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On the Editor's Desk

by: Liz Beaulieu - Friday, December 6, 2019

As I was pulling the most read stories for this year, I was struck by the number of stories with unfinished business.

The No. 1 most read story was the news that Drive DeVilbiss was struggling under $600 million in debt, as reported in the Wall Street Journal. Also cracking the top 15 (see below) was a subsequent story about providers going on alert about possible changes at Drive DeVilbiss due to its debt, and a story about the company securing $35 million in new capital, as well as a reduction in cash debt service obligations. Not making the top 15, but still well read, was the news just last month that Drive DeVilbiss CEO Bob Gilligan had stepped down and Robert Size had been named the company’s new leader. With the infusion in capital, along with better rates, not to mention a new CEO, there’s a lot that may happen yet at Drive DeVilbiss in 2020.

Other manufacturers also dominated the most read stories of 2019, including Inogen entering the ventilator market with its acquisition of New Aera, a story that will have more color and context in 2020.

(A manufacturer that was surprisingly missing from the most read stories of 2019: Invacare. The company made the list last year for, along with Philips, going direct to cash-paying consumers for its portable oxygen concentrator. With its looming goal of $85 million to $105 million adjusted EBITDA run-rate by the end of next year, however, I wouldn’t be surprised if the company returns to the most read list in 2020, as it makes moves to hit its target.)

Stories about AdaptHealth’s merger and subsequent IPO also made the list of most read stories in 2019—another story, like Inogen’s, that will have more color and context in 2020. The company is actively consolidating the market, acquiring six companies since July, and expanding its product portfolio, acquiring McKesson’s supply business just last month. All eyes are on AdaptHealth, the first new public HME company in years—not just within the industry but also among investors (I got a call from one of them just this week).

But perhaps the biggest piece of unfinished business in 2019 is competitive bidding. Stories about vents and braces being added to Round 2021 and the industry’s increased education efforts, including a bid calculator, made the list of most read stories this year. I expect CMS’s plans to announce new payment amounts in the summer to be one of the most read stories, if not the No. 1 story, of 2020.

1.)   Drive struggles 600M debt
2.)   Providers cite frustration CareCentrix
3.)   Providers watch changes at Drive DeVilbiss
4.)   ResMed nears settlement of years-long investigation
5.)   Drive DeVilbiss secures additional runway
7.)   Inogen targets non-invasive vents
8.)   Bioscrip OptionCare to merge
9.)   AdaptHealth announces high profile merger
10.) Round 2021 new calculator highlights bid ceiling, comparisons
11.) Vents braces in for Round 2021
12.) Lincare has bought Southwest provider
13.) CPAP supplies OIG adding another layer of scrutiny
14.) Inogen hits bumps
15.) AdaptHealth becomes public company

by: Liz Beaulieu - Friday, November 1, 2019

Ask most anyone at Medtrade earlier this month, and they’ll tell you there was something in the air.

Sure, questions over competitive bidding loomed, but there was a feeling that, while the industry has experienced significant attrition in the past few years, those providers that remain are on solid ground, if not motivated to be on solid ground.
The data in this year’s State of the Industry Report, which will be published on our website in December, seem to reflect that perception.

First, there’s overall DME growth by category. All categories, with the exception of medical/surgical supplies, saw an increase in allowed charges from Medicare in 2018, with total allowed charges of $5.7 billion vs. $5.1 billion in 2017. Of particular note was the wheelchairs category, which saw a 10% increase in 2018 vs. 2017. In fact, when you compare 2018 data to the previous five-plus years, one might even call it a small rebound, though still far below 2012 levels ($8.1 billion), the year before competitive bidding expanded significantly in 2013.

Second, there’s the number of providers in the $3 million to $10 million range, and the number of providers in the $10 million and up range—they increased 16% and 6%, respectively, in 2018 vs. 2017. I recently talked to Bernie Lambrese, who is rebuilding his consulting business, and he said what the providers left in the market need to do is get bigger. Simple as that.

Third, there’s the list of top 100 providers of DMEPOS and their allowed charges from Medicare in 2018. While there wasn’t much jockeying in this year’s list compared to last year’s—the top four companies remained the same: Lincare, Accredo, Lincare Rx and Walgreen—there was an increase in their allowed charges in 2018. Lincare saw a 19.6% increase; Accredo, 6%; and Walgreen 7.4%. Of the top four, only Lincare Rx saw a decline, 7.4%. Beyond the top four, Apria Healthcare, in the No. 5 spot, saw a healthy 6.5% increase.

Of course, another reason for the good buzz at Medtrade: The changes to the bid program for Round 2021. Everyone hopes the industry will see increased single payment amounts when they’re released next summer, but as the saying goes, hope is not a strategy.

It’s time to act—whether it’s shifting your business model or advocating for changes on Capitol Hill or, ideally both—and the attendees at Medtrade were doing just that.

by: Liz Beaulieu - Thursday, October 10, 2019

I already wrote a story overviewing the HME News Business Summit, but here are some snapshots that, while they landed on the cutting room floor for that story, are still too important not too share.

The return of TPAs

AAHomecare’s Laura Williard hinted at the Summit that we’d be seeing a resurgence of managed care organizations using third party administrators—and not just in Florida.

And voila, just a few weeks later, Sleep Solutions in Michigan sent out an alert to its customers who are BCBS PPO members that the insurer has hired Northwood, a TPA, to manage their HME needs.

As a result of the change, Sleep Solutions warned customers that they may experience access issues (fewer HME providers can now offer products and service to these members) and they may experience reduced services (providers will be forced to re-evaluate what they offer due to reimbursement cuts).

A few years ago in Florida, you’ll recall how the now defunct Univita Health served as a TPA for 10 of the 14 plans participating in the state’s Medicaid managed care program, as well as an HME provider. Univita eventually lost the contracts and filed for bankruptcy, leaving providers in the lurch.

In response to the news in Michigan, Woody O’Neal, a provider in Alabama, commented on twitter: “Just terrible…TPAs, PBMs, all looking to do one thing…profit off the volume of transactions and add nothing to the patient experience. TPAs proliferated in the late 80s on workers compensation cases and now are in the mainstream commercial plans. Just frustrating.”

Stay tuned.

Time to stake your territory

I think everyone agrees that more health care is moving outside the walls of hospitals. How that manifests itself and how that care is paid for are the elephants in the room, but it’s going to happen. It is happening!

At the Summit, Dr. William Zafirau, who leads the Cleveland Clinic’s Center for Connected Care, which brings together all of the clinic’s home and transitional care services, talked about community paramedicine as a new model of care. He talked about how paramedics can treat in place, ideally with increased physician involvement, possibly through telemedicine, to prevent emergency department visits. He also talked about how they’re a good resource for connecting people with community resources.

He also talked about how paramedics may often need some HME—everything from walkers to nebulizers to home blood pressure monitors—to treat people in place.

The optimist in me responded to this with, hey, maybe there’s partnership potential for HME providers here; the pessimist in me responded with, providers need to stake their territory with hospitals for care outside of the hospital before it gets chipped away at by other providers.

Be warned.

Check out a video re-cap of the Summit here.

Check out photos from the Summit here.

by: Liz Beaulieu - Wednesday, September 4, 2019

During a conference call last week with the panelists for a session at the upcoming HME News Business Summit on investment and M&A in the HME industry, it wasn’t long before the elephant in the room came up: competitive bidding.

While there’s been an uptick in investors and M&A in the industry this year, everyone’s wondering what will happen in the time from CMS closing the bid window for Round 2021 on Sept. 18 and the agency announcing contract suppliers in the fall of 2020.
During that one-year gap, will investment and M&A continue, with the industry not knowing what the single payment amounts will be (CMS says we’ll know that in the summer of 2020) and who the contract suppliers will be?

Another possible wild card affecting investment and M&A: reimbursement in rural areas.

There are 50/50 blended reimbursement rates in those areas through 2020, but what happens after that? A bill in the House of Representatives seeks to make those rates permanent, but its fate is unknown. As one panelist pointed out: These rural areas have been seen as a haven from the bid program and a decent prospect for providers looking to buy. Will that go away?

But the thinking going into Round 2021 has always been that the industry has “hit bottom,” that the single payment amounts can’t go much lower than they already have, especially with a number of improvements to the program, like lead-item pricing (fingers and toes). Then there’s also likely to be a number of investments and M&A fueled by bets on which providers might come out on top come the fall of 2020.

There are a few other factors that might keep investors and M&A humming throughout the one-year gap, particularly related to non-Medicare payers. Panelists pointed out that they’re willing to pay top dollar for an HME company, even if it’s small, if they hold a contract that’s attractive.

This conversation got me to thinking about what providers at large will be doing during the one-year gap, not just related to M&A. What are your business plans for fall 2019 to fall 2020? Will you, for example, ramp up your non-Medicare business in case you don’t get contracts? Will you make changes to your business in preparation for possibly obtaining contracts?

Managing Editor Theresa Flaherty bets your answer will be “business as usual.”

You tell us.

I received an email recently that pointed out the amount of “negative” news stories in HME News. “I implore you to seek out more positive and uplifting news stories because if I dread visiting your site on a daily basis expecting doom and gloom, I promise your other readers feel the same way,” it read.

We wouldn’t be doing our jobs if we didn’t cover the legislative and regulatory developments often considered “negative” news. It’s true that competitive bidding and audits have dominated the headlines in the past few years, but for good reason, as these are important realities in the industry today that can’t be ignored.

But we look for and write stories of all kinds, and we’re now making more of a conscious effort to elevate some of the non-bid, non-audit stories that we write. While these stories may appear in our print issues, they don’t typically appear in our HME Newswire that goes out each Monday and, therefore, aren’t typically as visible on our website.

In a recent Newswire, for example, we did run a story about the supplies market fracturing (this could be considered “negative” news), but we also ran stories on an HME icon’s return to the industry (Jane Wilkinson-Bunch), a young professional in the industry working with a university to broaden their education to include HME and supplies (Justin Racine) and a provider that hosts a local farmer’s market each week to elevate its presence in the community and help with health and wellness (Barnes Healthcare).

We also launched a special HME Newspoll in July asking readers to share some positive and uplifting news with us. See some of your responses below.

We take reader feedback seriously and we’re always working to improve, so we appreciate emails like these.

And, as always, we can’t write about what we don’t know. Story tips are welcome!

According to a clinical study published in the Association of Rehabilitation Nurses journal, people with spinal cord injury live twice as long if they have two factors in place: 1. a sense of independence (I can do this) and 2. a sense of support (I don't know how to do this, but I know who to call). When HME providers invest in programs that offer fellowship and support to their customers, we have a tangible impact in helping our community live longer, healthier lives, in addition to the products we provide for their independence. That's why it's so wonderful to see HME providers actively engaged in community programs on a regular basis!
—Lisa Wells, vice president of marketing, Cure Medical, Las Vegas

Having been in this industry since 1984, I have literally been through the best and the worst of times. These are most definitely the worst of times. However, the brightest part of what we do is allowing people to return home to an often loving family and familiar environment. The appreciation for what we do is seen so often by our field technicians and therapists and all of the office staff when patients stop by or send kind notes and cards. That is why we stay. That is why we do what we do. Caring people, caring for people.

We do a lot of hospice business. Our delivery drivers frequently receive praise from our customers' families because of the care and understanding during a great time of emotional need.
I think the reimbursement staying the same in rural areas was a big positive for our company. Hopefully, the reimbursement doesn't decrease.

The HME industry works tirelessly to help patients live out the best quality of life in the most comfortable place, their own home. HME providers and advocates are reducing the total spend of health care for a patient by preventing costly episodes of emergency and extended care. This is why we are seeing wins at the state level, and ultimately, will see wins at the national level. I am confident the value of the HME industry will continue to be recognized with our efforts to demonstrate the good we do for patients. Our state providers have done a great job of inserting themselves into the legislative dealings of healthcare, and the result has been the elimination of sole-source provider agreements, inclusion of patient choice, and a better working relationship between the state, our health plans, and providers to achieve a better outcome.

For as bad as it gets for the industry with regard to reimbursement, regulation and legislation, at the end of the day we can still go home knowing that we made a difference in the lives of our patients. Even if it all ends tomorrow, we made a difference and made someone's life better!
—Mark Barch, MS, RRT RCP, president/CEO, PCMStexas, LLC Arlington, Texas

I'll start by saying that this is a difficult task. While insurance cuts make it difficult to meet patient needs in their homes, technology has advanced to a point where people who previously would be stuck in a healthcare facility can now be at home with their families. Technology advances have improved the quality of lives for our patients and I am proud to be a part of that.
—Tom Buchanan, RRT, vice president of clinical services, Brotherston Home Respiratory, Bensalem, Pa.

We are still in the business of taking care of people and I receive confirmation every day from my patients. They are so appreciative of what we do to make their lives better.

Making a difference. My father started the first DME company in our area back in 1978. He saw a need in our community and decided to do something to help. He always went above and beyond to see that people had what they needed. When I was young, people would ask what I wanted to do when I grew up, and I would say "I want to do what Daddy does." This is the only industry I know; I grew up in it. It makes it worth fighting to stay in business to know we've made a difference in someone's life. It is my honor and privilege to continue his legacy and help the people of our community.
—Susan Thompson, owner, Home Breathing Care, Beckley, W.Va.

by: Liz Beaulieu - Tuesday, July 2, 2019

Theresa and I met last week to talk about the stories we’re working on for our upcoming August issue. Except for a quick update on bid calculators (they’ve been downloaded 4,224 times since April 24!), we don’t have much in the way of competitive bidding related news. Which is, well, unusual.

Much of the focus by stakeholders in June has been on sign-on letters in the House of Representatives (180 signers!) and the Senate (38 signers!) asking CMS to drop non-invasive ventilators from the bid program. Which is technically bid news, but we were talking more about overarching bid news, like is there any movement in getting reimbursement relief for non-bid, non-rural areas? (The bill in the House that would do just that, H.R. 2771, has 31 co-sponsors right now, by the way.)

This got Theresa and I talking about possible angles on bid stories and staring us right in the face: the bid window opening on July 16. Which got us to talking about how providers are strategizing their bids. No one’s going to talk to us about what they’re bidding (nor should they), but we’re curious about:

  • How did providers decide what product categories to bid on, and what not to bid on?
  • How did they educate themselves on the changes to the program? Did they attend the industry’s “Bid Smart Summit” in June? Did they listen to any of the various webcasts offered?
  • When are they more likely to submit their bids? At the beginning, middle or end of the bid window? Is there an advantage to one or the other? I'm especially curious about this one: What's their bid style? To be proactive? To procrastinate?
  • How did they go about formulating their bids? Did they use the bid calculators? Did they develop their own spreadsheets?


Of course, the timing of the bid window is less than stellar, as provider Regina Gillespie pointed out on twitter this week (see above).

So what’s the scoop providers, other than that you’d like to be doing something else with your summer?

Email us (ebeaulieu@hmenews.com, tflaherty@hmenews.com), DM us on twitter (@hmeliz, @hmetheresa), call us (207-846-0600, ext 230 and 226, respectively).

Oh, and fear not, Theresa will also have an update on H.R. 2771 in the HME Newswire on July 8!

by: Liz Beaulieu - Friday, June 14, 2019

This year’s HME News Business Summit kicks off on Monday, Sept. 23, about a week after the bid window closes for Round 2021. The event is in Cleveland no less, one of the original nine competitive bidding areas.

Why is this important?

What better time, than the week after a big deadline—after spending weeks, if not months, with your noses in calculators and DbidS—to pick your heads up and take in the bigger picture.

Because, while competitive bidding has been largely all-consuming for the HME industry, there’s a dizzying amount of change going on in health care, in general, and that’s just as important.

That’s a big reason why, when we built the education program for this year’s Summit, we pulled in outside experts to provide thought leadership on the industry and its role in the continuum of care.

The keynote session will be a “fireside chat” between Josh Marx of the Medical Service Company and J.B. Silvers, a leading healthcare economist. They’ll talk about many of the themes that underly the sessions in this year’s program, including vertical integration and consumerization in health care.

Attendees will also hear from Dr. William Zafirau, who heads up the Cleveland Clinic’s Center for Connected Care, a division that brings together all home and transitional care services. How does one of the most pre-eminent healthcare systems in the country view the role of home care as medicine transitions from volume to value?

Additionally, attendees will hear from Aaron Sheedy of Xealth on digitally enabling care, and Kevin Caliendo and Matthew Taylor from UBS on potential large new players in HME.

These are speakers you’ll be hard pressed to hear from, at another industry event.

They say timing is everything. On Sept. 23, it’s time to think big.

Please consider joining us!

by: Liz Beaulieu - Monday, April 29, 2019

Is there a provider that doesn’t like a good lead? As long as it’s legal? (Which, BTW, is good question as we’ve learned from “Operation Brace Yourself.”)

I remember talking to a provider once about Inogen and the provider said the amount of advertising they do almost makes up for the fact that they’re also a competitor. Inogen has arguably done the most to raise the awareness of POCs to the point where Mr. Smith goes into an HME company asking for an Inogen. It has become the Kleenex of POCs. But Mr. Smith doesn’t necessarily want to buy from Inogen; he wants to buy from a local company; and this provider is up for the task.

So I was surprised when I was talking to providers about ResMed’s new pilot program called Oxyensure and one provider told me: “I have access to patients. I don’t need them putting up a website to help me get access to patients.”

One part of www.oxyensure.com serves as a lead-generation service of sorts for HME providers. If Mr. Smith lands on the website and wants the Oxyensure POC (ResMed’s Mobi POC re-branded) and he wants to use insurance, the website will direct him to a provider in his area who can help, if that’s what he prefers. The other part of the website serves as a direct-to-consumer service for patients who want to pay cash.

This provider believes that manufacturers that offer POCs to cash paying customers—and insurance using customers, for that matter—are barking up the wrong tree.

Once more providers adopt a non-delivery model and fold in more and more POCs into their fleet, this provider says Mr. Smith is going to choose them over a website or a telephone. Every. Single. Time. Sure, the transition isn’t happening very fast, this provider acknowledges, but it’s happening.

This is the opposite of what Inogen says conference call after conference call to discuss its latest financial results. Even when its business-to-business sales are tracking ahead of its direct-to-consumer sales, it says it’s the latter they’re banking on being the leader in the long term.

Who’s right? This POC space sure is interesting— and getting more interesting.

by: Liz Beaulieu - Monday, April 8, 2019

The title of my blog is “On the editor’s desk” and, this time of year, what’s on the editor’s desk is…a lot.

Sure, there’s the usual detritus of coffee cups, water bottles, hand lotion, gum, desk planner, ear buds and post-it notes.

But there’s also more specific detritus related to a number of big projects, specifically the HME News Business Summit, the 2019 HME Financial Benchmarking Survey and the HME Excellence Awards.

Let’s start with the Summit. I’m in the throes of putting together the educational program for this year’s Summit, Sept. 22-24 in Cleveland (there are no hurricanes in Cleveland, right?), and it’s coming together nicely, but it’s far from complete. I’ve signed up a doc from the Cleveland Clinic (on how it’s prioritizing care in the home) and I’m hoping to sign up a healthcare economist from Case Western Reserve University (on anything from the larger paradigm shifts in health care to the role of post-acute care in the value chain). I’m also chasing sessions on managed care organizations (trends in contracting and payment models); large, new entrants in health care (hello Amazon, CVS and others); and M&A and investment opportunities (with valuations up and with uncertainties in 2020, this is the year to give it your full consideration). My goal is to have the educational program complete by June 1—keep an eye out for it at www.hmesummit.com.

For the Benchmarking Survey, we’re pleased to be partnering with the VGM Group again this year. The link to the survey is now live, and you’ll be seeing us and VGM promoting the survey and asking you to complete it for the next few months. In fact, we’re going to nag and bug, because it’s that important. We got a nice bump in the number of providers who completed the survey last year, but the more providers who complete the survey, the more robust and valuable the data is. This survey is the only thing like it for the HME industry, so help us help you and complete the survey. Mark Higley at VGM says he’s going to tell providers he won’t answer any questions from providers about Round 2021 until they’ve completed the survey. He’s joking, of course, but you get the idea. The survey is open until July 17, but don’t put off until tomorrow what you can do today. Did I mention that we’ll be doing two raffles for providers who complete the survey: a free registration to the Summit in September, and a free registration to the VGM Heartland Conference in June?

For the HME Excellence Awards, we’ve made a change this year: We’ll be picking one “Provider of the Year” instead of first, second and third place winners. I can say, on behalf of myself, Publisher Rick Rector and judges Jonathan Sadock, Miriam Leiber and Lisa Wells, that this is one of our more fun projects. We’re always floored by the quality of the providers who submit applications for this award—we just wish there were more of you. We’re providing incentives for you for this, too: We’ll be doing a raffle for a free registration to the HME Databank, and we’ll be giving the “Provider of the Year” two free registrations to the Summit. The deadline to submit an application is June 4.

Hop on it y’all!

by: Liz Beaulieu - Monday, March 11, 2019

It certainly caught the attention of HME providers when CVS announced that CPAP masks would be among the products offered in three new HealthHub concept stores in the Houston area.

In a CNBC story online, there was even a picture of the CPAP masks featured in the stores, namely the ResMed AirFit series.

From what I can tell, providers have a steely resolve in the face of the announcement. Providers are still the ones providing CPAP devices and, therefore, they’re the ones with established relationships with users. They’re also, largely, the ones making sure that users remain compliant and, therefore, are the link to being able to continue their therapies.

They’re also feeling like they’ve been here before.

And they have. Way back in 2012, Philips Respironics had a pilot project with Kroger to provide the company’s masks, with prescriptions, through some of the grocery store’s pharmacies.

(What came of that pilot project? I’ve made inquiries to Philips.)

There’s one fear, however, that providers had about Kroger and they still have today about CVS. Might users be tempted to just pay cash for their supplies from a CVS, especially if they’re happy with their current mask and if they have a high deductible insurance plan?

And if CVS is successful with supplies, what makes anyone think they’ll stop there?

This is essentially the thinking of provider Andrew Trammell, who spoke with Managing Editor Theresa Flaherty for a story on the announcement.

“If you have been using the same CPAP mask for a long time, you really don’t need a whole lot of interaction,” he said. “I think CVS could absolutely be a threat.”

Of course, providers always have threats, whether it’s CVS or the growing number of online providers of not only CPAP supplies but also the devices themselves!

We're running a poll asking providers whether or not the announcement concerns them. Right now, the majority say yes, but the majority also say they think their customers will keep coming back to them. The biggest reason: their expertise.

“Unless CVS plans to employ knowledgeable personnel like an RRT to handle what is usually the No. 1 complaint of CPAP users (mask issues), I believe they’ll soon learn DME companies specialize in this type of service,” wrote in one respondent. “However, a move such as this will temporarily impact the DME world until patients figure this out.”

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