In brief: Quipt acquisition, CVS’s new strategy, ResMed’s new board members

CINCINNATI – Quipt Home Medical has executed a non-binding letter of intent to acquire an “arm’s length” private respiratory care company servicing seven states throughout the U.S. reporting unaudited trailing 12-month annual revenues of about $14 million, $1 million in net income and positive adjusted EBITDA. 

The acquisition adds a new vertical in long-term care settings, four new states and 165 remote respiratory therapists. 

“We continue to strategically work though our robust acquisition pipeline, which has companies reflective of all three tiers of our previously disclosed acquisition strategy,” said Greg Crawford, CEO of Quipt. “This target is an extremely exciting opportunity for us to expand our operating scope to include patients with respiratory related needs in the long-term care setting, which we see as an area of significant growth for years to come. We would leverage our at home care model and anticipate numerous cost and revenue synergies.” 

Per the LOI, Quipt expects to close the acquisition for $5 million, plus a $500,000 earn out based on certain targets, payable in cash. 

Quipt also announced it is in the final stages of securing a commitment on increasing its debt facility to $100 million to primarily fund large acquisitions and to support working capital. 

CVS announces new omnichannel strategy 

WOONSOCKET, R.I. – CVS Health plans to focus on three distinct store models, including an enhanced version of HealthHUB locations with products and services designed for everyday health and wellness needs, as part of a new omnichannel pharmacy strategy. 

It will also focus on stores offering primary care services, and traditional stores providing prescription services and health, wellness, personal care and other convenient retail offerings. 

Additionally, as part of the strategy and as part of efforts to have “the right kinds of stores in the right locations,” CVS Health will close 300 stores a year for the next three years. 

“Our retail stores are fundamental to our strategy and who we are as a company,” said Karen Lynch, president and CEO. “We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence.” 

CVS Health has also named its first chief pharmacy officer, Prem Shah, to oversee the company’s new strategy. On Jan. 1, Shah and Michelle Peluso will become co-presidents of the company’s retail business, with Peluso overseeing front-store strategy and operations. 

OIG investigates payments for hospice beneficiaries 

WASHINGTON – Medicare improperly paid suppliers an estimated $117 million over four years for DMEPOS provided to hospice beneficiaries, according to a new report from the Office of Inspector General. 

Specifically, for 58% of the sampled DMEPOS items billed without the GW modifier (67 of 115 items) and 63% of those billed with the GW modifier (54 of 85 items), the items were provided to palliate or manage a beneficiary’s terminal illness and related conditions. The GW modifier indicates that an item is not related to the beneficiary’s terminal illness and related conditions. 

“Medicare pays the hospices for the DMEPOS items provided to the beneficiaries as part of the hospices’ per diem payments,” the OIG states. “These items should have been provided directly by the hospices or under arrangements between hospices and the suppliers.” 

The improper payments occurred, according to the OIG, because (1) the majority of the suppliers were unaware that they had provided DMEPOS items to hospice beneficiaries, (2) the system edit processes that should have prevented the improper payments were not effective or did not exist, and (3) the suppliers inappropriately used the GW modifier. 

The OIG recommends that CMS (1) improve the prepayment edit process by instructing the DME Medicare contractors to deny DMEPOS claims submitted by suppliers without the GW modifier for DMEPOS items provided to hospice beneficiaries; (2) implement a post-payment edit process; (3) direct the DME and hospice Medicare contractors, or other contractors as appropriate, to conduct pre-payment or post-payment reviews of supplier claims billed with the GW modifier; and (4) study the feasibility of including palliative items and services not related to a beneficiary's terminal illness and related conditions within the hospice per diem. 

CMS concurred with the first and third recommendations but did not concur with the second and fourth recommendations. The OIG maintains that the second recommendation is valid, but it has revised its fourth recommendation.  

Quinlan’s Pharmacy hosts candidate 

MONTOUR FALLS, N.Y. – Quinlan’s Pharmacy in November hosted an event with Joe Sempolinksi, who is running to replace Rep. Tom Reed, R-N.Y., who is not seeking another term in 2022. John Quinlan and other stakeholders discussed their concerns, including the need to extend reimbursement for non-rural and rural areas, and to establish new rates for competitive bid areas due to increased costs of equipment, PPE, surcharges and labor. “I was very impressed with candidate Sempolinski and the two hours he took listening, asking questions, taking notes and trying to understand what is happening to health care access in his potential rural N.Y. district,” said John Gallagher, vice president of government relations for VGM Government Relations. The event was well attended by a diverse group of health care providers, including not only pharmacies and DME providers, but also hospital administrators and nursing agencies. 

NSM responds to supply chain disruptions 

NASHVILLE, Tenn. – National Seating & Mobility says it is doing “everything we can” to navigate supply chain challenges that are impacting the company’s ability to provide products and services to customers. “The slowdowns are caused from a range of challenges, including timing to bring parts and products into the U.S., availability of raw materials, transportation constraints and labor limitations,” NSM stated in a letter to clients. “We are doing everything we can to navigate these challenges, including working with our suppliers and logistics providers to understand where they are experiencing delays to minimize the impact on our customers’ orders.” NSM says it is managing all orders to ensure it is meeting clients’ needs as quickly as possible, and it encourages clients to check the status of active orders at www.mynsmorder.com. 

ResMed names Microsoft, Google execs to board 

SAN DIEGO – ResMed has elected Desney Tan and John Hernandez, both digital health leaders at leading tech companies, to its board of directors. “We’re pleased to welcome Desney Tan and John Hernandez to ResMed’s board,” said Peter Farrell, ResMed’s founder and board chairman. “We are fortunate to leverage their expertise in digital health and health economics outcomes research as we continue to expand our leadership in digital health and improve the lives of millions of people around the world.” Tan is vice president and managing director for Health and Life Science R&D at Microsoft, where he’s worked in various research roles since 2004. He is the named inventor on more than 100 granted patents and is the author of numerous academic publications on topics relevant to ResMed’s long-term strategy, such as artificial intelligence, machine learning and human-computer interaction. Hernandez is clinical director and head of clinical research, health economics and outcomes research at Google. Over the past 20 years, he has led similar work at Verily, Abbott Laboratories and Boston Scientific Corporation. He lectures frequently on topics relevant to ResMed’s long-term strategy, such as digital health, real-world evidence strategies and value-based payment systems.  

PE firm recaps StateServ Medical 

NEW YORK – WindRose Health Investors, a New York-based private equity firm, has completed the recapitalization of StateServ Medical, a provider of DME benefit management solutions to the post-acute care market. WindRose partnered with StateServ’s executive team to recapitalize the business and to provide additional capital to support future growth, accelerating the next phase of the company’s expansion. "We are excited to partner with WindRose as StateServ enters its next phase of growth," said Paul DiCosmo, StateServ's CEO and co-founder. "We believe that our partnership with WindRose will further empower us to continue to drive meaningful value for our customers while developing additional solutions to address the complex needs of the post-acute care community and their patients. With the post-acute care industry at an inflection point, we believe that WindRose's experience and relationships will help us to capitalize on the opportunities that are ahead of us." Through a national network of 2,300 DME provider locations and 34 company owned direct service locations, StateServ offers a technology enabled DME cost containment solution to more than 600 customers in the hospice, PACE and skilled-nursing markets. Terms of the transaction were not disclosed.