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On the Editor's Desk

by: Liz Beaulieu - Monday, November 12, 2012

Our HME Newspoll for the December issue takes a look at your net revenues for 2012—will they meet your expectations, will they be up or down for the year, how will they compare to last year?

We selected this topic for two reasons: 1.) With so few public companies in the HME industry, we thought this would be a god way to get a feel for the financial health of the industry; and 2.) it’s the end of year, so we thought it would be a good time to look back at 2012 and look forward at 2013.

So far, 59 providers have taken the poll, which is disappointing to say the least. (We grimace at any response below 100.)

But I hope more providers take the poll in the next two days (we kick the December issue out the door end of day on Tuesday), because what we are seeing so far is pretty interesting.

Here’s a peak at the results as of Monday morning:

Will your total net revenues for 2012 meet expectations?
Yes – 41%
No – 59%

How did your company perform this year compared to 2011?
Increased revenues – 37%
Decreased revenues – 43%
Stayed about the same – 20%

If revenues increased, by how much?
0-5% - 66%
6-10% - 20%
More than 10% - 14%

If revenues decreased, by how much?
0-5% - 68%
6-10% - 12%
More than 10% - 20%

What are your expectations for 2013?
Increased revenues – 37%
Decreased revenues – 37%
Stay about the same – 26%

I’m not going to deny that the fact that nearly 60% of respondents reporting that their net revenues for 2012 won’t meet expectations is pretty ugly, but 57% of respondents reported that their net revenues will increase or stay the same this year compared to last year. That’s a majority, albeit a slight one.

Also, for those providers who reported that they’re net revenues will decrease in 2012, 68% reported that they will decrease by only 0-5%.

Finally, 63% of respondents reported that they expect revenues to increase or stay the same in 2013. That’s an even healthier majority. And that’s in a year that the industry expects CMS to roll out Round 2 of competitive bidding in 91 cities.

With the U.S. economy, in general, having a tough year, I’d say the industry’s not doing all that bad.

Your thoughts? Chime in here.

by: Liz Beaulieu - Thursday, November 8, 2012

I love getting feedback from HME News readers, especially when they’re taking us to task.

I received an email this week from a reader who complained —very nicely, for the most part—that all of the most read stories in our Top 5 Respiratory for October were about CPAP and none were about oxygen. (We consider “respiratory” to cover both product categories.)

The reader wrote: “Could you possibly consider adding at least one non-CPAP story to the fold, as many of your readers provide more than just CPAP. We could use a story or two on O2 delivery models, innovative products and such articles that help us provide better outcomes to our oxygen patients.”

I had also noticed that all of the most read stories for October were about CPAP.

But when we pull the most read stories from Google Analytics, we don’t cherry pick. We literally go down the list of most read stories for the month and pick the stories that have to do with CPAP or oxygen.

For October, there were five stories about CPAP before we could get to any stories about oxygen.

I have several thoughts about this:

Does this happen often, or is this just an anomaly? (In the Top 5 Respiratory for September, there were three stories about CPAP and two about oxygen; in June, there were, again, three stories about CPAP and two about oxygen.)

Are there more CPAP stories in the past few months because of a major change to how providers provide supplies? (I bet when the 36-month cap went into effect for oxygen, there were stories about oxygen than CPAP.)

Are more providers talking about CPAP, because more of them are moving into that business or trying to grow the supply side of that business? (At least 75% of the stories we write, we get from talking to people with boots on the ground, not from press releases and the like.)

The reason I love getting feedback like this: Now I have oxygen on the brain. What are providers doing in this area? Like the reader mentioned, how are providers changing their delivery models, how are they improving outcomes? These are questions we’ll be asking when we make our cold calls for the January issue. (The December issue, believe it or not, is out the door early next week!)

In the meantime, two oxygen-related items that have been posted to our website in the past few weeks include this interview with Todd Anzalone at Inova Labs on competitive bidding fueling adoption for portable oxygen concentrators (POCs) and this interview with Bob McCoy of Valley Inspired Products on the changing business model for respiratory providers.

While I’m thankful for this reader’s feedback, I’m not thankful for how he closed his email:

“I know you pull this from a readership ranking but, darn, it looks like either someone on your editing staff is a former CPAP therapist or your selection is biased to your full page ResMed and Respironics advertisements.”

No, and no.

by: Liz Beaulieu - Friday, November 2, 2012

As I was listening to the Nov. 1 call about waivers for Medicare, Medicaid and CHIP providers in New York and New Jersey, I couldn’t help but wonder how this all worked out the last time we had a hurricane that caused this much damage.

Hurricane Katrina in 2005?

I made a few calls to industry stakeholders in Alabama and Mississippi, where that hurricane hit hardest. I left a lot of voice mail messages, but I was able to get Michael Hamilton, the executive director of the Alabama DME Association, on the line.

I asked him whether or not these waivers made a big difference for providers that, then during Katrina and now during Sandy, are working 24/7 to make sure their patients have the products and services they need.

Where the waivers came in handy, Hamilton said: They allowed providers to file claims without paperwork that’s usually required in advance; and they allowed providers to service patients that had relocated temporarily.

Other than that, not so much, he said.

“The process is so convoluted and complicated,” Hamilton said. “I’m not sure anyone thought it was worth it.”

At the end of the day, “most of the work was done for free or for cash,” he said.

Hamilton noted that President Barack Obama, during a speech following Hurricane Sandy, promised “No bureaucracy, no red tape” in the government’s response. That’s nice in theory, he said.

“Once they start reading the regulations and figuring out which apply and which don’t, things always get bogged down,” Hamilton said. “That’s the nature of a bureaucracy I guess.”

by: Liz Beaulieu - Tuesday, October 30, 2012

I had an interesting conversation with Bob McCoy this week. McCoy is a respiratory therapist (RT) and the managing director of Valley Inspired Products.

It turns out he’ll be giving a presentation at the AARC Congress 2012 next month in New Orleans about how RTs need to be identifying opportunities to provide value-added care in this challenging environment.

Sounds like your standard fare, right? Opportunities and challenging environment have to be three of the most frequently written words by the HME News team.

As we continued talking, however, I learned that McCoy has a different take on how he thinks these opportunities should play out, at least in the respiratory space.

Let me back up: I hear a lot from HME providers that if only lawmakers and government officials knew and understood the services they provided and the impact those services can have on patient care and outcomes, they wouldn’t be pulling the rug from underneath their feet all the time.

This is true.

But instead of trying so hard to fight the image that some lawmakers and government officials have about HME providers as drop-shippers, McCoy believes the industry should move on.

He explains:

“There’s going to be a model change. If we still have HME providers in the future, they’re going to be efficient UPS people. If you’re a typical HME provider and you’re still just doing the equipment model, you’re going to have to get real efficient at it. The models that are coming up spin off the service component. You spin off the service component, so it’s not bundled to the equipment, but it works in conjunction with your HME.”

McCoy says he’s putting his money where his mouth is with a new company called Valleyaire Respiratory Services dedicated to providing RT services to hospitals and healthcare systems to help them educate patients, improve outcomes and reduce re-admissions.

“They think hospital RTs are going to solve the problem, but it’s not going to work, because they don’t know the home,” he said. “The clinical issues and needs in the home haven’t been defined. There are no standardized procedures. There’s a wide-open opportunity to provide professional RT services in the home.”

As for reimbursement: McCoy has no problem with swapping Medicare reimbursement for hospital contracts, especially when he knows his services can help those hospitals save big money on patients with congestive heart failure and other chronic conditions.

“It’s the new frontier,” he said. “It has to happen.”

by: Liz Beaulieu - Friday, October 26, 2012

The amount of talk and activity around the market-pricing program (MPP) is really at a pitch and fever that I’ve never heard and seen before.

That’s a big deal.

I know I haven’t been around the HME industry as long as some of you, but I’ve been around long enough to remember the Hobson-Tanner bill, one of the first efforts to squash competitive bidding, which made the rounds in D.C. at least six years ago.

When it comes to the industry’s current efforts with MPP, I know there’s never too much talk and too much activity, but there was so much of it this week that we decided to do a separate roundup for our HME Newswire on Monday. (We posted it to the website today if you want to take an advance look.)

A few more things have come in post-press time, too, like another roundtable sponsored by a state association (MAMES), The VGM Group and PFQC to educate lawmakers on competitive bidding’s negative impact and on MPP as an appropriate solution.

Such as the way things are, MPP crept into a lot of the HME News TV interviews that we taped last week at Medtrade.

That’s why for the first three weeks in November, we’ll be playing interviews on HME News TV that focus on MPP and the industry’s efforts as part of an “MPP madness” special package:

Nov. 7: Tyler Wilson of AAHomecare, “Don’t leave any representative unapproached”

Nov. 14: Wayne Stanfield & Steve Ackerman, NAIMES, “Time to close the deal”

Nov. 21: Cara Bachenheimer, Invacare, “It’s crunch time”

In the days and weeks that follow, if you ever need some motivation to call your representative for the second, third or fourth time, watch one of these videos.

They’ll get you moving.

by: Liz Beaulieu - Wednesday, October 24, 2012

As users of our HME Databank very well know, we still don’t have 2011 data for Provider Share (top providers) and Product Share (product utilization), and I’m profusely sorry about this.

Believe me, I’m as upset about it as the Databank users that I’ve been talking to on a weekly, if not daily, basis.

I mean, it’s almost 2013.


For what it’s worth, I made the request for this data in May, as I always have for the past several years. Typically, it takes the good folks at the PDAC (CMS’s Pricing, Data Analysis and Coding contractor) three months to fulfill the request, which allows us to update the Databank with new data late August/early September.

Not this year, apparently.

I’ve been calling the PDAC regularly since August to ask when we’ll get the data, and every time I’m told that my request is in QA (quality assurance). This week when I called, I asked: What’s taking so stinkin’ long?

I was told that the PDAC has seen a significant increase in the number of requests for data, that many of these requests have come from “stakeholders” and that said requests from “stakeholders” must be given priority.


(I feel the need to point out, here, that we pay the PDAC to fulfill these requests. They’re not free. In fact, for the requests we file for the Databank, we have to pay in full in advance due to the size of the requests. Can you imagine all transactions worked this way?)

When I was told that the request was still in QA, I didn’t have a clear enough mind (see second paragraph above where I talk about being upset) to ask the natural follow-up question: Who are these “stakeholders”?

CMS? The Office of Inspector General (OIG)? The Government Accountability Office (GAO)? We all know there’s an unsatiated appetite for data related to health care right now.

God forbid we go into late November/early December without the new data, but if we do, the good news is that the 2012 State of the Industry Report will be included in the December issue. This will have data on the top providers across product categories and utilization for some of the most popular DME, diabetes, infusion, respiratory and mobility codes.

In the meantime, bear with me.

The HME News team got back from Medtrade last night via what turned out to be a fairly bumpy airplane ride. I felt better knowing, though, that Jim Greatorex (Black Bear Medical) was on the plane.

After helping to put together two Show Dailies in 48 hours, I'm pretty worded out.

Sooo, this blog is going to be all about some of my favorite scenes from Medtrade, like:

A tete a tete between these two HME powerhouses, Mal Mixon and Van Miller (thank you Carolyn Cole for sharing!)

A man known as the grandfather of HME, Shelly Prial, listening to the industry's newest champion, Rep. Tom Price

An exhibitor, Sky Med, taking advantage of Halloween to decorate its booth

That there were scantily clad men

To go along with the scantily clad women.

And on that note, I'm out.

by: Liz Beaulieu - Tuesday, October 9, 2012

I feel like I should apologize to many of you in advance for being missing-in-action from the HME News booth (2928) at Medtrade next week.

You see, the HME News team will be putting together the Show Dailies, which means we’ll be running around chasing stories (by we, I mean me, Managing Editor Theresa Flaherty, Associate Editor Elizabeth Deprey and Web Editor Leif Kothe), taking photos (that’ll be Production/Creative Director Glen Halliday) and polling attendees for the question of the day (that’ll most likely be Elizabeth and Glen).

When we’re not doing that, we’ll be chained to a desk in the Show Daily office, writing, laying out and proofing Show Dailies 2 and 3.

So be sure to wave hello when you see us zipping from a session like AAHomecare’s Washington Update (Wednesday, Oct. 17, from 1:30 to 3 p.m.) to an event like the welcome reception hosted by MK Battery for the consumer advocacy organizations (Tuesday, Oct. 16, Room 315, from 8 to 9:30) to the show floor (We hear Sky Med, booth 2625, will be giving out Halloween treats).

In any event, the HME News booth will be in the capable hands of Heather My-First-Name-Isn’t-Kelly Kelly, not to mention our publisher Rick Rector and our sales reps Jo-Ellen Reed and Steven Loerch.

We’ll also be taping HME News TV interviews, which will be in the capable hands of Jennifer Keirn, our contributing editor, and Shaun Clearie, our videographer. The TV studio will be at the top of the last set of escalators that you take to get down to the show floor. This year, we’re interviewing some new faces (Stephen Hodges from HME Solution) and some dynamic duos (not just Andrea Stark, but Andrea Stark and Derrick Stark).

Your best bet at finding me, Theresa, Elizabeth or Leif at the booth is on Thursday morning, when Show Daily 3 will be hot off the presses and that part of our Medtrade duties will be O-V-A.

See you next week (I hope)!

by: Liz Beaulieu - Monday, October 1, 2012

I don’t know about you, but I always have a mental checklist of things I need to worry about in my life.

This checklist runs from the mundane (did I lock the door when I left the house this morning?) to the more serious (will I get Chrone’s disease like my dad)?

I have a problem, I know.

What’s worse: I also have a mental checklist of things I need to worry about in the HME industry. I tend to think of this list more frequently on Friday afternoons—that’s when I fear those late announcements from CMS.

There are obvious things on my list right now:

What are the Round 2 single payment amounts (See note above about late announcements)?

But there are other things, too:

What’s the CBO score for H.R. 6490?

Will HME be exempted from the medical device tax?

Who will replace Phil Carter at Rotech Healthcare?

How am I going to get earnings data for Lincare now that it’s owned by Linde?

This one will be appreciated by those of you who subscribe to our HME Databank:

When will I get the 2011 data for top providers and top products? (For what it’s worth, I made my request to the PDAC at the same time I always do.)

The list goes on.

After covering the HME industry for going on eight years now, it’s more a part of my psyche than I’d like to admit—not as much as yours, perhaps, but a part nonetheless.

Let me know if there’s anything huge that I should add to my list.

by: Liz Beaulieu - Tuesday, September 25, 2012

Now that there’s a bill on the books in the House of Representatives for the industry’s market-pricing program (pop in H.R. 6490 here), it’s worth a few minutes to step back from all the hoopla (this is a big deal, after all) and review what it is you’re fighting for.

The summary below was included in email bulletins from AAHomecare, VGM and other groups this week, but I thought it was worth reprinting here in the event that you don’t belong to AAHomecare, VGM or other groups (which I frown upon highly, by the way) or in the event that said email bulletins got lost in your inbox (something that happens to me more and more frequently).

You’ll want to have this summary in hand when you lobby your members in the House to co-sponsor the bill and your members in the Senate to introduce a companion bill.

There’s enough ammunition here to put you on very firm ground with even the current program’s biggest proponents (Sen. Max Baucus, D-Mont., I’m talking about you).

I’ve heard the phrase “This is our time” used quite a bit in recent days to describe the industry’s position—not only in the fight to revise the current program, but also in the fight to make sure it plays a pivotal role in healthcare reform going forward.

You know what I like to say about time? Use it or lose it.

The Medicare DMEPOS Market Pricing Program Act of 2012


This legislation would replace the current Medicare DMEPOS competitive bidding program with a sustainable market pricing program (MPP) that is based upon sound economic principles that are embraced universally by auction experts across the country. The market pricing program would be implemented on the same timetable and apply to the same DMEPOS product categories as the current program, and it will reduce government spending for DMEPOS items nationwide. It is intended to be at least budget-neutral.

Bill Summary

Stop the Current Program

* The Round One rebid Medicare DME competitive bidding contracts and prices will continue through June 30, 2013, and then terminate (six months early), when the MPP pricing will take effect.

* In the nine Round 1 Rebid areas, the Secretary shall offer contracts to DMEPOS suppliers that submitted a bid for one or more of the Round One product categories, but whose bid(s) were rejected solely because of price considerations. Those bidders who accept a contract must accept the single payment amount in effect for the particular product category(s).

* The Secretary will take no further action to implement Round Two in the 91 new bid areas under the current competitive bidding program.

Establishment of the DMEPOS Market Pricing Program (MPP)

Use of Experts to Design and Monitor the MPP

* The Secretary shall, within two months of enactment, contract through a competitive process with an Auction Expert for the design and implementation of the MPP, and separately, also through a competitive process, contract with an expert to serve as Market Monitor for the MPP.

* Both the Auction Expert and Market Monitor may not be a current government employee, a current or former CMS employee, or a current or former CMS contractor involved in the competitive bidding programs undertaken to date by CMS.

* Both the Auction Expert and Market Monitor must have successful experience designing and implementing auctions of similar complexity in the public sector.

* The Secretary shall make available to the Auction Expert and Market Monitor all confidential information on the relevant markets.

* The Secretary and Auction Expert are required to operate the MPP with full transparency and to post on a public Internet site operated by the Secretary all information pertinent to the MPP.


* Within two months of appointment, the Auction Expert shall develop a draft auction design as the starting point for the collaborative rulemaking process.

* Within four months of appointment, the Secretary and Auction Expert shall convene a design conference to include all stakeholders, including CMS and other federal personnel, DMEPOS suppliers, beneficiaries and the DMEPOS competitive bidding Program Advisory and Oversight Committee (PAOC). The conference shall be recorded and available over the Internet.

* Within three months following the design conference, the Secretary and Auction Expert will publish the final MPP design, which, to assure transparency, shall include all financial and other qualifications for bidders, the eligible market areas and product categories to be auctioned, the protocols and timing for the conduct of the auction, the methodology by which prices will be set for the non-lead products within a product category, the methodology by which an auction price will be transferred to the same product in an economically similar eligible area in which no auction for that product was held, and an appeals process to protect suppliers.


* The auctions will commence no later than March 1, 2013.

* The auctions will consist of multiple rounds of bidding (descending price), concluding when supply (from DMEPOS providers) meets demand (expected utilization) and thereby establishing the clearing price.

* A cash deposit or irrevocable letter of credit bid bond, in an amount determined by the Secretary and Auction Expert, is required for a bidder to be qualified to participate. These deposits are returned to unsuccessful bidders and retained for the successful bidders as a guarantee of performance on the contract.

Implementation of the MPP by July 1, 2013

* MPP prices determined through the auction will be effective July 1, 2013, for all areas of the country not excluded by current law.

* The Secretary and Auction Expert will select a sufficient sampling of market areas for auction that will establish valid nationwide prices.

         •The first auction will cover a sample of at least 20 percent of the country and include a variety of geographic and socio-economic areas. Succeeding annual auctions to cover a sample of at least 10 percent of the country.

 Product Categories to Be Auctioned

* Same as in current program: oxygen, standard power wheelchairs, manual wheelchairs, enteral nutrients, CPAP, hospital beds, walkers, diabetic supplies, negative pressure wound therapy and support surfaces (Group 2).

* Secretary retains current authority to compete additional categories.

* Secretary is precluded from including in MPP adjustable skin protection cushions for wheelchairs, complex rehabilitative power wheelchairs and complex manual wheelchairs (HCPCS K0005 and E1161).

* No more than two product categories may be auctioned for exclusive contracts in any one market area (defined as a city/county/aggregation of counties).

* Any qualified and willing supplier may provide non-auctioned categories in market areas at the clearing price as determined from auctions in other market areas via MPP.

Price Determination

* A "lead product" is determined for each of the product categories.

* Other products are proportionately referenced (in terms of price) to the lead product price through a process designed by the Auction Expert with input from stakeholders.

* The "lead product" is auctioned (descending price) until supply (providers' capacity) equals demand (expected utilization).

* At this point, the "clearing price" is determined and all remaining bidders are offered, and must accept, a contract at this price.

* The Secretary and Auction Expert, using an econometric model developed from the auction process, which spans a full range of geographic and socio-economic factors nationwide, determine and announce prices for all market areas not specifically excluded from MPP.

* Prices are effective July 1, 2013, and each July 1 of succeeding years for all areas not under the two-year exclusive contracts. This process annually adjusts prices to reflect true costs and rewards the most efficient providers.

* Successful bidders (i.e. those whose bids are below the clearing price) will be offered a two year contract for that market area, and these suppliers must accept and perform the contract.

Bidding Requirements

* All bidders must provide a cash deposit or irrevocable letter of credit (LOC) from a qualified institution as a bid guarantee of good faith and ability to perform. This bond will be retained as a performance guarantee for winners and returned for unsuccessful bidders.

* The capacity of each bidder will be determined based upon the bidder's historical supply. Any new-to-the-market-area or new (start-up) suppliers having no historical supply will be assigned a standard base capacity of one percent market share.

Miscellaneous MPP Provisions

* A product-specific grandfathering period may be set by the Secretary on the recommendation of the Auction Expert with oversight of the Market Monitor, with qualified suppliers to furnish products under contract in market areas.

* Small businesses are defined as $3.5 million or less in annual revenues and shall represent at least 30 percent of total capacity in each market area.

Role and Responsibilities of the Market Monitor

* Reporting to the Secretary, the Market Monitor evaluates and reports on the design, implementation and functioning of MPP for the purpose of identifying weaknesses or problems and recommending adjustments and changes.

* The Secretary shall provide the Market Monitor with access to all confidential information on the relevant markets.

* The Market Monitor shall review and report on the draft and final auction designs and participate in and report on the designs and design conference.

* The Market Monitor shall monitor supplier performance and beneficiary experience to ensure supplier compliance with standards established in the MPP and beneficiary access to quality products and services and shall provide regular reports to the Secretary on the these matters and the overall operation of MPP.

* The Market Monitor shall provide an annual report to Congress on the development and operation of the MPP process, identifying potential problems and recommending solutions.

Other Provisions

* The PAOC is made permanent, subject to the Federal Advisory Committee Act (FACA), and terms of PAOC members extended for an additional 3 years.

* Negative Pressure Wound Therapy-Standards will be collaboratively developed in consultation with the stakeholders as part of a new appendix to the Medicare DMEPOS Quality Standards.