rate changes. Clients must now private pay, and we file non-assigned if we have the proper documentation to do so. No providers in our areas are taking Medicare, except for oxygen jobs by Apria. Medicare clients are being told to change health plans. Clients are not happy. Ironically, we are doing financially better now than before we stopped taking Medicare claims. Plus, billing staff is reduced due to less audits and difficult claim documentation.

Paul Gammie, Gammie HomeCare, Maui, Hawaii.

 

I purchased this business in August of 2015. It has been established for more 20 years and we are located in the most heavily populated senior area in NJ and my nearest competition is about 40 miles away. I basically have no competition and operate from a beautiful showroom. My revenue in 2016 was reduced over $340,000 due to the Medicare cuts. I may not be able to keep my doors open and have put everything I have into this business, including liens on my home. I have between eight to 10 employees that rely on this business, along with hundreds of seniors. My projected revenue should have been sufficient to sustain and grow the business. Now I may lose everything I have, including my home and all personal assets. I would be more than happy to sue Medicare for my financial situation if I lose the business.

 

We have learned to deal with the stupidity of the government and no longer are we dependent of their stupidity. While we have compassion for the elderly, we have learned to take them unassigned and if they cant do that, we send them down the road. The most loyal and easiest patients stay with us. We have found that the biggest challenges are personality wise and unreal expectations wise—they move on to other options and then come back asking us to take them back, which we don't do. We are a profit business and the government is expecting us to act as a nonprofit, but they tax us like a for-profit. When they get their heads out of their asses, maybe we will consider taking these things back on, but probably not. Life is much better without the government shit.

 

We have been able to grow our volume but not quite enough to cover the cuts. The biggest thing is that we need to look at outsourcing some of our operations, such as billing, and cut the workforce.  It's the only way to make it work. Unfortunately, we are like most DME companies who have a hard time dealing with that fact and have a hard time pulling the trigger.

 

Our patients have more to pay out of pocket. Those that are not capable of paying out of pocket drop their therapy, thus causing undo harm to their body and unnecessary hospitalizations.

 

These cuts have made it impossible to keep doing business in the rural areas. We have had to change our delivery systems, stop carrying certain products, and are looking to have layoffs of employees. It takes all the employees we have to do the mountains of paperwork and keep up with the regulations Medicare requires.  You pay more to watch cable television than we get paid to provide life saving oxygen in a patient's home. We are already using our savings to keep the company going. I don't know how much longer we can survive. Then what happens to the patients? What happens to my employees? With these cuts everyone loses!

 

Lots of ABNs. Lots of non-assigned sales. Medicare beneficiaries can pay the difference. Medicaid patients are not allowed to, and THAT will be when bad outcomes hit the fan.

 

We have had to change our hours of operation, and have became much tighter on who we will accept for patients. We are no longer accepting assignment for most products and dropping those that are a loss.

 

We are no longer billing Medicare for DME as of March 15th. Not sure how this will impact my job since that was one of my responsibilities. Customers are having a difficult time finding locations that will bill Medicare. 

Diane Dean, Jefferson Pharmacy

 

We were doing OK up until competitive bidding rates hit the Tricare contracts. How can you accept a nebulizer or CPAP on rental at 60% of bid rates? Now we are considering any means of reducing our expenditures and buying the cheapest equipment possible. We are trying to draw attention to this issue with both the Department of Defense and HealthNet, but so far no one is interested.

Victoria Peterson, Respiratory & Medical Homecare, El Paso, Texas

The DMEPOS competitive bidding program has a long and controversial history; at this point, however, the program appears to be well-cemented into the fabric of the industry. Reports of abuse of the bidding process continue to rise with each new bid submission, including, among others, suppliers with little to no experience in certain product categories winning large competitive bid territories—territories that they have never served previously. The Trump Administration and Health and Human Services’ new leadership is determined to engage in substantial regulatory reform, which leaves many suppliers in the industry asking, “Will the program be continued, modified, or scrapped?”

CMS is poised to make changes to the program

Representative Tom Price, M.D., was confirmed by the Senate as the new Secretary of HHS on Feb. 10. As an orthopedic surgeon, Secretary Price has been a strong supporter of DME suppliers and other health care providers for many years. CMS’s recent removal of the Round 2019 information from its website suggests that Secretary Price and CMS plan to consider program reform options. On Jan. 31, CMS announced key changes to the program for Round 2019 on its website, including consolidating the Program’s bidding process into a single round of competition. A few days later, CMS removed the information and replaced it with a joint statement from CMS and the CBIC—“CMS has decided to temporarily delay moving forward with the next steps of the Round 2019 DMEPOS Competitive Bidding Program to allow the new administration further opportunity to review the program.”

Notwithstanding the current delay, CMS initially intended for the following program changes to be implemented for Round 2019 bidding:

Round 2019 would include two additional product categories: (1) CPAP devices and related accessories; and (2) insulin pumps and supplies, which would be bid in the national CBA.

Round 2019 would create 10 new CBAs for CPAP devices and related accessories. The new CBAs would be divided in half with CMS reimbursing suppliers in five CBAs on a non-bundled, capped monthly rental basis, and CMS reimbursing suppliers in the other five CBAs on a bundled, non-capped monthly rental basis. This “demonstration project” is intended to provide the program with reimbursement and utilization data to determine the best method for reimbursing suppliers for CPAP devices and disposables.

CMS would implement a “lead item bidding” reimbursement methodology for certain DME in Round 2019, which will require that bidders “bid for a lead item within a grouping of similar equipment” and payment for all similar equipment in the same grouping will be based on the relative ratio between the lead item and non-lead item.

CMS would require suppliers to maintain a $50,000 surety bond for each CBA for which a bid is submitted. CMS set forth this all-CBA bonding requirement to stop some bad-actor-suppliers from submitting “sham” or “speculative” bids by requiring that bidders demonstrate to the surety bond issuer that it has the financial ability to honor the financial commitments associated with each surety bond in each CBA.

Potential legislative changes

If either HHS or the White House pursues a legislative solution, it is widely predicted that the administration would most likely ask Congress to adopt a bill similar to the one Secretary Price proposed as a congressman in 2013—the Medicare DMEPOS Market Pricing Program Act of 2013 (MPPA). Although that bill never passed, the MPPA provides insight into Secretary Price’s views about the program and, possibly, the Administration’s views regarding same.

In short, the MPP was intended to be a budget-neutral replacement to the program. The MPP establishes supplier reimbursement rates by using a “lead bidding clearing price” reimbursement methodology. The previously expressed goal of the MPP is to collect data from a limited number of suppliers, in a limited number of areas, and on a limited number of products to ensure that the government prices DME at market rates and in the least disruptive manner to suppliers. Moreover, the MPP requires government transparency at all levels and stakeholder contribution in the design and implementation of the MPPA. For example, here is a rough example of how the MPP’s program administrator would price a hospital bed:

  1. A “lead item” would be selected from the hospital bed category. CMS would identify the lead item in each product group by selecting the item within the group that had the highest number of allowed services nationwide for a particular calendar year. For the hospital bed grouping, a semi-electric hospital bed with mattress and side rails (HCPCS E0260) has the highest number of allowed services; therefore, E0260 would be the lead item in this grouping.
  2. The other hospital beds in the grouping would be given a relative ratio to E0260. A semi-electric hospital bed without a mattress (HCPCS E0261), for example, would be included in the hospital bed grouping. E0261 would be given a relative ratio to E0260 based on the 2015 reimbursement rates. In 2015, E0260 was reimbursed at an average of $134.38 and E0261 at $124.20. Therefore, the relative ratio for E0261 would be 0.92—the non-lead item’s 2015 average fee schedule ($124.20) divided by the lead item’s 2015 average fee schedule ($134.38).
  3. In 20% of bidding areas (10% of bidding areas in subsequent bid years), each supplier interested in supplying hospital beds would be required to declare how many beneficiaries it can service within the bidding area and participate in the bidding auction. The auctioneer would start the auction in descending order with high bids first and work the price of the hospital bed (E0260) down to the point at which the number of remaining suppliers’ capacity meets the Medicare Program’s utilization demands. This is the “clearing price.”
  4. All bidders at or below the “clearing price” are required to accept a contract at the “clearing price” rate.
  5. The secretary and auctioneer would use an economic model that takes into consideration both geographic and socio-economic factors to determine the market price for hospital beds in all bidding areas that were not required to submit a bid. The reimbursement rates for supplies in those bidding areas would be set by multiplying the clearing price established in Step 3 by the relative ratios established in Step 2 while making adjustments for both geographic and socio-economic considerations.

The MPP approach would contrast starkly with the program in its current iteration. Currently, the program requires all suppliers to submit bids if they wish to participate; MPP only requires that a fraction of suppliers submit bids. The program sets reimbursement rates based on the median price of the bid winners; the MPP sets rates at the “clearing price.” The program requires bids in all product categories in each CBA; the MPP limits bids in CBAs to two product categories to be auctioned—the remaining product categories will be priced using Step 5 above. As a result, if the administration pursues changes similar to those previously proposed by Secretary Price, this new legislation would have a substantial impact on the Program. However, CMS would need to move quickly to implement a new program by 2019.

Potential regulatory changes

While waiting for Congress to act, Secretary Price might also consider regulatory alterations to the program within the bounds of the current statutory scheme. Program alterations could focus on addressing some of the key criticisms addressed above—non-binding bid submissions, low bid submissions, median pricing reimbursement methodology, and lack of transparency. These issues could be addressed, at least partially, through regulatory reforms to the Program and could include the following:

  • Require that bid submissions are binding upon the supplier. CMS’s proposal for Round 2019 required suppliers to have a surety bond of at least $50,000.00 in each CBA in which the supplier submits a bid. Although this will help alleviate some of the pressures from bad-actor-suppliers, HHS could require that selected bidders fulfill the obligations of their bids and/or that, if they fail to do so, the company and its owners (e.g., 5% or more) would be prohibited from seeking any future bids for a period of specified time.
  • Require that the Program move away from the median bid reimbursement methodology to the clearing price reimbursement methodology. As stated above, many believe adopting the clearing price methodology will remove the incentives for bad-actor-suppliers to submit unreasonably low bids. Moreover, the clearing price methodology would represent the actual price of DME goods on the market.
  • Provide exemptions for rural areas from competitive bidding or establish an enhanced payment that contemplates different delivery costs associated with serving rural markets.
  • Require that CMS adopt the lead item billing methodology. The lead item billing methodology, if modeled after the MPPA, could increase stakeholder involvement in the pricing of items. Moreover, lead item billing is touted by the industry as a process that reduces supplier bidding obligations and simplifies the bidding process. In point of fact, CMS appears to have already heard the writing on the wall. For Round 2019, CMS had proposed that hospital beds, seat lifts, support surface mattresses, transcutaneous electrical nerve stimulation (TENS) devices, walkers, and standard power wheelchair product categories’ reimbursement rates be determined by using the lead item billing methodology. But, with the current bidding process placed on hold, HHS could consider expanding the lead item billing methodology to all applicable product categories for Round 2019.
  • HHS could establish an enhanced quality metrics framework that: (1) considers bids on the basis of supplier experience and quality (e.g., suppliers with only a certain period of experience or owners and operators with that experience); and (2) evaluates bidding suppliers’ Medicare compliance programs and other quality metrics (e.g., patient satisfaction). While Medicare Part A reimbursement rules have adopted some quality monitoring metrics as a basis for payment or enhanced payment, CMS has yet to propose standards that would differentiate payments to suppliers based on quality. To date, for example, there are no differentiating factors between suppliers (e.g., the speed by which a supplier can fulfill a product, repair a product, or provide alternative options in the event of an emergency—such as back-up oxygen systems). Medicare could also evaluate credit worthiness in the same way that banks or other financial institutions evaluate borrowers. Instead, under the current approach, the CBIC assumes that if a bidder (1) meets the supplier standards, (2) meets financial requirements, (3) is not under investigation for overpayment, (4) is accredited AND has the ‘right price’—the company can be a winning supplier. Critics say that this approach has allowed several market entrants, with limited experience outside their market, to serve nationwide markets.
  • HHS could eliminate the ability to enter into subcontracts at all or limit the subcontracting to a specified % of total sales (e.g., no more than 15%). Under the current approach, there are no limits on how much subcontracting a winning supplier may engage in. This permits winning suppliers to establish vast networks with other suppliers where the winning supplier has no market presence. In addition, HHS could establish express regulations on subcontracts, financial or other solvency requirements on subcontractors, quality standards for subcontractors, or express approval of subcontractors (as opposed to the informal notification process that exists with the CBIC currently).
  • HHS could consider halting the inclusion of any additional product categories into Round 2019 bidding, and even consider removing certain product categories from the Program altogether. This approach could enable CMS to keep the current Program operable before expansion into new product areas while the Administration evaluates Program reform options.

Conclusion

Many industry advocates and stakeholders have widely discussed the fact the Program has a number of flaws. But, it is clear that HHS has many options. While CMS’ implementation of the Program was based upon statutory requirements, there are many rulemaking and implementation options to consider. As with any unwinding or a modification of a program well down the tracks at this point, HHS will need to evaluate whether to fix the train while barreling down the track or pull the rip cord entirely while looking at the fork in the tracks ahead. There appears to be little doubt that some level of changes will be proposed. The when, how much, and how deep remain to be determined. Stay tuned.

Barry Alexander, Matthew Agnew, and Emily Shaw are healthcare attorneys at Polsinelli, PC. Reach them at barry.alexander@polsinelli.com, magnew@polsinelli.com, or eshaw@polsinelli.com.

Elizabeth Hogue
attorney

CMS has selected five new recovery audit contractors (RACs) and established new rules. RAC audits will undoubtedly resume soon. Performant and Cotiviti were awarded contracts, along with HMS Federal Solutions. A previous RAC auditor, CGI Group, did not bid in the latest round of contracts for RACs. Performant will focus on auditing home medical equipment (HME), home health agency (HHA) and hospice claims.
 
CMS will continue to pay RAC auditors a contingency fee when overpayments are identified. Providers frequently point out that RACs are incentivized to find erroneous overpayments and these errors have resulted in a multi-year backlog of claims pending appeal, especially before administrative law judges (ALJs). Nonetheless, CMS announced that RAC auditors have recouped $8 billion for the federal government since the audits began in 2009.
 
Under previous rules, RACs received payments for overpayments they identified in less than 45 days. Under new rules, RACs will now receive payments for overpayments they identify only after providers have an opportunity to appeal through the second level of an appeal process that provides five stages of appeals. As a result of this change, contingency rates for payments to RACs will likely increase substantially, from the current 9.5% to 12%.
 
Also under previous rules, RACs could review claims that were up to three years old. Under new rules, claims reviewed by RACs cannot be more than six months old.
 
Audits by RACs have been on "pause" while new rules were developed and disputes about the contracting process resolved. When RAC audits resume, providers can expect more of the same, i.e., a focus on vague eligibility criteria, such as home bound status and terminal illness, which are open to broad interpretation.
 
RAC auditors are also likely to continue their focus on whether care that was provided was reasonable and necessary. Unfortunately, RAC reviewers often seem to evaluate this issue very differently than providers who are "on the ground," so to speak. It seems reasonable to require RACs to cite national standards of care to support their conclusions that care provided was not reasonable and necessary. Without such support, what constitutes reasonable and necessary care seems to be "in the eye of the beholder," which makes such determinations extremely difficult for providers to address on appeal.
 
CMS's initial meeting with new RACs is in November. Audits will begin soon thereafter.
 
As always, the "name of the game" for providers with regard to all types of audits, including RAC audits, is documentation, documentation and more documentation! Although it is an age-old "story" and most clinicians certainly know how to provide appropriate documentation, consistently excellent documentation appears to remain elusive.

Topic:

After serving our community for the past 170 years, Gulick’s Illiana Medical Equipment and Supply will be closing its doors for good by Nov. 1.

That’s correct, we’ve been serving our community since 1846! My great grandfather owned three drug stores in the Depression. To see the full history on our company, please visit http://www.gulickhhc.com.

Our decision to close was not an easy one for us to make. We have been taking care of families in our community for a long time. Some families we have been taking care of for several generations.

The decision to close was pretty much made for us in these last rounds of cuts made by Medicare—24% in January and another 24% in July. We did not think we could provide a quality service or provide quality equipment at these payment rates. There was no way we could survive delivering hospital beds for $75 a month, oxygen concentrators at $90 a month, just to name a few examples. And once Medicare establishes these payment rates, the private insurers are right behind them cutting their reimbursement by more than 48%. At those rates, we could not pay our staff, the workers’ compensation, the liability insurance, the fuel, the vehicle insurance, let alone the power bill!

Our patients are very confused and frightened about where and how they are going to get the same kind of quality service and quality of equipment somewhere else. These patients have come to depend on us for advice when they become ill and advice on where to get other services they may need. I am asked on a daily basis, “What am I going to do when you are closed?” I really don’t have answer for them.

Personally, I have been in the HME business for 38 years and this is the worst that I have seen it. Our Medicare system for HME is very confusing and burdensome for us to navigate, let alone an 84-year-old patient or caretaker or case manager at the hospital. Providers are not sure if we have enough information that supports the medical need, the doctors aren’t sure what to dictate into their notes for equipment—Medicare has made the guidelines too hard to understand, let alone actually get the information in the right format to support the medical need for the equipment. Take the oxygen guidelines, which require copies of the test signed and dated, chart notes with the test results signed and dated, the initial order with the right information signed and dated! Trying to get all this information on a Sunday afternoon is impossible.

Many patients are getting discharged from the hospital with no equipment because the HME provider is being up front with the patient telling them, “I can’t guarantee you that your oxygen or your hospital bed will get paid for.” The patients can’t afford the rental so they go home without the equipment and then 10 days later they are back in the hospital for the same reason they went in. But now the hospital can’t get paid for the re-admit because the patient hasn’t been out for 30 days. So now everyone is losing—the patient is still sick not getting better, the HME provider isn’t getting paid   because there is not enough medical documentation to support the need, and the hospital is not getting paid, either.

As we move forward, the case managers will be calling not one but several HME providers trying to find out which one provides which services and which ones will actually take Medicare as a payment source.

Service will be a thing of the past and quality equipment will also be a thing of the past. Walkers will be falling apart not long after they are issued, beds will start breaking just months into rental, and wheelchairs will have arms breaking and tires falling apart.

We are not the only HME provider closing its doors. Small providers all over the country are closing. These small providers are the backbone of the industry and provide quality care and quality equipment, but soon we will be a thing of the past.

As we close our doors, it truly is the end of an era.

Steve Gulick is the owner of Gulick’s Illiana Medical Equipment and Supply. He has been working in the HME industry for 38 years. You can reach him at stevegulick@sbcglobal.net.

Andrea Stark
reimbursement consultant, MiraVista

Editor's note: In the wake of new market pressures, upgrades, non-assigned claims and cash sales are taking center stage, says industry consultant Andrea Stark. The market has changed and your business should contemplate the suitability of these options, but they are not appropriate in all cases, she says. This is the second in a series of mini-articles that break down the top myths of filing non-assigned claims and leveraging upgrades and cash sales.

Myth #3:  Every claim can be filed as non-assigned.

This is FALSE.

The most significant roadblock to filing non-assigned is a supplier’s participation status with Medicare. You must be non-participating to file a non-assigned claim. Your participation status with Medicare can be verified at www.medicare.gov using the “find a supplier” tool. Select a product you sell for a zip code located in your service area. If there is an “M” icon next to your company name, then you are a designated participating supplier and you must accept assignment on all your claims through the end of the year. This status can only be changed by sending a letter to the NSC in December that you no longer wish to participate. Participation status is governed at the tax ID level. If you multiple lines of business (hospital, home health, etc.), and any line participates, all lines must participate.

Another obstacle pertains to patients that are dual-eligible (meaning they have Medicare and Medicaid coverage). Medicare mandates assignment for these claims if you choose to service this group of beneficiaries. You do, however, have the right to refuse service.

Another barrier to filing non-assigned applies to pharmacies. Medicare mandates that all covered drugs be filed on an assignment basis. There are very few covered medications under Medicare Part B, but aerosol medications used with nebulizers, immunosuppressive medications for organ transplant patients, oral anti-emetic drugs for chemotherapy patients, and select medications infused through a pump are some of the medications subject to mandatory assignment.

If your company can clear the three hurdles listed above, filing non-assigned may help you cross the finish line.

Andrea Stark
reimbursement consultant, MiraVista

Editor's note: In the wake of new market pressures, upgrades, non-assigned claims and cash sales are taking center stage, says industry consultant Andrea Stark. The market has changed and your business should contemplate the suitability of these options, but they are not appropriate in all cases, she says. This is the first in a series of mini-articles that break down the top myths of filing non-assigned claims and leveraging upgrades and cash sales.

Myth #1:  If an item is not coded, it does not have to be billed.

This is FALSE.

First, every “potentially covered” item has to be billed as a result of federal guidelines in the Social Security Act. If Medicare ever pays for the item, then you have to file the claim, even if you do not expect it to be covered for a specific beneficiary. This is often referred to as mandatory submission of claims: “The Social Security Act (Section 1848(g)(4)) requires that claims be submitted for all Medicare patients for services rendered on or after September 1, 1990. This requirement applies to all physicians and suppliers who provide covered services to Medicare beneficiaries, and the requirement to submit Medicare claims does not mean physicians or suppliers must accept assignment.”

Second, manufacturer product coding is generally voluntary unless mandated by the DME MAC. When coding is voluntary, the onus is on the supplier to make the best coding decision using existing codes and product characteristics. If it looks like a standard walker, acts like a standard walker and functions like a standard walker…then the claim should be filed using a standard walker HCPCS code (even if the vendor has not submitted the item for coding). However, a few items are subject to mandatory coding. Refer to the LCD for instructions and requirements for billing scenarios where mandatory coding is required by the MAC, but has not been secured by the manufacturer. Only in the event that the LCD provides for a statutory exclusion does claim filing become voluntary.

Andrea Stark
reimbursement consultant, MiraVista

Editor's note: In the wake of new market pressures, upgrades, non-assigned claims and cash sales are taking center stage, says industry consultant Andrea Stark. The market has changed and your business should contemplate the suitability of these options, but they are not appropriate in all cases, she says. This is the second in a series of mini-articles that break down the top myths of filing non-assigned claims and leveraging upgrades and cash sales.

Myth #2:  DME suppliers are bound by a “limiting charge” when billing non-assigned, and beneficiaries cannot be charged more than a certain percentage over the Medicare fee schedule allowable.

This is FALSE.

The “limiting charge” concept applies to Part B services like physician visits, but does not apply to durable medical equipment. The limiting charge restricts physician collections to a maximum of 115% of the Medicare fee schedule when they file non-assigned. Physicians are further subject to a participation penalty when they do accept assignment (non-participating physicians receive a maximum of 95% of fee schedule amounts when they do accept assignment). Neither the participation penalty nor the limiting charge apply to durable medical equipment. The CMS publication titled “Medicare Coverage of Durable Medical Equipment and Other Devices” states, “If a DME supplier doesn’t accept assignment, there’s no limit to what they can charge you.”

Wayne Merdinger
executive vice president & general manager, MK Battery

It is a sport played in 27 countries. Thousands of uniquely gifted athletes of all ages compete. Scores of spectators are amazed. It touches hearts and changes lives. Power Soccer, known internationally asPowerchair Football, enables power wheelchair users to pursue their dreams.

MK Battery showcased this exciting sport of skill at Medtrade 2014, where it was wholeheartedly embraced. The United States Power Soccer Association (USPSA), the not-for-profit governing body of the sport in the U.S., needs the help of the HME industry. MK Battery, now in its third year as the primary national sponsor of the organization, provides much-needed funding, public relations and other promotional support, but the USPSA has now taken on its greatest challenge yet as it prepares to host the largest scale international tournament ever.

The USPSA, in partnership with the Federation Internationale De Powerchair Football Association (FIPFA), which Invacare has been sponsoring for many years, is proud to bring the FIPFA World Cup of Power Soccer to the United States for the first time. The tournament, which will be streamed live over the Internet, will be held July 5-9, 2017, in Kissimmee, Fla., and will bring the 10 top-ranked teams from around the world to the largest stage they’ve ever competed on. In 2007, seven countries converged on Tokyo to compete in the first-ever World Cup of Power Soccer. Team USA was victorious and then, in 2011, they won their second consecutive World Cup, this time in Paris. The 2017 team has been training since October 2014 and is eager to defend its title on home turf.

There are approximately 60 organized teams competing in the U.S. at various skill levels. Athletes' disabilities include spinal cord injury, quadriplegia, multiple sclerosis, muscular dystrophy, cerebral palsy, and many others. Disabled military veterans are quite active in the sport, as well.

The look on a player’s face after a brilliant victory, or the emotional response of a parent watching a child compete, never fails to inspire and captivate all who witness the sport. Power Soccer affords those confined to power wheelchairs the opportunity to live their dreams of participating in a team sport, while enjoying the camaraderie and spirit of competition that had previously eluded them. The entire MK Battery organization has embraced our close association and sponsorship of the USPSA and Team USA as a truly inspirational and rewarding endeavor that we are extremely proud to be a part of. 

The World Cup will take a tremendous funding effort so I urge manufacturers and providers to step up and get involved at whatever sponsorship level makes sense for their business. I can assure you that the emotional reward and positive exposure for your company are well worth the investment. For the USPSA, grass roots engagement is also sought. For instance, providers can get involved by forming local teams or by providing “pit stop” facilities to charge batteries and make minor equipment repairs at local tournaments. No matter how you choose to participate, I can assure you that it will be a most meaningful experience for your organization.

To request a sponsorship package, please visit www.powersoccerusa.org, or contact MK Battery for more information.

I look forward to seeing you at World Cup 2017!

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