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On the Editor's Desk

by: Liz Beaulieu - Wednesday, April 4, 2018

It’s always disappointing when the HME industry’s efforts to get relief from Medicare’s competitive bidding program fail to cross the finish line. But this last time around, when H.R. 4229 failed to make the cut in a recently passed omnibus bill, it was particularly disappointing.

In the weeks leading up to the vote on the omnibus bill, I received emails from several providers asking, do you think it will happen? After the vote, the “ask” became, do you think it will ever happen?

I offered summaries of stories we’ve written chronicling the industry’s efforts, which I’m sure wasn’t anything they didn’t already know, but was the only tangible thing I could offer. That, and my shared frustration.

Following the vote on the omnibus bill, I also got a fax from a provider titled “A sad ending to a 23-year career.” The reimbursement cuts, coupled with draconian audits, has led the provider to “throw in the towel, like so many of my colleagues.”

The fax, from Juli Shogan, RN and owner of Wound Solutions, reads in full:

“I am in my 23rd year of working in the DME industry. Tonight marks the most discouraged I have ever been. One would think that after 23 years in the industry, being a registered nurse, building relationships, and providing the best customer service possible, the job would get easier—not harder.

Because of the recent and drastic Medicare cuts, I had no choice but to lay off the technician that I had employed for the previous 10 years. Now, at age 55, I am back to delivering, cleaning, repairing and servicing equipment. In addition to marketing and running the company on a day-to-day business.

I am well aware of the qualifying criteria for the products I carry. I wouldn’t pay for, deliver and spend time billing if the patients didn’t fit said criteria. I collect correct forms from physicians, along with supporting documentation. I deliver equipment to Medicare patients and cross my fingers that they w ill pay. I get one denial after another for reasons that make no sense. They deny for reasons that simply are not true and I have documentation to prove so.

I am finally throwing in the towel, like so many other of my colleagues. And, who will ultimately pay? The patients! There will soon be no companies left willing to roll the dice and hope they get paid a 65% reduced rate for buying, delivering and servicing much cheaper version of equipment because that is all they can afford to possibly make a measly profit.

Once upon a time, I was willing to jump through Medicare’s hoops, follow 27 standards and pay to be accredited because I was being adequately compensated. It is no longer worth the pit in my stomach that I feel each time I open an envelope to a denial, an unfavorable reconsideration, or a low reimbursement rate.

I hope all the money that Medicare is saving is benefitting someone? I know it has not been any benefit to those of us who provide equipment. I know that patients are not benefitting from receiving much ‘cheaper’ equipment since that is all we can afford to deliver.

This industry is in crisis. I have held on as long as I could afford to. I had hoped that some help would come my way. Things just keep getting worse with no relief in sight. I have to break the news to my local customers that one more company is bowing out. But I can’t continue to ‘donate’ my time it takes to deliver equipment and to ‘donate’ the disposables that I deliver and get denied on that I can’t ever collect.

So much for the mistaken notion of building a business and putting in the hard work early on to reap the rewards on the back side. This industry has never been so hard. I am working twice as hard for less than half the money.”

Multiply Juli’s situation by what … thousands? There are no words.

by: Liz Beaulieu - Friday, March 9, 2018

During my monthly cartoon meetings with Theresa, I’ve suggested a few times now, a cartoon wherein Rep. Cathy McMorris Rodgers, R-Wash., is depicted as Superwoman (the old-school Superwoman, the one with full sleeves and a red cape).The logo across her chest would read CMR, as AAHomecare and other industry stakeholders have begun calling her (if there’s an industry that likes its acronyms, it’s HME).

As anyone who knows Theresa knows, Theresa can be a tough crowd and she’s always shot my idea down, probably because she thinks it’s too cheesy.

But it’s not hard to envision CMR as Superwoman, especially to the HME industry. Let’s take a look, shall we, at what I’m sure is only a sample of what she has done for our little niche of health care:

  • Most recently, she spearheaded a congressional sign-on letter supported by 56 of her peers asking the Appropriations Committee to include provisions of H.R. 4229 into budget legislation.
  • Speaking of H.R. 4229, she spearheaded that, too.
  • With the industry working on bid relief through not only H.R. 4229 but also an interim final rule, she stepped in there, too, spearheading another sign-on letter, this one pressuring the Office of Management and Budget to finalize the IFR.
  • Leaving no stone unturned, she also recently organized a congressional staff briefing for AAHomecare and the American Thoracic Society, so they could share their research on the negative effects on the impact of competitive bidding.


Outside of HME, a visit to CMR’s website shows she’s also passionate about other healthcare-related issues, particularly related to veterans. She has introduced bills that would provide veterans access to their medical records at all times and direct Veterans Affairs to establish Alzheimer’s disease research, education and clinical centers.

You probably already know she sits on the influential House Energy and Commerce Committee and its Health Subcommittee, but you may not already know (unless you’re Ryan, Gallagher or Bachenheimer) that she’s chairwoman of the House Republican Conference, making her the fourth highest ranking Republican in the House and the highest-ranking woman in Congress.

The highest-ranking woman in Congress? That’s who I want behind me.

I still like the idea of CMR as Superwoman. But I also like cheese.

by: Liz Beaulieu - Friday, February 16, 2018

Some eagle eyes on twitter (I’m looking at you Woody O’Neal) noticed that the August data for our Medicare Market Marker looked like it climbed Mount Everest.

For those uninitiated, the marker tracks the number of allowed Medicare beneficiaries for five of the most popular DME products: oxygen concentrator, semi-electric hospital bed, CPAP, standard wheelchair and power wheelchair.

For oxygen concentrator, for example, the trajectory of the number of bennies looked something like this for the three most recent reporting periods:

June: 218,411
July: 290,574
August: 321,652

O’Neal commented that his own business ramped up fairly dramatically in the same time period, too.

Grasping at straws, he suggested the spike was related to the DMERCs pulling back on audits related to advanced determination of coverage.

I emailed my sources at the PDAC (the Pricing, Data Analysis and Coding Contractor), where we get the data for the marker, as well as for our HME Databank, and they responded thusly:

“Excellence question, Liz. (That means excellent question, O'Neal). I’m not sure of all the factors that may have affected the counts, but one may be due to a large number of claims adjustments as a result of the 21st Century Cures Act.”

The Cures Act, as you’ll recall, required CMS to retroactively delay a second round of reimbursement cuts that went into effect in non-competitive bidding areas on July 1, 2016, until Jan. 1, 2017, allowing HME providers to essentially recoup six months worth of reimbursement.

“P.S.,” my sources continued, “you probably noticed that on the report for September the count of beneficiaries allowed decreased substantially.”

There you have it.

by: Liz Beaulieu - Friday, January 26, 2018

I emailed Theresa on Thursday morning to say I was taking a breather from the March issue that day to work on the educational program for the HME New Business Summit. Yup, it must be nearly February.

I start allowing the thought of the Summit to enter my frontal lobe (that’s the one responsible for “high-level mental functions,” or so my Google search just told me) some time in January, and by Feb. 1, it’s go-time. By April 1, the panic attacks start setting in (joking, not joking).

So beware, in the next few months: This is when every story idea I get, every person I talk to, every article I read turns into a potential session for the Summit.

Case in point: I was talking to Robert Wilkins, the CEO of SoClean, on Thursday for a story about the company’s recent investment from DW Healthcare Partners. I had no idea of the company’s origins. Apparently, Wilkins was helping to run a company that made machines that cleaned DVDs and Blu-rays for Blockbuster when that industry started going downhill. “We saw that it wasn’t long in the tooth,” he said.

But Wilkins, who has had a hand in running 11 startups, mostly in the tech industry, felt the company was the perfect incubator—it had pick and pack, it had engineering, it had design, it had customer service. So he challenged the company to come up with different business ideas, and they came up with 15. The one that stuck: a business making CPAP cleaning and sanitizing devices.

Wilkins said he didn’t even know what a CPAP device was at the time, but when he started looking into the market, it was eye-opening.

“How big the market was, how pervasive of a problem cleaning the equipment is,” he said. “I thought, ‘There’s a true need for this.’”

As I was listening to Wilkins talk (and please do check out the story on SoClean in an upcoming HME Newswire and the March issue of HME News), I couldn’t help but think, what a great story of reinvention and redemption. You know who needs stories about reinvention and redemption? HME providers.

I also spoke with Katherine Royster, the executive vice president of business development for Classic SleepCare, on Thursday. She said Classic SleepCare was ready to close its doors when a Hail Mary decision to offshore its back-office operations to nurses in the Philippines not only saved the company but also spurred a new company, HealthScope Services Division, to offer the same services to other sleep providers. Did I mention they have private investment behind the idea?

Good stuff, right? It just may be coming to a Summit near you…well, if you live in Georgia, because the Summit will be in Savannah this year (At the DeSoto, I hear, though Rick Rector is still keeping that close to the vest for now).

If you don’t live in Georgia, don’t let that stop you from coming to the Summit. Come one, come all, and stay tuned.

by: Liz Beaulieu - Friday, January 5, 2018

The print issues of HME News are on their way to your mailboxes (if not already there), but I wanted to call your attention to page 22. Here you will find, as you do every month, The Braff Group M&A Insider. This graph and accompanying analysis are always interesting, but I found this most recent graph and accompany analysis of particular interest.

The two key takeaways from the The Braff Group’s latest contribution: 1.) M&A activity for the HME industry in the third quarter topped out at 18 transactions, its highest output since the second quarter of 2014; and 2.) that activity spanned multiple product categories (really, just respiratory and complex rehab, but in the past it has been more focused on niches like home infusion or supplies).

M&A activity has long been a harbinger of the health of the HME industry, especially when equity investors are involved (which they were in the third quarter), so this is a good sign. “You might even characterize the climate as robust,” The Braff Group said in its analysis.

Now that Medicare’s competitive bidding pricing has gone nationwide, “there is little room for substantial additional cuts,” The Braff Group points out.

Well, for Medicare, anyway. We all know eyes have turned to Medicaid (which is in the ugly position of having to implement a provision from the 21st Century Cures Act that essentially gives it no choice but to adopt bid-influenced Medicare pricing) and managed care organizations (which are ginning up their own cost-reduction schemes in the form of preferred partnerships with large distributors, or just run-of-the-mill*, across-the-board reimbursement cuts).

But as much as everyone talks about payer diversification and cash retail, Medicare is still the biggest game in town for a large number of providers, so let’s focus on this “good sign,” shall we?

Speaking of M&A, Managing Editor Theresa Flaherty caught up with the latest hire at Vertess, Eric Hymes, for our upcoming February issue. Hymes brought up another reason why M&A activity, even for HME, might be more free-flowing in the year ahead.

“They slashed the levy that companies are paying on repatriated earnings, so there’s going to be a movement of cash back to the U.S. I think it’s going to trigger a buying spree and we are going to see that in the healthcare segment.”

These days, I’ll take good signs where I can get them.

by: Liz Beaulieu - Thursday, December 14, 2017

This one’s for you, dear providers who aren’t on twitter.

AAHomecare included an item in its Wednesday in Washington bulletin this week on updated data for HME’s share of total Medicare spending. Turns out it’s down to 1.11% in 2016 from 1.22% in 2015.

The association pointed out that even way back in 2006, HME’s share of total Medicare spending was a paltry 1.6%.

The general theme here: HME spending is what they call in Washington, D.C., “budget dust.” Am I right?

AAHomecare further pointed out that while overall Medicare spending continues to climb (and let’s face it, that trend will likely continue—I’m talking about you baby boomers), HME spending has decreased 7.5% between 2012 and 2016.

I posted the above graph to twitter, and a telling exchange between providers ensued.

Here it is:

Jason Jones: When I’m working AR, I start with higher dollar amounts and worry less about those who owe very little. Why is it that Medicare hammers the 1% and ignores the rest? What do I know—I’m just a college dropout from Alabama.

Woody O’Neal: Why would they even bother?

Jamie Long: Any meeting with Congress should consist of pulling out this graph, slapping it down on the table, and walking out of the room.

Gary Sheehan: I have always used this one and it does help. “See that tiny line at the bottom, the only one going down, that’s us!”

Rusty Church: Marcus Lemonis would come into a DME business and say, “The product costs you this much, driver costs this, gas costs this, and Medicare pays you this? Are you crazy? Why are you in this business? Who created this crazy (bleep) model?”

Gary Sheehan: The other item that bears mentioning: The small line on the bottom holds the key for controlling the out-of-control growth of all the other lines.

Rusty Church: Well said.

Jamie Long: I wish there was a way to show that the growth would have been in those other areas if DME had not been gutted over the last decade. I bet that graph would look vastly different.

Thanks providers for writing this blog for me. Sure, I cleaned up some of your language and added some grammar here and there, but I couldn’t have said it any better.

by: HME News Staff - Wednesday, November 29, 2017

Here’s a look at the most read stories for 2017. I know there are still 32 days left in 2017 (who’s counting), but I couldn’t help myself (and I needed a blog topic).

The No. 1 most read story surprises me—and it doesn’t. It surprises me because it’s not competitive bidding related. On the face, it’s even what we call a “state story,” meaning it doesn’t even apply to every provider everywhere. But it doesn’t surprise me, because it’s representative of the increasing influence of managed care organizations in HME payment and policy. And when those organizations have multiple companies in multiple states, it becomes bigger than Texas or Indiana. With competitive bidding pricing now in place nationwide, this is the next front in the war on reduced reimbursement for HME.

Competitive bidding may not be the subject of the No. 1 most read story, but have no fear, it’s still well represented in this year’s list. The stories have to do with the impact of the program (41% of providers across the country have dropped Medicare or closed their doors since July 1, 2013, when Round 2 kicked off in 91 cities) and efforts to reform it (an interim final rule stuck at the Office of Management and Budget would purportedly provide relief in non-bid areas). TBH, I am surprised that no stories about H.R. 4229, which would extend a retroactive delay of a second round of reimbursement cuts in non-bid areas, made this year’s list.

There are always stories on the most read list about national and regional providers and this year’s no different, with stories about layoffs at Pacific Pulmonary and the merger of Linde and Praxair. Noticeably absent are any stories about the traditional nationals like Lincare or Apria Healthcare or Rotech Healthcare, which is probably a testament to how quiet (i.e. inactive) they’ve been.

If I had to pick one story that made the list that surprised me the most it’s No. 8.  It’s bid-related, so it had that going for it, but it was kind of an obscure story, stemming from a tweet from then HHS Secretary Tom Price. The story detailed a video made by HHS meant to support efforts to repeal Obamacare and that actually featured an HME provider who was more concerned about competitive bidding. I got tipped to the story from another provider on twitter, a good example of why it’s important to be there and interact with all of you.

Don’t get me wrong, something big could happen in the next 32 days that could impact the most read stories for 2017—namely, H.R. 4229 gets passed as part of broader legislation—in which case, I’ll happily edit and update this list.

Stay tuned.


States move to single-source more and more DME

‘They’re commoditizing this portion of health care, and it’s scary to think about how far they’ll take it’

YARMOUTH, Maine – Distributors have been picking up Medicaid contracts for incontinence supplies in a number of states for years. Now the stakes have been raised.


Tougher times ahead: Impact of rate cuts pile up

YARMOUTH, Maine – A whopping 65% of respondents to a recent HME Newspoll say they can sustain their businesses for less than a year, if they don’t get reimbursement relief.


All eyes on new bid-related rule

‘It sounds like a good thing, but we just don’t know what’s in it’

WASHINGTON – The website of the Office of Information and Regulatory Affairs and the Office of Management and Budget now shows an interim final rule pending review titled “Durable Medical Equipment Fee Schedule, Adjustments to Resume the Transitional 50/50 Blended Rates to Provider Relief in Non-Competitive Bidding Areas.”


Turmoil continues at Pacific Pulmonary

BAKERSFIELD, Calif. – Pacific Pulmonary Services will lay off 170 employees in July, according to a local newspaper.


CMS adds teeth to bid program

WASHINGTON – After several rounds of the competitive bidding program now under its belt, CMS has implemented improvements to Round 2019 that could curb the ongoing race to the bottom, say industry stakeholders.


HME infrastructure crumbles

‘I’ve been saying for a while that I think we’ve crossed the tipping point,’ says one provider

YARMOUTH, Maine – CMS set out to reduce the number of HME providers with competitive bidding and, as recent data shows, it has done just that, say providers


Linde-Praxair: Will merger have impact on HME?

MUNICH and DANBURY, Conn. – Although industrial gas giant Linde continues to dip its toe in the waters of home care, its planned merger with Praxair likely won’t have a noticeable effect on the HME industry, say M&A analysts.


Caught on tape: Criticism of bid program mixed in with criticism of Obamacare

Also, Secretary Price finally goes on record about access issues

WASHINGTON – When HHS Secretary Tom Price took to Twitter last week to post several videos of small business owners speaking on the negative impact of Obamacare, one in particular caught the eye of social media-savvy HME providers.


Pacific Pulmonary settles whistleblower lawsuit

NOVATO, Calif. – Pacific Pulmonary Services has agreed to pay $11.4 million to resolve allegations that it participated in a kickback scheme for home oxygen and sleep therapy equipment.


‘Right this wrong,’ providers tell CMS

Callers to forum outline problems related to drastic rate cuts

WASHINGTON – From Martha’s Vineyard to the Pacific Northwest, rural HME providers are struggling to survive in a post-competitive bidding world, they told CMS officials during a call March 23.

by: Liz Beaulieu - Wednesday, November 1, 2017

A Boston TV station recently ran an “I-Team” piece on a man who needed a brace after twisting his knee and who was charged nearly $700 for said brace by a local supply company because he hadn’t met his deductible.

In shock, the man Googled the brace and found it available through several online retailers for as little as $125.

Who do you think took the blame in this scenario?

You guessed it, the supply company.

It’s all become so very predictable.

There a number of things wrong with this, the first being the supply company doesn’t set fee schedules for DME, Medicare does, and more often than not, private insurers pick up those fee schedules, as appears to be the case here.

Why is the fee schedule for this particular brace nearly $700?

It might have something to do (though not entirely—I’m not naïve) with the second thing that’s wrong with this: There’s a big difference between getting a brace from a supply company vs. an online retailer.

It’s not quite apples to apples, but this reminds me of a graphic recently posted to twitter by the government relations team at VGM that compares the payment received for a pumpkin spice latte and the work involved in providing said latte, and the payment received for a nebulizer and the work involved in providing said nebulizer.

Like I said, not apples to apples, but the general idea is, being a supplier vs. an online retailer comes with additional burdens, including more often that not filling out and collecting cumbersome paperwork.

Of course, it wouldn’t be a piece involving DME without a mention of competitive bidding and how that has helped to rein in pricing (albeit, as the article points out, not for braces, which hasn’t been included in the program—yet), to which a provider responded, “Dear I-Team, interview oxygen and diabetic patients who can’t find providers due to Medicare allowables (that are drastically reduced due to competitive bidding), rather than one guy with a knee brace.”

Good point.

All of this is symbolic of the mess we’re in—a knee brace whose allowable is probably too high; an oxygen concentrator whose allowable is definitely too low.

It’s representative of the complicated problems with the healthcare system in the U.S. today, problems that go far beyond DME, which accounts for only a slim percentage of total Medicare spending.

So why is it DME’s always the easy target?

by: Liz Beaulieu - Friday, October 20, 2017

I’ve had a few conversations now where the people I’m talking to try to find the silver lining in the statistic that the number of DME locations has dropped about 40% since 2013, when Medicare’s competitive bidding program began to really gain steam.

That’s a brutal statistic and one that, when shared with members of Congress, has to be impactful in the industry’s efforts to get some relief from the bid program.

But a few of the people I referred to above like to look at it as, 60% of locations are still standing and with the bid program now in effect nationwide, if they’re still standing now, they should remain standing.

“We believe we’re in a pinnacle moment in time here,” said one person I talked to. “Forty percent of dealers have closed their doors, but the people who are in business today, they have the opportunity to be in business going forward. We don’t expect additional cutbacks.”

Of course, there are a whole host of questions that come up when considering this logic. Mainly: Just because a company is still standing now, doesn’t mean it’s not still standing with two broken legs, limping along with crutches, am I right?

There are other questions: What are the types of businesses that can remain standing and in what areas? Are they larger companies in more urban areas? Are they full-line or specialty providers?

To move on to another statistic, I’ve also had a few conversations with people about the fact that DMEPOS appeals have made up about 49% of total appeals at the ALJ level so far in fiscal year 2017. AAHomecare reported this week that as of August 2017, 591,962 appeals were pending, a 300% increase since 2016, and as of October 2017, 291,047 appeals were for DMEPOS. It’s hard to find any silver lining at all in that.

The two big questions here: How much money are these appeals costing CMS to adjudicate, especially when the majority are overturned; and how is it fair that DMEPOS, which represents about 2.3% of the Medicare budget, represents nearly 50% of appeals?

Like a lot of things these days, none of this makes a whole lot of sense.

by: Liz Beaulieu - Tuesday, September 26, 2017

We go live with 2016 data for our HME Databank on Oct. 1. I’ve been playing around in a test site this week, and let me tell you, the data ain’t pretty.

Take E1390, stationary oxygen concentrators. Total Medicare spend on this code in 2016 was $620,708,743, according to data obtained via a Freedom of Information Act request from CMS. In 2015: $903,973,456.

Before we move on to declines in spending in other DME, let me say that obtaining the data this year was more difficult than in past years. Our request for county-level data for total Medicare spend had to be forwarded from the Pricing, Data Analysis and Coding Contractor, which usually fulfills our requests easily and timely, to CMS’s FOIA office and then to the agency’s “central office.” It took months. But I’m glad to say that once it hit said “central office,” the data was released promptly. Thank you!

How about E0601, CPAP devices? Total Medicare spend was $115,903,964 in 2016 vs. $150,060,612 in 2015.

For E0260, hospital beds, semi-electric with mattress: $48,239,698 in 2016 vs. $65,522,841 in 2015.

A4235, blood glucose strips: $179,812,476 in 2016 vs. $222,324,155 in 2015.

K0823, standard power wheelchair: $32,579,043 in 2016 vs. $43,227,808 in 2015.

It goes on and on and on.

Another aside: The line above reminds me of the kid’s favorite book at the moment: “The Circus Ship” by Chris Van Dusen. Long story short, a circus ship crashes off the coast of Maine and the 15 animals aboard make their way to an island, where they surprise, and initially horrify, its human inhabitants. There’s a tiger in the tulips, there’s a lion on the lawn, there’s a python in the pantry, it went on and on and on. I highly recommend it.

Speaking of horrifying, when you combine this data with other data, such as the aging population (the number of Americans ages 65 and older is projected to more than double from 46 million today to more than 98 million by 2060), the increasing awareness and diagnosis of OSA (it’s estimated 75% of severe sleep disordered breathing remains undiagnosed), etc., it’s hard to make sense of any kind of declines at all.

What is going on here? That’s more of a rhetorical question, of course, because we all know what’s going on here. And something’s gotta give.