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On the Editor's Desk

by: Liz Beaulieu - Friday, December 14, 2018

It just occurred to me and Theresa this week, as we were pasting up the January issue (yes, in addition to writing 98% of all the stories that appear in the issue, we also lay it out using InDesign!), that 2019 is the 25th year that HME News has been in print.

25 big ones.

Theresa and I have been working at HME News since 2005 and 2004, respectively, so in other words, about half of the publication’s life.

Looking at the front page of HME News way back in 1995 is quite a trip. Remember when HME manufacturers had high-profile spokesmen, including Don Shula for “Pridehealth” in this issue? I also remember Arnold Palmer for Invacare.

Most of the other news and companies on this front page predate me—except for Sunrise, of course—but there are a number of themes that remain relevant today: mergers and acquisitions, managed care, licensure, etc.

I started down this memory lane, because I wanted to know if we have printed cartoons in our Edit Spread section from the beginning and it turns out we have. And cartoons by the same cartoonist no less: Steve Meyers, based right here in Maine.

The cartoon for that first issue in 1995 concerned audits. No one has to “remember” those; they’re still very much a problem.

I wanted to know if we’ve printed cartoons from the beginning, because one way Theresa and I would like to mark our 25th year of publishing is re-printing five of our favorite cartoons over the years. We already know one of them will be the cartoon of HME providers at a Christmas party, all wearing ugly sweaters, one of which reads: shrinking reimbursement. The little doc in that cartoon says, “Don we now our not-so-gay apparel.” It still cracks me up.

Maybe we’ll even have a contest soliciting cartoon concepts from you, our readers, and have Steve ink it up for an issue next year. What do you think? Are Theresa and I the only ones who are crazy for these cartoons (though, let me tell you, they’re easier to come up with some months than others)?

I think we’re kicking off our 25th year of publishing with a pretty good cartoon in the January. Enjoy this sneak peek.

by: Liz Beaulieu - Wednesday, November 28, 2018

“We believe we’re on the cusp of another 2012,” said Dexter Braff during a webcast today on the M&A outlook for HME.

What happened in 2012?

The number of HME deals jumped to 107, up from 71 in 2011 and 59 in 2010. The number of private equity deals also jumped, to 10, up from four in 2011 and 2010.

2012 was also one year after CMS kicked off its competitive bidding program in the country’s largest cities.

Putting two and two together: Investors thought, after the first round of bidding, that reimbursement wouldn’t go any lower, so they pressed on the gas on deals.

“They thought they knew where the space was headed and that reimbursement wouldn’t go down from where the first round settled,” Braff said.

Investors, as we know, were wrong. Subsequent rounds of bidding resulted in lower and lower reimbursement, and deal activity suffered. There were 68 deals in 2013, 61 deals in 2014, 47 deals in 2015 and 40 deals in 2016. There were four private equity deals in 2013, five in 2014 and 2015, and three in 2016.

“There was a significant retreat,” Braff said. “They saw that in subsequent rounds there were new bottoms to be found.”

So why are we on the cusp of another 2012, when deal activity was at a 10-year high?

With CMS’s plans to pause the bid program for two years, in 2019-2020, and to implement significant changes in 2021 that could actually increase reimbursement, investors are talking about HME again.

“There’s been a lot of chatter,” Braff said.

There was also an article “out of the blue” in a private equity publication in October titled: “Durable medical equipment: once shunned, now new opportunity for PE.”

“We don’t know if there’ll be (a surge in deal activity), but if you made a bet that there would be, it wouldn’t be a stupid bet,” Braff said.

You know, you can still register to watch/listen to a digital recording of the webcast here!

by: Liz Beaulieu - Friday, November 16, 2018

To help determine the focus of a recent webcast with Andrea Stark, we surveyed HME providers on an upcoming two-year gap period in Medicare’s competitive bidding program.

Before sharing the results of the survey, which surprised me, let’s talk about who took the survey. The majority of the 89 respondents, about 69%, said they were non-contracted providers. The remaining, about 32%, said they were contracted providers.

We then asked them which of the following scenarios was of most interest to them:

  • Servicing a competitive bid area during the transition
  • Exiting a competitive bid area during the transition
  • Submitting a bid in the next 24 months


The majority of respondents, about 59%, said they were most interested in servicing a competitive bid area during the transition, and about 24% said they were most interested in submitting a bid in the next 24 months.

The smallest percentage of respondents, about 17%, said they were most interested in exiting a competitive bid area during the transition.

To review: So you have mostly non-contracted providers mostly interested in servicing a competitive bid area during the transition. Put another way: Providers who have been locked out of the program for the past few years want back in.

This surprised me. When I was at Medtrade last month, in a session with Jeff Baird about the gap period, there were a lot of questions from not only contracted providers looking to exit some or all of their Medicare business but also non-contracted providers looking for reasons and rationale to stay out of it.

The stories that we’ve written so far about this show an industry fairly divided about how to operate during the gap period, when an any willing provider provision will allow any Medicare-enrolled provider to supply beneficiaries with DMEPOS. In “Expect shifts to Medicare’s provider base,” we reported that the majority of non-contracted providers, about 60%, won’t try to pick up Medicare business on Jan. 1, but the majority of contracted providers, about 67%, say they will continue to do business with Medicare.

In “Any willing provider? It’s not a unanimous decision,” we wrote about how the initial reaction of providers on the gap period and the any willing provider provision ran the gamut.

When I talked to providers at Medtrade, before the final rule had come out, no one could tell me definitively what their strategy was going to be post-Jan. 1. That supports a belief by Stark and Jeff Baird that providers won’t be making any “knee-jerk” reactions.

So we’re preparing for some wait-and-see in January, but as we get deeper into the first quarter, it will be interesting to see how this all shakes out.

Hold on. It could be a bumpy ride.

There seems to be an uptick in outsider interest in the POC market in the past few months, and it’s no wonder with Inogen’s off-the-charts financials, and Philips and Invacare dipping their toes into direct-to-consumer business models.

Whenever I’m listening to a conference call on Inogen’s most recent financial results, an analyst almost always asks CEO Scott Wilkinson about POC adoption, mainly: When will we see it take off? And Wilkinson always says the company doesn’t expect to see a “hockey stick” growth curve in adoption. More like, slow and steady.

I looked at what Medicare paid for POCs (E1392) over a 10-year period, from 2008 to 2017, using our HME databank. What I found: While the amount Medicare paid for POCs has been slow and steady from 2014-17—and for one year, 2016, a bit bumpy—when you look at the past 10 years, payments have increased a whopping 821.05% (thanks to a particularly active 2008-13).

2017:26,521,201
2016:25,369,608
2015:25,900,993
2014:23,888,362
2013:22,706,968
2012:17,895,957
2011:12,366,372
2010:8,607,453
2009:5,184,240
2008:2,879,445

When you look at the same 10-year period for stationary oxygen concentrators (E1390), Medicare payments decreased 78.27%.

2017:425,142,708
2016:620,708,743
2015:903,973,456
2014:908,279,821
2013:1,063,635,721
2012:1,225,553,358
2011:1,357,953,903
2010:1,404,413,286
2009:1,379,142,846
2008:1,956,407,246

Now, one must take into consideration the reduction in reimbursement that spread to significantly more competitive bidding areas on July 1, 2013 (Round 2) and again on Jan. 1, 2016 (national rollout). So perhaps a look at the number of Medicare beneficiaries is more fitting/telling?

For E1392:
2017:144,213
2016:128,748
2015:118,005
2014:106,763
2013:97,434
2012:76,406
2011:54,872
2010:36,478
2009:23,686
2008:13,147

That’s a whopping 1,007.69% increase in the number of Medicare bennies over 10 years.

For E1390:
2017:1,229,770
2016:1,296,213
2015:1,340,951
2014:1,389,739
2013:1,453,982
2012:1,515,990
2011:1,578,755
2010:1,592,902
2009:1,598,701
2008:1,626,872

That’s a 24.41% decrease in bennies.

A caveat: The bid program has likely impacted access to both POCs and stationary oxygen concentrators, slowing down increases for the former and speeding up decreases for the latter.

I’m interested to hear what you think. What are your take-aways?

by: Liz Beaulieu - Tuesday, October 16, 2018

For a number of reasons, I didn’t attend Medtrade last fall (husband at must-attend leadership retreat, leaving me single parenting it) or the HME News Business Summit last fall or this fall (medical emergency from hell, hurricane from hell), so it was great to see so many of you in person this week at Medtrade.

I’m talking about you Gary Sheehan of Cape Medical Supply, Joel and Josh Marx of Medical Service Co., Mike Bailey of Handi Medical Supply, Patty Mastandrea and John Sphon of MedCare Equipment, and more!

On Monday, I sat in on a number of sessions that were part of Medtrade’s competitive bidding track, including Jeff Baird’s session on the “gap period”—that 18 to 24 months when any Medicare-enrolled provider can provide DMEPOS to Medicare beneficiaries. There were a good number of questions, a sign providers are really digging into what’s best for their business. One attendee, a current contract provider, asked Baird if they could drop their Medicare business on Jan. 1, 2019, when the any willing provider provision is set to go into effect. “You have an absolute right” to do that, he told her. It’s almost as if a hush fell over the crowd.

On Tuesday, I spend the morning on the show floor, talking with mostly exhibitors. Some of the things I learned:

  • 3B Medical’s Alex Lucio says the company has sold out of its Lumin Bullet, a device that cleans CPAP hoses, even though it hasn’t even started production yet. The company expects to make the device available in December. Why is it resonating so much with providers? Two reasons: First, it’s an easier sell to CPAP users at $99 retail than a Lumin CPAP Cleaner at $249 retail; second, “Dealers are hungry for more cash items, in general,” Lucio said. “The Lumin line is outselling anything else we sell.” 3B was also talking up its first portable oxygen concentrator, the Aer, at Medtrade. It plans to make that available in January.
     
  • Ron Richard, who has been a presence in the HME industry at a number of companies, is back on the scene at Medtrade this year with a new company called AirAvant Medical, which makes the Bongo Rx, a small device that goes in each nostril and creates back pressure when users exhale. The company is positioning the Bongo Rx as a retail product that needs a prescription, and it was at the show to build a dealer network to provide the product to users. It envisions them selling the devices in a four pack, one each for 90 days. The company plans to release the results of a clinical trial in January that compares the device to CPAP devices and shows that it meets all AASM guidelines for mild to moderate sleep apnea.
     

More faces to see and more stories to hear tomorrow, including from Pride Mobility and Quantum, Apacheta, The Compliance Team, Brightree and more.

But first, another hour on the show floor, and then the Stand Up for Homecare Reception. See you there!

by: Liz Beaulieu - Tuesday, September 25, 2018

Fall always makes me think of the end of the year, and the end of the year always makes me wonder about the most read stories of the year.

I just pulled that data for Jan. 1, 2018, through today, Sept. 25, 2018, which represents roughly three-quarters of the year, and the top 10 most read stories are listed below.

As you can see, the list is dominated by competitive bidding news, and it has been a roller coaster year for the program. We wrote about—and you read about in earnest—everything from HHS’s proposal to roll out a bid process for rural areas (not just bid-influenced pricing, but an actual bid process) to CMS’s proposal later in the year to pause the program while it makes substantive changes.

We knew that Seema Verma’s acknowledgement that there are flaws with said bid program—the first time a CMS official has acknowledged as much, stakeholders say—was going to attract a lot of hits. Thanks again to Theresa for staying past 5 p.m. to listen to the conference call and file this important story.

In the wake of CMS’s proposal to pause the program and implement an any-willing provider provision, a whole new set of questions cropped up and we sought answers in a number of follow-up stories, including “Any willing provider? It’s not a unanimous decision” and “Expect shifts to Medicare’s provider base, poll respondents say.”

Now that I’ve pulled this data, it makes me think of how it will change in the next three months. I can guarantee you that one story we haven’t written yet will knock one of these stories off the list: In November, stakeholders expect CMS to publish a final rule with final bid changes.

Stay tuned.

CMS upends competitive bidding
Agency pauses program with plans to implement significant changes, including some that stem from industry recommendations
WASHINGTON – All Medicare-enrolled HME providers are back in business starting Jan. 1, 2019.

CMS’s Seema Verma: Current bid structure ‘not sustainable’
WASHINGTON – CMS Administrator Seema Verma says she wants to “modernize” the agency’s long-standing competitive bidding program for DMEPOS by instituting market-oriented reforms.

Amazon wants to disrupt health care, including DME, report says
BOSTON – DME is one of five possible points of entry for Amazon to dominate the healthcare market, according to a new report from global management consulting firm L.E.K. Consulting.

Proposed rule: Current bid contracts won’t be extended
Rule also proposes adjustments to fee schedule methodology, establish separate payment class for oxygen
WASHINGTON – A proposed rule released today seeks to make changes to the Medicare fee schedule and the competitive bidding program.

Embattled Arriva Medical closes
CORAL SPRINGS and BOCA RATON, Fla. – Arriva Medical is closing its facility in Coral Springs and laying off 142 employees, the Sun Sentinel reports.

CMS adds templates for RADs, PAPs and vents
Of the three, RADs top the improper payment rate at 63%
WASHINGTON – CMS unveiled the first drafts of clinical templates for respiratory-related items at a Special Open Door Forum April 19.

Stakeholders ‘aghast’ at bid proposal
 ‘We’ve already stripped the benefit and I don’t think there’s any more savings to be had’
WASHINGTON – Industry stakeholders say they are as surprised as anyone by a proposal to expand Medicare’s competitive bidding program to rural areas.

CMS rule falls far short of bid relief
 ‘We have to go back to Congress and tell them, you have to fix it’
WASHINGTON – The long-anticipated interim final rule landed with a thud last week, when it became apparent that it offered little in the way of bid relief, say industry stakeholders.

Any willing provider? It’s not a unanimous decision
YARMOUTH, Maine – Reaction among providers to CMS’s any willing provider provision run the gamut—with some feeling disbelief, some contemplating new opportunities, and some discounting the idea outright.

Expect shifts to Medicare’s provider base, poll respondents say
60% of non-contract suppliers, 33% of contract suppliers say they’re out
YARMOUTH, Maine – The majority of non-contract suppliers who responded to a recent HME Newspoll (60%) say they won’t try to pick up Medicare business starting Jan. 1, 2019.

by: Liz Beaulieu - Wednesday, August 29, 2018

This probably says it all: In this year’s State of the Industry Report, for our data on Medicare utilization for 2017, we decided to change the name of the column “2017 Growth” to “2017 Change.” Why? Because for several years now, the allowed charges for the majority of codes have been decreasing year over year, not increasing.

Take CPAP devices. There is an increasing, not decreasing, number of people who are being diagnosed and treated for obstructive sleep apnea, right, with awareness efforts at what I’d guess are all-time highs (thanks to everyone from the CPAP manufacturers to John Goodman’s character on Roseanne)?

Well, the allowed charges for E601 decreased about 15% in 2017 to $136.4 million.

  • Oxygen concentrators (E1390): down about 31%
  • Power wheelchair, Group 2 standard, Captain’s chair (K0823): down about 27%
  • Hospital bed, semi-electric with mattress (E0260): down about 28% (although, without mattress: up about 53%)


So what are those products that saw “growth” in 2017?

Portable oxygen concentrators, for one. The allowed charges for E1392 increased about 5% in 2017 to about $35.3 million.

Outside of POCs, supplies, in general, seem to be a product category that’s seeing growth year over year.

  • Disposable canister for pump (A7000): up about 7%
  • Tubing used with suction pump (A7002): up about 4%
  • Replacement nasal cushion (A7032): up about 3%
  • Replacement nasal pillows (A7033): up about 5.5%
  • Cushioned headrest (E0955): up about 16%
  • Tubing with heating element (A4604): up about 25%


There are a few other codes that, like cushioned headrests and tubing, saw double-digit “growth” in 2017, including:

  • EF blenderized foods (B4149): up about 24%
  • Custom fabricated wheelchair back cushion (E2617): up about 20%
  • Power wheelchair, Group 3 standard, Captain’s chair (K0849): up about 20%
  • Ultralight wheelchair (K0005): up about 24%
  • Dry pressure mattress (E0184): up about 44%


You’d think with the aging baby boomers that we’d see some more consistent, marginal increases in utilization across the board starting right about now. Actually, with the oldest baby boomers starting to turn 65 back in 2011, we should be in the thick of it.

See these numbers and more in December, when we publish the State of the Industry Report online.

by: Liz Beaulieu - Wednesday, August 1, 2018

The list of top 100 suppliers of DMEPOS by amount allowed for 2017 is in.

The top five looks like this:

Lincare, $539, 604, 080
Accredo Health Group, $475,577,257
Lincare Pharmacy Services, $277,122,027
Walgreen, $215,880, 876
Zoll Services, $212,308, 306

The top five for 2016 looked like this:

Lincare, $651,783, 993
Accredo Health Group, $482,764,158
Lincare Pharmacy Services, $290,162,919
Apria Healthcare, $224, 300, 906
Zoll Services, $204, 036, 809

So once again, we have Lincare at No. 1, albeit with an about 17% reduction in amount allowed; Accredo Health Group at No. 2, with about a 1.5% increase; and Lincare Pharmacy Services at No. 3, with an about 4.5% reduction.

A notable change from 2016 to 2017: Apria Healthcare drops out of the top five for 2017, while Walgreen moves in. Apria moved to No. 6 in 2017, with $200,648,591 in amount allowed. Walgreen had been No. 6 in 2016, with $182,037,356 amount allowed.

Apria wasn’t the only provider to drop one or more spots from 2016 to 2017. Coram Alternate Site Services dropped from No. 8 to No. 11; KCI USA dropped from No. 10 to No. 23; and Arriva Medical, which was No. 12 in 2016, didn’t make the list at all in 2017. The embattled Arriva, as you know, closed for good in 2017.

But other providers moved up one or more spots in 2017, including United Seating and Mobility (No. 16 to No. 12), 180 Medical (No. 14 to No. 9), Byram Healthcare Centers (No. 13 to No. 10), and Liberator Medical (No. 19 to No. 14).

Other providers that made the top 100:

No. 18, Option Care, $57,766,599
No. 22, National Seating and Mobility, $51,158,113
No. 24, Verus Healthcare, $45,476,878
No. 26, American HomePatient, $43,311,284
No. 38, Norco, $25,849,469
No. 46, Super Care, $21,648,832
No. 50, Binson’s, $19,658,545
No. 56, Inogen, $17,495,682
No. 57, Hoveround, $17,161,379
No. 58 Aeroflow, $16,275, 277

Check out our State of the Industry Report in December for a more complete list.

by: Liz Beaulieu - Friday, July 27, 2018

Innovation: a new method, idea, product.

You’ll find all that and more in this year’s educational lineup for the HME News Business Summit.

A new method: A hybrid business model that gives both manufacturers and providers skin in the game, yet tweaks their roles to maximize cost-savings.

A new idea: A healthcare continuum that places the patient at the center of care where they are most often, in the home.

A new product: A growing group of patient engagement tools that serve the dual purpose of improving your business and patient care.

Visiting speaker Jacob Warren, a rural healthcare expert, believes innovation, in the form of technologies like remote patient monitoring and mHealth, is the key to not only taking good care of patients in rural areas, but also fueling successful businesses in those areas.

As is the Summit way, we’ve also put M&A front and center, with The Braff Group providing a market outlook and a panel of providers making the case for why they’re buying.

Additionally, we’ll be putting industry icons Jeff Baird and Cara Bachenheimer in the hot seat to answers all your questions—and we’re guessing most of them will be competitive-bidding related.

Finally, speaker Justin Racine will be taking on the elephant in the room: Amazon.

The Summit will show you how you can inject innovation into your business today. Please consider joining us!

by: Liz Beaulieu - Thursday, June 28, 2018

The data’s starting to trickle in for this year’s State of the Industry Report (keep an eye out for it online in December!) and at least one of piece of data isn’t looking so bad.

Here is the breakdown of the number of HME companies by how much they billed Medicare for DMEPOS in 2017:

<$300K:                 80,291

$300K to $1M:        3,877

$1M to $3M:           1,093

$3M to $10M:          202

>$10M:                  54

In 2016, the data looked like this:

<$300K:                 81,286

$300K to $1M:        3,679

$1M to $3M:           921

$3M to $10M:         152

>$10M:                  55

As you can see, the number of HME companies that are really small and really big decreased (though only by 1 for the >$10M companies), but the number of companies that are in the middle increased, with the biggest increase for the $300K to $1M companies.

That the biggest increase is in the $300K to $1M companies is a little surprising, considering all the consolidating going on in the HME industry. It’s hard to make the current Medicare climate work when you’re that small, but maybe these companies are hyper-specialized?

These increases follow a steady decline in the number of HME companies, pretty much across the board, since 2011, when Medicare kicked off its competitive bidding program.

Let’s take the $3M to $10M companies as an example:

2011: 209

2012: 229

2013: 184

2014: 173

2015: 172

2016: 152

2017: 202

So for these companies, we actually see a bump in 2012, after Round 1 of competitive bidding, but starting in 2013, when the program spread to substantially more areas, it was downhill from there until 2017.

In fact, when you look at this seven-year spread, $3M to $10M companies are actually nearly back to their 2011 levels.

Stay tuned—there’s more where this came from.

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