You tell us

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09/04/2019

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.