Here we are. HME providers have been bracing themselves for the moment when Round

Two of national competitive bidding would start hurtling toward imple-mentation, and the recent unveiling of Round Two’s reimbursement rates by the Centers for Medicare & Medicaid has marked that very moment.

The result of that news has been stunning. While many people expected that Round Two’s cuts would be at or near the rates of Round One’s prices, the industry was staggered by an average 45 percent cut to DME reim-bursement and an average 72 percent cut to mail-order supplies.

While the winning providers that will be offered contracts have yet to be announced, many in the industry are wondering which providers are actually the winners in this scenario — the ones that lost a signifi cant service category, or the ones that have to try and serve patients under razor thin margins.

This issue’s cover story interviews a variety of experts at the epicenter of CMS’s competitive bidding bombshell to get their reaction to Round Two’s rates; how the pricing will impact HME and healthcare as a whole; and what this news will mean for the industry’s political fi ght to stop competitive bidding and replace it with the market pricing program.

Round TwoPricing Reaction . . . . . Page 28

Round Two’s Pricing Powder Keg Rocks the Industry

March 2013Volume 20, Number 3

hme-business.com

What’s Inside:

Medtrade Product Showcase . . . . . 22

HME Mergers & Acquisitions. . . . . . 33

News, Trends & Analysis . . . . . . . . . . 8

People in HME . . . . . . . . . . . . . . . . . . 16

Auto Access’s Fast Lane . . . . . . . . . . 20

The Bariatric Market . . . . . . . . . . . . . 42

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4 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

HME Business March 2013Table of ContentsVolume 20 No. 3

6 Editor’s Note 18 People in HME

Wayne van Halem on Audits

20 Problem SolverDriving in the Auto Access Fast Lane

39 Product SolutionsMobility

40 HME Inventory

41 Classifi eds/Ad Index

41 Coming Industry Events

42 Observation Deck Understanding the Bariatric Market

8CMS drops Round Two pricing bomb; Round Two rates’ fallout already felt; Industry, CMS puts pressure on Congress over bidding; Provider poll: Round Two rates; 2011 RAC audits saved $488 million of $797 million collected; NAIMES acquires CSIHME; Essentially Women gears up for Focus on the Future 2013; Harmar opens European offi ce; and more news.

34 Mergers and AcquisitionsWhether due to funding pressures, or simple expansion and competition, HME providers will see an increase in mergers and acquisition activity. What should they know?

Cover Feature:

27 Round Two ReactionCMS’s announcement of the Round Two reimbursement rates has left the industry reeling. HMEB talks to various experts to get their insights and perspectives.

Re-Evaluating HSTAs HME providers look for addi-tional revenue, they are giving home sleep testing a second look. Can it be a viable service?

RT Obstacle CourseFourth annual respiratory therapy survey shows that industry barriers continue to hamper RTs’ future.

Respiratory OasisRSM looks at some conference and products from this month’s Medtrade Spring in Las Vegas.

4 10 13

22 Medtrade Spring ProductsThis year’s edition of the spring event might be in the Las Vegas desert, but it will serve up an oasis of home medical equipment. We showcase some of what’s in store.

ID STATEMENTHME Business (ISSN 1940-6479) is published monthly by 1105 Media, Inc., 9201 Oakdale Avenue, Ste. 101, Chatsworth, CA 91311. Periodi-cals postage paid at Chatsworth, CA 91311-9998, and at additional mailing offi ces. Complimentary subscriptions are sent to qualifying subscribers. Annual subscription rates for non-qualifi ed subscribers are: U.S. $77; Canada $147 (U.S. funds); International $187 (U.S. funds). Subscription inquiries, back issue requests, and address changes: Mail to: HME Business, P.O. Box 2166, Skokie, IL 60076-7866, email HHP@1105service.com or call (847) 763-9688. POSTMASTER: Send ad-dress changes to HME Business, P.O. Box 2166, Skokie, IL 60076-7866. Canada Publications Mail Agreement No: 40612608. Return Undeliver-able Canadian Addresses to Circulation Dept. or XPO Returns: P.O. Box 201, Richmond Hill, ON L4B 4R5, Canada.

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6 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

I admit it: I’m a sucker for the movie “Rocky.” I

went to see it at the local theater for my friend’s

birthday when I was eight years old. I have

no idea why my parents, or his would permit us

kids to witness a movie that included scenes that

resembled gladiatorial combat (i.e., “Cut me, Mick.

Go on, cut me!”) as opposed to the sweet science,

but there we sat, eyes wide, jaws agape, soaking up

every second of the action.

I like “Rocky,” because at its core, and despite

any fl aws, the fi lm tells a incredibly inspiring

sports story that throws an underdog up against

impossible odds. Some random palooka is pitted

against a titan of the ring as part of a publicity

stunt. Rocky is supposed to lose — he’s just some

random nobody. but through dogged determina-

tion and a refusal to acknowledge how much of

a joke boxing fans and afi cionados consider him,

that unassuming ex-heavy for a loan shark actually

pulls it off and redeems himself.

I think everyone in the HME industry needs to

have “Rocky” playing on a perpetual loop on his

or her DVR or DVD player, because we sorely need

some inspiration. The Centers for Medicare and

Medicaid Services have released the Round Two

bid amounts well beyond the Dec. 20, 2012 dead-

line, and the results are about as pretty as Rocky’s

face after Apollo Creed has spent several rounds

pummeling it: a 45 percent average cut to DME and

a 72 percent cut to mail-order diabetic supplies. It’s

enough to stun any provider to the point they wind

up kissing the canvas.

You can read more about the Round Two bid

rates and how they have already impacted the

industry in “News, Trends & Analysis,” starting on

page 8. Also, you can get the experts’ insights on

the bid amounts in this issue’s cover story, “Round

Two Reaction,” starting on page 28. The informa-

tion will shock you. At least, it should.

But what’s doubly shocking is providers’ current

sentiments about competitive bidding. Looking at a

couple of our recent online polls, I’m disturbed by

a couple trends I’m seeing:

A few weeks ago, HMEB ran an online poll

asking providers if they thought the industry

would be able to stop competitive bidding Round

Two before implementation in July? Only 8 percent

said, “yes” and 6 percent said it was likely, while

41 percent said it wasn’t likely and 43 percent said,

“no.” That’s 84 percent pretty much betting against

the industry.

Then we asked in an online poll shortly after the

Round Two rates were released if providers thought

their business could survive an average Medicare

reimbursement cut of 45 percent? A whopping 85

percent fl at-out replied, “no” with 4 percent saying

“yes,” and 10 percent saying “possibly.”

(Our online polling system rounds to the nearest

percentile in case you’re wondering about any

wayward percentiles.)

Those results aren’t very encouraging. They tell

me that providers don’t think they can survive

under the bid amounts — and that’s if they even

get a contract — and that they don’t think they can

do anything to stop the program in the near future.

If we truly consider competitive bidding to be

the time bomb that it is, it appears that everyone is

sticking their fi ngers in their ears and taking cover.

Now is not the time to run for our lives and fi nd a

safe spot to hide.

Now is the time to redouble our efforts in the

fi ght against competitive bidding and come out

swinging. Call your representative and Senators

and tell them that this is unsustainable. Tell them

the Market Pricing Program is the right solu-

tion and is backed by the experts. Tell them the

industry is working to develop with legislation

with Rep. Price, and that you are depending on

them to co-sponsor it when it is introduced.

Now is the time to get inspired, to stop worrying

about our chances one way or the other, and to

come out swinging.

David Kopf

Editor

HME Business

Time to Get Inspired

Round Two’s bid rates are staggering, but we must shake it off and keep fi ghting.

REACHING THE STAFFEditors can be reached via e-mail, fax, telephone, or mail. A list of editors and contact information is at www.hme-business.com.

Email: email is routed to individuals’ desktops. Please use the following form: fi rstnameinitial,lastname@1105media.com. Do not include a middle name or middle initials.

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Corporate Phone: (818) 814-5200; Fax: (818) 734-1522

Ty Bello, RCCPresident and Founder

Team@Work

Georgie BlackburnVice President,

Government Relations and Legislative Affairs

BLACKBURN’S

Sandra CanallyPresident

The Compliance Team Inc.

Dave CormackPresident and CEO

Brightree LLC

Spencer Kay President and CEOFastrack Healthcare

Systems Inc.

Michael ReinemerVice President,

Communications and Policy American

Association for Homecare

Ron ResnickPresident

Blue Chip Medical Products Inc.

Kelly J. Riley, CRT , RCP Director

Nat. Respiratory Network

Tom RyanPresident and CEO

Homecare Concepts Inc.

John ShirvinskyExecutive Director

Pennsylvania Association of Medical Suppliers

Wayne E. Stanfi eldPresident and CEO

National Association of Independent Medical Equipment Suppliers

Peggy Walker, RNBilling & Reimbursement

AdvisorUS Rehab Division

of VGM Group

Carl WillSenior Vice President,

North American HomeCare Invacare Corp.

EDITORIAL ADVISORY BOARD

President & Neal Vitale Chief Executive Offi cer

Senior Vice President Richard Vitale & Chief Financial Offi cer

Executive Vice President Michael J. Valenti

Vice President, Finance Christopher M. Coates & Administration

Vice President, Erik A. Lindgren Information Technology & Web Operations

Chairman of the Board Jeffrey S. Klein

Editor David Kopf (949) 265-1561 Associate Editor Cindy Horbrook (972) 687-6753 Group Publisher Karen Cavallo (760) 610-0800

Group Art Director Dudley Wakamatsu Director, Print Jenny Hernandez-Asandas & Online Production Production Coordinator Charles Johnson Sr. Dir., Audience Marketing Bill Ellis Dir., Audience Marketing Margaret Perry

Director of Online Marlin Mowatt Product Development

Volume 20, Number 3March 2013

Editor’s Note

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More industry intelligence is available at hme-business.com.

Developing Stories — Monitor HME-Business.com regularly to stay on top of key industry stories unfolding in March, including the results from the industry’s late-February Washington Fly-In, and our coverage of Medtrade Spring (see page 22 for a roundup of some of the top products on display at the show).

Upcoming Features — Audits aren’t going away. Watch our site for continuing coverage

of steps providers can take to help ensure they have rock-solid documentation. Also, we’ll look at where portable oxygen technology is headed and what it will be mean for respiratory providers and their patients.

We’re Being Social — HME Business is tweeting, are you reading? You can fi nd us at twitter.com/hmebusiness. We’re also on Facebook, so make sure to like our page at www.facebook.com/HMEBusiness. Follow us on both services to keep up on the latest headlines.

Voice Your Opinion — Have an opinion on how the industry is headed? Join the discussion between involved HME Business readers by posting your comments to any story on the site.

e-Source — Sign up for our weekly e-newsletter, e-Source, to ensure you stay up to date on the latest industry news, trends and developments.

Provider Polls — Participate in our regular online polls, which are always visible in the right-hand margin of our site.

See Pricing Bomb continued on page 11

The Centers for Medicare & Medicaid Services released the payment amounts on Jan. 30 for Round Two of its controversial competitive bidding program, with reimbursement rates for DME more than 10

percent lower than Round One’s rates.The payment amounts for DME supplies in Round Two have been cut by

average of 45 percent from the current fee schedule prices, according to CMS. The payment amounts for the national mail-order program for diabetic testing will be reduced by an average of 72 percent, the agency said.

A full list of the new single payment amounts can be downloaded from the Competitive Bidding Implementation Contractor (CBIC) web site at www.dmecompetitivebid.com.

The cuts will reduce costs for Medicare Part B Trust Fund by $25.7 billion and benefi ciaries $17.1 billion between 2013 and 2022, according to esti-mates made by the CMS Offi ce of the Actuary. This is in comparison to Round One rates, which reduced rates by an average of 32 percent for fi rst the nine Round One competitive bidding areas (CBAs). That resulted in reducing provider funding by $202.1 million in its fi rst year.

Under the current Round Two schedule, contract holders are slated to be announced in Spring, and the program is scheduled to begin imple-mentation in July. Round Two impacts 91 CBAs, and essentially makes the program nearly nationwide upon implementation.

The national mail-order competition is on the same schedule include all parts of the United States, including the 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa.

A statement from CMS touted the savings and said the bid process was “bona fi de” and that all providers being offered contracts met fi nancial standards and license requirements.

“This process will ensure that benefi ciaries have access to the equipment they need at fair prices,” said Jonathan Blum, deputy CMS administrator and director of CMS’s Center for Medicare. “We will continue to monitor the program closely as it expands to ensure the same success we saw in the program last year, with benefi ciaries continuing to have access to all the services they need, while paying a much lower price.”

Initial industry reaction to the news was not nearly as glowing. A state-ment from the American Association for Homecare pointed out Round Two’s low payment amounts for DME were unrealistic and, as demon-strated by Round One, are forcing providers in the affected communities to go out of business or no longer offer products or services to Medicare

CMS Drops Round Two Pricing BombDME rates slashed by an average of 45 percent, diabetic supply rates plummet by an average 72 percent cut.

benefi ciaries.“It’s ironic that a program that is supposed to increase competition

among providers is actually reducing competition, costing jobs in commu-nities, and putting Medicare patients at risk,” said AAHomecare President Tyler Wilson. “This program is spiralling out of control. Providers, consumer advocates, and economists are urgently calling on Congress to adopt a better system.”

Joel Marx, chairman of AAHomecare and chairman of Medical Service Company in Cleveland, said the rates would prove disastrous for providers

■ CMS is not basing anything on the actual median bid. The payment amounts are derived by beginning at the lowest bidders’ providable quantity … it is bottom feeding that leads to self destruction.

■ I am extremely skeptical about how CMS came up with these numbers. … I would like to see the industry force CMS to release the bids.

■ I have been in the industry for 16-plus years; owned my own DME company for 13 years. After jumping through all the hoops and doing business in a fair and honest way, I can no longer continue, and I made the decision to tell Medicare to go to he**.

■ Medicare is fast going to fi nd itself with no providers willing to do business with it. They are living in a fantasy world where the realities of running a business are completely lost on them.

■ Even at best cost and early payment discounts, we are barely covering cost now. Don’t even mention the man-hours and take-backs from audits!

■ I’ve been in this industry 30-plus years, and I feel that Medicare is heading the way of dental insurance: Lots of people have it, but nobody accepts it for payment!

■ With the cap and shrinking reimbursement we can’t afford to deliver tanks, set up homefi ll systems or put them on a POC. What option is left? I guess they will have to go to the hospital to get the oxygen that is needed. That will certainly save Medicare some money …

Join the news discussion on HME-Business.com’s story comments.

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Pricing Bomb continued from page 8

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Here we are. HME providers have been bracing themselves for the moment when Round

Two of national competitive bidding would start hurtling toward imple-mentation, and the recent unveiling of Round Two’s reimbursement rates by the Centers for Medicare & Medicaid has marked that very moment.

The result of that news has been stunning. While many people expected that Round Two’s cuts would be at or near the rates of Round One’s prices, the industry was staggered by an average 45 percent cut to DME reim-bursement and an average 72 percent cut to mail-order supplies.

While the winning providers that will be offered contracts have yet to be announced, many in the industry are wondering which providers are actually the winners in this scenario — the ones that lost a significant service category, or the ones that have to try and serve patients under razor thin margins.

This issue’s cover story interviews a variety of experts at the epicenter of CMS’s competitive bidding bombshell to get their reaction to Round Two’s rates; how the pricing will impact HME and healthcare as a whole; and what this news will mean for the industry’s political fight to stop competitive bidding and replace it with the market pricing program.

Round Two Pricing Reaction . . . . . Page 28

Round Two’s Pricing Powder Keg Rocks the Industry

March 2013Volume 20, Number 3

hme-business.com

What’s Inside:

Medtrade Product Showcase . . . . . 22

HME Mergers & Acquisitions. . . . . . 33

News, Trends & Analysis . . . . . . . . . . 8

People in HME . . . . . . . . . . . . . . . . . . 16

Auto Access’s Fast Lane . . . . . . . . . . 20

The Bariatric Market . . . . . . . . . . . . . 42

Over the past several years, oxygen providers have been hit by multiple cuts to their

funding. First the 36-month rental cap. Then there was the 9.5 percent cut from the Medicare Improvements for Patients and Providers Act. Then providers in Round One suffered reimbursement cuts, or the loss of their ability to serve patients in their competitive bidding area. And now they face taking competitive bidding essentially nationally with Round Two. (Also, we shouldn’t forget cuts to private payor funding, as well.) No matter how you slice it, things have been tough for respiratory HMEs.

But those scenarios are made tougher when you consider that those providers have had to continue to ensure that their patients comply with their oxygen therapies so that they will experience optimal outcomes. For providers that have been cutting back on therapist visits and similar high-cost elements of their care infrastruc-ture in order to compensate for the aforementioned funding cuts, that has been a puzzling brainteaser indeed.

However, some are pulling it off. Providers are leveraging product advancements, technologies, smart business practices and other strate-gies to maintain good compliance and outcomes despite the cuts. This month’s cover story talks to various providers and experts to learn more.

The Oxygen Puzzle . . . Page 24

Respiratory Providers Balance Costs vs. Compliance

December 2012Volume 19, Number 12

hme-business.com

What’s Inside:

2013 Power Mobility Preview . . . . . . 24

Five Bariatric Bath Safety Basics . . . 16

News Trends & Analysis . . . . . . . . . . . 8

People in HME . . . . . . . . . . . . . . . . . . 13

Diabetes Products Roundup . . . . . . 28

HME Inventory . . . . . . . . . . . . . . . . . . 30

Ladies and gentlemen, place your bets. The next 12 months might, or might not bring considerable

and tumultuous change to the already reeling HME industry.

The lynchpin for that turmoil: competitive bidding Round Two. If the industry can’t stave off Round Two through the passage of H.R. 6490, the bill that would replace the bid program with the industry’s market pricing program (MPP), then Round Two will undoubtedly redefine the home medical equipment industry — and not for the better. If H.R. 6490 passes, then providers still must revise their business models.

These two factors, Round Two and the MPP, sit at the top of our latest installment of HMEB’s annual Big Ten list. Besides those two pivotal trends, there are a range of challenges, strate-gies and opportunities that HME busi-ness owners must consider:

and others are evolving trends. Read our sixth annual Big Ten list to learn more about how these factors could play out in 2013.

HME Big Ten . . . . . . . . Page 20

The New Year Brings Massive Challenge and Opportunity

January 2013Volume 20, Number 1

hme-business.com

What’s Inside:

. . . . . . . . . . . . . 20

. . . . . 26

. . . . . . . . . . . 8

. . . . . 16

. . . . . . . . . . . 18

. . . . . . . 31

Cash is king. Every provider in the industry has been hearing that statement for at least

the past five years, and while it might begin to sound like a broken record, the sentiment remains true and timely.

Retail sales undoubtedly represent a pivotal opportunity for providers to drive new revenue to their bottom lines at a time when funding cuts past and present (MIPPA oxygen rental cap, standard power rental, Round One of competitive bidding), as well as future (Round Two), have slashed provider inflows. HME businesses must diver-sify, and cash sales are an effective way to help accomplish that.

Over the five years or so that providers have been hearing this message, they’ve also been gaining insights into how they can shape and implement a cash sales strategy. Publications such as this one, trade show conference sessions, consultants and webinars have all been offering methods for conducting cash sales.

But what about retail in the real world? How are these cash sales strategies actually playing out? What assumptions and lessons were right and which ones weren’t so right? And, what unexpected lessons have providers learned? This issue’s cover story interviews several providers with varying retail businesses to get a clearer picture of retail reality.

Retail Sales . . . . . . . . . Page 16

Mapping a Road Trip from Retail Theory to Practice

February 2013Volume 20, Number 2

hme-business.com

What’s Inside:

Patient Contact Technology . . . . . . 23

Accreditation Services . . . . . . . . . . . 29

News Trends & Analysis . . . . . . . . . . . 8

HME’s Advocacy Future . . . . . . . . . . 15

HME Inventory . . . . . . . . . . . . . . . . . . 30

Confronting Medicare Audits . . . . . 34

across the country.“These reimbursement rates are based on a convoluted methodology

which pits providers in a life or death situation,” he said. “The government then decides which companies survive and which are driven out of business rather than run a fair auction conducted by auction experts. The current bidding system is forcing seniors and people living with disabilities to seek medical help in emergency rooms, to be forced into nursing homes and to be hospitalized when they could be cared for at home at much lower costs.”

Round Two Rates’ Fallout Already FeltAAHomecare calling on providers to send in their experiences.

While Round Two of competitive bidding isn’t scheduled for implementation until July 1, the recently announced rates for that round, which impacts 91 competi-

tive bidding areas, are already having an effect on providers and patients.“We’ve heard from scores of providers about the detrimental impact Round Two

prices will have on their patients and businesses,” said Rachel Prager, manager of Regulatory Affairs for the American Association for Homecare. “Across the board they are saying they will be forced to cut services, close locations, and lay off workers.”

The prices, announced by CMS on Jan. 30, amounted to an average cut of 45

percent for DME items in the 91 new metropolitan areas subject to the botched bidding program. In addition, diabetic testing supplies in the national mail-order program will be cut by an average of 72 percent.

“Patients who live in sparsely populated areas or are strictly homebound will have limited or no alternatives to receive the care upon which they depend,” Prager added. “CMS has displayed a lack of understanding of the needs of homecare patients and the costs of running a business that provides critical patient care.”

To help get a clear idea of how Round Two is already impacting the industry and the patients for which it cares, AAHomecare is collecting provider accounts that it will share with lawmakers on Capitol Hill to help illustrate the effects of Round Two before the program is implemented.

Providers are being asked to send their stories to CBRound2Problems@aahomecare.org. Providers should indicate in their messages whether they would be willing to let the association share their name, company and Round Two experience with members of Congress, other government offi cials, and the media.

Specifi cally, the association is asking providers to send the following information, but to remember to remove any information that might violate privacy laws:• Data on how their business will be affected by these rates, including possible staffi ng

changes, closures, and consolidations.• Data on how their benefi ciaries will be impacted. Will many of them be required to

change providers; how far from those providers do benefi ciaries live; will benefi cia-ries end up paying more or paying out-of-pocket for the equipment they require?

• Anecdotes highlighting the data submitted. Putting a face and name with the data will help the association drive the message home to members of Congress and CMS offi cials that these reimbursement cuts will have an extremely detrimental effect on benefi ciary access to homecare and income, regardless of what CMS claims in public statements and press releases.The association is also encouraging providers to carbon copy their Congress

members on the email, or call them via the Capitol Switchboard at (202) 224-3121.“Remember, the most compelling stories lawmakers hear are told by constituents,”

a statement from AAHomecare read. “The more stories we collect, the stronger our message.” ■

12 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

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Provider Poll:Round Two Rates

Results from a recent hme-business.com survey

The Centers for Medicare and Medicaid dropped its bombshell that the bids were in, tabulated and the

rates were ready: DME reimbursement was slashed by an average of 45 percent and mail-order supplies were gutted by an average of 72 percent. While it defi es logic that any business could sustain such a signifi cant revenue hit, we wanted to get providers’ take, and it is clear they feel the same. Very few in the industry think the Round Two rates are sustainable.

Note: Due to the open nature of the Web, the results of this and other hme-business.com polls are instant opinion tallies and are not scientifi c.

Shortly after the release of the Round Two bid rates, which included massive average cuts of 45 percent to DME and 72 percent to mail order diabetic supplies, both industry advocates and the Centers for

Medicare and Medicaid services worked overtime to win over Congress.The American Association for Homecare met with House and Senate

lawmakers in February regarding Round Two of competitive bidding, both in terms of helping lawmakers get answers from CMS, as well as to impress upon Congress members that the program will negatively impact U.S. healthcare as a whole.

Meanwhile, representatives of CMS met with Congressional health staff at what the National Association of Independent Medical Suppliers reported was a “packed” meeting to answer staff’s questions about the program.

Also, AAHomecare’s team of in-house government affairs experts and a lobbying fi rm employed by the association have met with and contacted House and Senate offi ces to voice alarm over the Round Two prices announced last week and about the overall harm to the homecare commu-nity caused by the current bidding program.

The Association said it also is evaluating a court challenge, and is hiring a law fi rm to review the competitive bidding law and the actions taken by CMS to determine whether there is a basis for a legal challenge. The association said it will carefully assess whether CMS has met the requirements of the

competitive bidding statute and the implementing regulations. Legal experts will also investigate all constitutional arguments and every other opportunity to shine a bright light on the program and get it reviewed by the courts.

Negative Reaction to CMS?While AAHomecare lobbied lawmakers, early reports of CMS’s meeting with Congressional staff could indicate that CMS might have done itself more harm than good.

NAIMES reported that unnamed sources indicated to the association that House healthcare policy staffers were “very disgusted, angry, and frustrated to the point of walking out” due to a lack of substantive answers provided by CMS representatives.

“[A] Health LA from one offi ce expressed anger and irritation at CMS’ lack of response to almost any questions asked, and arrogance from CMS staff,” NAIMES reported. “Answers to questions were often condescending and lacked any facts beyond published propaganda.”

While those reports from LAs continue to come into focus, one fact that is clear is that providers have a considerable amount of work to do in order to advance the industry’s market pricing program (MPP) as a means to replace competitive bidding.

Washington Fly-InTo launch that work, the VGM Group, The American Association for Homecare, and the National Association of Independent Medical Equipment Suppliers were, at press time, were readying an

See Congressional Pressure continued on page 10

Industry, CMS Puts Pressure on Congress Over BiddingBoth sides push their respective agendas amid maelstrom of Round Two pricing worries.

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Congressional Pressure continued from page 11

industry-wide Washington Fly-In scheduled for Feb. 26 and 27. To start the campaign, the industry was scheduling in-district meetings

with members of Congress, during their Congressional recess, from Feb. 18 to 22. Providers were being called upon to take advantage of lawmakers’ time in their home districts to meeting with Congress members and relate fi rst-hand accounts of the negative impacts of competitive bidding.

That was to be followed by the Feb. 26 and 27 Washington Fly-In. The

various state and national associations were organizing meetings and devel-oping talking points and leave-behind materials as the issue was going to press.

Additionally, to support the Fly-In, a Shutdown the Switchboard effort was scheduled to concurrently run Feb. 26 and 27, as well. Providers were being called upon to encourage their referral sources, patients, employees and even family to call the Capitol switchboard at (202) 224-3121, to get connected with their legislators, and urge those lawmakers to put a stop to the current bidding program. ■

Medicare Recovery Audit Contractors (RACs) corrected $939.3 million dollars worth of claims during 2011, but suffered an 44 percent overturn rate on ap-

peals, according to “Recovery Auditing in the Medicare and Medicaid Programs for Fiscal Year 2011” a report sent by HHS to Congress.

Some key fi ndings from the report:• Recovery Auditors identifi ed and corrected $939.3 million in improper payments.• There were $797.4 million collected overpayments and $141.9 million identifi ed

underpayments that have been paid back to providers.• DME accounted for more than $34 million in overpayments and just over $12,000 in

underpayments.• CMS spent $129.4 million to operate the Medicare FFS Recovery Audit Program, of

which $81.9 million were contingency fees paid to Recovery Auditors.

• Administrative costs such as processing appeals, cost of adjusting claims, support contractors, and oversight of the program, accounted for the additional $47.5 million.

• After subtracting all costs, underpayments paid to providers, and reversals after appeal, the audit returned $488.2 million to the Medicare trust fund for 2011.The 2011’s claim appeals data also shows that DME providers appealed the largest

number of claims in Jurisdictions C and D, and that of those appealed claims, 58.9 percent were successfully appealed in the provider’s favor in Jurisdiction C and 39.2 percent in Jurisdiction D. In total, Medicare providers appealed 60,717 claims, 43.6 percent of those claims were overturned on appeal.

The full report and letters from Kathleen Sebelius to the House and Senate leader-ship can be downloaded as a PDF at http://bit.ly/Ws7aLd. ■

2011 RAC Audits Saved $488 million of $797 million CollectedAfter underpayments and costs, only $488 million goes to trust fund; DME overpayments account for less than 5% of overpayments.

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16 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

NAIMES Acquires CSIHMENAIMES merges smaller industry advocacy organization into its structure.

The National Association of Independent Medical Equipment Suppliers has acquired the Committee to Save Independent HME suppliers (CSIHME) and merged it into

the national association. “We are pleased with this merger which will combine the resources of CSIHME with

NAIMES,” said NAIMES Chairman Wayne Sale. “This effectively doubles our resources and will improve the effectiveness of NAIMES as an advocate for its members in the independent supplier community.”

“CSIHME has served an important role for the industry and our Executive Committee was unanimous in approving this merger,” added CSIHME President David Petsch. “We feel that putting the two groups together is sensible and strategic as we approach the pending Round Two launch.”

NAIMES will continue forward as a non-profi t trade group focused on the needs of America’s independent suppliers. As a part of this merger, Todd Tyson, President of Hi-Tech Healthcare Inc. (Norcross, Ga.), and a CSIHME Executive Committee member, will join the NAIMES Board. Tyson is also the past President of the Georgia Association of Medical Equipment Services.

CSIHME was created in 2009 to fund lobbying efforts on behalf of small indepen-dent suppliers. NAIMES will retain and continue the services of the lobby fi rm, Tauzin Consultant, LLC.

“We view this consolidation of the only two national groups focused solely on the small independent supplier as a positive strengthening of the NAIMES goals,” said NAIMES President Wayne Stanfi eld.

Also, as part of this merger, Raquel Morgan has joined NAIMES staff to serve as operations coordinator, and assist with the membership effort currently underway. ■

Essentially Women Gears up for Focus on the Future 2013Thirteenth annual conference and tradeshow slated for March 17-19 in Charleston, S.C.

Women’s healthcare group purchasing organization Essentially Women is preparing for Focus on the Future 2013, its 13th annual conference and tradeshow, which

will take place on March 17-19 in Charleston, S.C. The tradeshow features exhibits with the manufacturers and distributors of women’s

health care products, the introduction of new product lines, and exclusive show specials. Exhibits include product categories such as post-breast surgery, compression, lingerie, orthopedics, wigs and other hair loss solutions, lymphedema, accreditation, software packages, billing outsourcing, breast cancer awareness products and other medical equipment and supplies.

Between the conference, social reception and tradeshow, members will have various opportunities to network and learn from industry participants including business professionals, industry consultants, manufacturers, smaller unique wholesalers and retail colleagues.

The educational courses will provide members with product training and informa-tion on business development, management, successful sales, merchandizing, marketing techniques, accreditation grassroots lobbying, and Medicare updates. All courses are in the approval process with the American Board for Certifi cation and Board of Certifi cation/Accreditation continuing education credits.

For more event information, contact (800) 988-4484 or email melissa@essentially-women.com. ■

Quantum Rehab Teams up with MDAManufacturer will support various 2013 Muscular Dystrophy Association campaigns, programs.

Quantum Rehab and Pride Mobility Products Corporation will partner with the Muscular Dystrophy Association for the 2013 MDA Muscle Walk season to raise

Harmar Opens European Sales Offi ceLift manufacturer expands its reach overseas.U.S.-based manufacturer of accessibility and mobility equipment Harmar has added an international sales offi ce for Europe, based in the Netherlands, with Richard Koopmans as managing director of Europe.

“Harmar grew quickly, with a history as one of Inc Magazine’s 500 fastest-growing private companies in America,” said Conor Sullivan, Harmar’s International Business manager. “Now, with rapid sales growth overseas, we are structuring to better serve international customers.”

The Netherlands offi ce will serve the United Kingdom and European markets and includes a Harmar product showroom, training areas, and offi ces for sales and service personnel. It is located at De Slof 28-2, 5107 RJ, Dongen. Phone+31(0) 76 7602824.

Harmar products are also expanding in Asia, Eastern Europe, Australia, New Zealand, Africa and South America and are currently being served through the U.S. headquarters. ■

awareness and funds for children and adults affected by neuromuscular disease.Quantum Rehab, an MDA Muscle Walk Presenting Partner, will help “Make a Muscle,

Make a Difference” in support of the campaign and the Association’s programs of research and health care services, including MDA summer camp, that benefi t families across the country served by the Association.

“We’re excited to expand our relationship with Quantum Rehab by offi cially welcoming them into the MDA family as a Muscle Walk partner,” said Scarlett Marchman, MDA vice president of Business Development. “Quantum Rehab empowers individuals to lead independent and active lives, in conjunction with MDA’s mission. Together, we aim to raise awareness and funds to provide treatments and cures to those affected by muscular dystrophy and related diseases.”

MDA Muscle Walk (walk.mda.org) is a series of fun, non-competitive local walks held across the United States from from January to April. MDA Muscle Walk is the largest event of its kind in the United States, with an estimated 50,000 participants registered in more than 160 Walks nationwide for the 2013 campaign. Last year, MDA Muscle Walk raised more than $6.2 million, and more than $10 million has been raised since the campaign’s inception in 2011.

“Quantum Rehab is pleased to partner with MDA for the 2013 Muscle Walk season,” said Jay Brislin, MSPT, Vice President of Quantum Rehab. “We have a close connection to families served by the Association, providing those with mobility needs with the proper equipment to help them live independent lives. We are exceptionally honored to take our support of those affected to a higher level by joining this inspirational campaign as a national partner and help promote neuromuscular disease awareness across the country.” ■

Sleep Nation Expands Insurance CoverageNational sleep provider has added 50 new insurance contracts since May.

National CPAP provider Sleep Nation Inc. has expanded in its insurance coverage for patients. Since Sleep Nation’s May 2012 purchase of CPAP Care Club LLC, it

has added 50 new insurance contracts providing access to 40 million additional patients nationwide.

“As Sleep Nation grows through acquisitions and internal growth initiatives, gaining full access to these patients through managed care contracting is critical,” said Sleep Nation CEO Richardson Roberts. “With many DMEs projected to go out of business due to Medicare’s competitive bidding program, patients run the risk of having diffi culty fi nding a provider who is in-network with their insurance.”

A key element in Sleep Nation’s business has been to make the process easy for patients by handling the paperwork requirements, fi ling the claim with the patient’s payor, and then fulfi lling the delivery, according to Roberts.

“With these insurance relationships, Sleep Nation can service the patient as a partici-pating provider, the patient has a company that engages in their respiratory therapy and the insurance carrier has a patient who is actively using their CPAP machine properly while lowering long term medical costs for patient care,” he added. ■

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18 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

Wayne van Halem came to the home medical equipment industry through perhaps one of the most unlikely routes. As a onetime Medicare fraud investigator who eventually rose through CMS’s ranks to oversee DME appeals on a national basis, van Halem now runs The van Halem Group LLC, a team of ex-Medicare experts who help providers navigate CMS’s often maddening pre- and post-payment audit and appeals process.

Getting there has been an interesting journey. Van Halem literally went to work for Medicare right after graduating from the University of South Carolina, starting in the customer service area for one of the DME Medicare Administrative Contractors in Jurisdiction C taking Medicare benefi ciary complaints over the phone.

“It was probably one of the worst jobs, I’ve ever had in my life,” he jokes. “But I learned an awful lot. It’s where I learned the most amount of information. When you’re constantly getting calls from providers and benefi ciaries, it sort of forces you to gain a pretty intense knowledge of coverage and policies.”

Van Halem’s degree was in Criminal Justice, and his desire was to get into fraud investigation. So he stuck with the bottom-rung job for the duration of a year, in order to transfer to what CMS at the time called it’s Anti-Fraud Unit. There, he worked as a Medicare fraud analyst for a few years.

“Then I worked as a Medicare Fraud Information Specialist,” he says. “There were about 20 of us throughout the country, and we served as a liaison between law enforcement, Medicare contractors and CMS. … My jurisdiction was about half the country.”

Those three jobs — customer service, fraud analyst and fraud information specialist — gave van Halem a knowledge of resources and process, as well as contacts with contractors, CMS and law enforcement.

Then Medicare came up with a program called Program Safeguard Contractors, and van Halem was one of the fi rst fraud investigators hired with them, where he worked in Jurisdictions A and B. Then he became a supervisor.

His last Medicare job was when CMS came out with the qualifi ed independent contractors, where he was hired as director of DME appeals, nationally, and Part B appeals for the western region of the country.

In 2006 he struck out on his own to work with providers to educate them and using contacts to help them navigate the process. “I saw a need for working with providers,” he said. “Even when I was an analyst and an investigator for Medicare, I didn’t feel like I was using my degree in Criminal Justice and investigating fraud, as opposed to looking to see if ‘T’s were crossed and ‘I’s were dotted.”

Now van Halem and his team fi nally brings all those skills to bear assisting providers with audits and appeals.

“We bring a unique perspective in that we actually worked for Medicare doing these audits,” he says. “We know how the inner workings of Medicare and what the contractors’ limitations are.

“But also their position,” he adds. “A lot of people blame contractors, but they’re often between a rock and a hard place, because they have a contract with Medicare that they want to keep, and Medicare is the one that establishes the rules, but the contractors are the ones that have to deliver the message and do the work.

“But because they know us and know our background, we have a good working relationship with the contrac-tors,” van Halem says, “That is why I think we’re able to do more than other folks can do on their own.”

As any provider knows, CMS has drastically ramped up the volume and intensity of its pre- and post-payment audits, and despite crowing about the results (see “News, Trends & Analysis, page 8), it is a program that through a high rate of appeals and overturns, as well as bad direc-tion from contractors is clearly not working.

“It’s a broken system for sure,” he says. “I say that to my clients all the time. … One of the reasons I left Medicare was that I was so frustrated that, despite what folks think about contractors they really do have well-qualifi ed people in some of these roles, but the focus from Medicare was always on quantity. It was never on quality. … I personally didn’t feel that providers were given a fair appeal. After a decade in a job that’s hard thing to leave, but I did see a need out there.”

In addition to helping providers handle audits, the

People in HMEIndustry Newsmaker President Obama Awards

AirSep’s McCombsNorman McCombs, senior vice president at AirSep Corp., a wholly owned subsidiary of Chart Industries Inc., has been awarded The National Medal of Technology and Innovation.

The National Medal of Technology and Innovation is the nation’s highest honor for technological achievement, bestowed by the President of the United States on the nation’s leading innovators. McCombs received the award from President Obama at a ceremony held at the White House earlier in February

“Chart and AirSep are proud to have Norm McCombs as a key member of our team and congratulate him on this well-deserved honor,” said Chart Chairman, President and CEO Sam Thomas. “We are fortunate to have Norm’s technological capability, but more importantly his high integrity and commitment to continuous improvement serve as a role model for everyone at Chart.”

The medal is awarded annually to individuals, teams, companies or divisions of companies for their outstanding contributions to U.S. economic, environ-mental and social well-being. The purpose of the National Medal of Technology and Innovation is to recognize those who have made lasting contributions to America’s competitiveness, standard of living, and quality of life through technological innovation, and to recognize those who have made substantial contributions to strengthening the nation’s technological workforce.

To that end, McCombs has been a pioneer in the fi eld of oxygen separation technology, and is responsible for 40 patents during his career, and products stemming from Mr. McCombs inventions can be found all over the world in various applications, including portable oxygen delivery systems for fi eld hospitals in Iraq and Afghanistan, personal portable units greatly improving the quality of life of Chronic Obstructive Pulmonary Diseases (COPD) patients, and the medical clinic at the base camp on Mount Everest, among many others. ■

Bridging WorldsWayne van Halem applies 11 years’ experience at Medicare to give providers audit assistance.

President Obama awards Norman McCombs, senior vice president at AirSep Corp., with the National Medal of Technology and Innovation for his work in oxygen technology.

core issue is trying to fi x that broken system. To that end, van Halem says that his fi rm reached out to the Senate Finance Committee via a white paper that discussed the various issues with CMS’s current Medicare audit program, and why the issues existed. It then went on to make various recommendations on how the program could be improved to help providers, as well as to ensure a more effi cient program that still maintained program integrity. He says that the committee took that informa-tion as well as information from other sources and its own research, and came up with a number of recommen-dations that it would like to see put into place.

“So, I do think that there is some sort of light at the end of the tunnel, so that they improve the process so that it is a little more reasonable for the providers,” he says. “You know, as a provider billing the government, I don’t think you are ever going to be able to get out of being audited.

“However the audit process should be fair and it should be reasonable,” he adds. “In fact the program integrity manual mandates that. And I don’t think it currently is. I don’t think the audit process is fair and I don’t think the appeal process is fair. But the fact that the people who have the power to do this — The Senate Finance Committee — have recognized that there are problems and have requested input from other stakeholders is a really good sign.” ■

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20 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

Auto access products represent an attractive retail sales avenue in

terms of their high-value revenue standpoint. Moreover, auto access

offers providers opportunities to break into the business by offering

more easier-to-install items, such as vehicle platform lifts and ramps. But what happens when a provider has found a good niche providing some

of these “easier” solutions, and wants to go the next level? Unfortunately, there is not a whole lot of middle ground between entry-level and expert offerings when it comes to auto access.

“There are dealers that are at a lower threshold of installation and they do simple mechanical hand controls or scooter lifts,” says Dave Hubbard, executive director of the National Mobility Equipment Dealers Association (NMEDA). “When you start putting in more elaborate equipment … there’s no precise path.”

Moving up to the next step in auto access represents a considerable chal-lenge considering that auto access can involve a major cost overhead. Installing more complex auto access systems means stocking higher-end solutions; investing in special tools; owning a special workspace; purchasing additional equipment; and fostering a deep level of product, automotive and mechanical expertise across the business.

Let’s take a look at some of the key things that providers angling to “supe up” their auto access businesses should consider:

Training and ExpertiseThe very fi rst thing that providers need to look at, according to Hubbard, is planning out what exactly they want to do. For example, there is a big jump to go from selling mechanical hand controls to electronic hand controls and many manufacturers require that providers go through their training program.

“Plot it out. Go to the various manufacturers and get the training,” he explains. “There are a lot of guys out there, we run into it all the time, who know their way around electronics very well and then they don’t pass our simple electrical test.

“Or because you’re a mechanic you think you know how to install a lift-and-swivel seat into a vehicle—a seat that swivels out, lowers down, allows the person to get in it and then lifts them back up—but there’s a lot to be consid-ered when you look at the electrical splicing that needs to be done,” he adds.

Airbags are another item that can require additional training and expertise. “The training that needs to take place with respect to the airbags—are you

affecting any airbags with the equipment that you’re putting into the vehicle?” Hubbard explains. “This is particularly true in high-tech driving systems, and a lot of these systems need to be trained.”

The Right EquipmentA provider needs to have both the physical structure and the right tools to do the work. To that point,

“If you’re going to expand into selling lift-and-swivel chairs and electronic hand controls, you’re going to need to look at having a well-equipped shop,” Hubbard recommends. “If you’re working with people with disabilities in wheelchairs you need a facility to do the work in that is protected from the elements and that people in wheelchairs can move around in.”

Also, NMEDA asks all of its members to have ADA-compliant facilities.

“That means that they have bathrooms for people in wheelchairs, their door openings are wide enough (and) there’s a big enough facility or workspace so that a person can go around the vehicle safely in a wheelchair,” says Hubbard.

Getting Certifi edNMEDA’s Quality Assurance Program is nationally recognized accreditation designed to give providers a systematic, documented approach to quality.

“It doesn’t have to be in-depth and it’s not hard to get involved with, but it a does have a little bit more expense involved in it,” says Hubbard.

Dealers are required to follow guidelines written in accordance with motor vehicle safety standards, a professionally managed dynamic and static testing program and proven quality control practices that advocate the highest level of performance and safety.

Some of the requirements to become certifi ed include a proper facility; an entrance and vehicle egress that are covered and out of the elements; the right tools, such as a torque wrench that is calibrated to the manufacturer’s specifi -cations and at least $2 million liability insurance.

The Right InsuranceWith auto access, the more technical a provider gets, the more elaborate the equipment becomes, which means there is an increased opportunity for mishap. NMEDA recommends that providers have at least $2 million in liability insurance.

“The more elaborate the equipment is, the greater the disability,” says Hubbard. “So a person learning to drive with a no-resistant driving control, which amounts to about a toggle switch, could put people in danger if it’s not handled properly. So they have to consider all these things.”

Certifi ed Driving Rehabilitation SpecialistsHubbard also recommends getting to know a Certifi ed Driving Rehabilitation Specialist. A specialist will evaluate vision, perception, functional ability, reac-tion time and behind-the-wheel ability to determine an individual’s safe driving potential. Also, the specialist can potentially help eliminate liability for a dealer, since it is that person who has outlined what should be installed in the vehicle.

“These are people who evaluate the needs of people in wheelchairs or people with disabilities or prosthetics and determine what it is they need to drive and will write a prescription,” Hubbard says.

Customization is StandardCreating a unique accessible automotive solution for each and every individual can be one of the big challenges in navigating auto access. That’s why training and understanding of the market of people with disabilities is essential.

For starters, providers need to be aware of the various auto options available to individuals, such as buying a new vehicle with customized adaptive equip-ment, buying a used vehicle that can be customized, or having equipment added to an existing car or van.

“Every person with a disability is different. Almost every time a solution comes up, it’s a custom solution in some way, shape or form,” Hubbard says. “Doing cookie cutter stuff across the board doesn’t work.” ■

Auto Access: Pulling into the Fast LaneWhat should providers currently offering basic auto access services consider before serving up more complex solutions?

by Cindy Horbrook

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22 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

While the harsh Medicare funding environment might closely resemble the parched sands of the Mojave Desert these days, providers can fi nd welcome respite at this year’s Medtrade

spring. Running March 19-21 at Las Vegas’s Madalay Bay Convention Center, the event serves up a conference session of more than 70 sessions across

Medtrade Spring 2013

DMEOasis in theDesert

Lightweight POC provides greater mobilityCAIRE’s Focus POC allows oxygen patients to be more mobile without carrying burdensome extra system weight. With a pulse fl ow setting of 2, the unit makes oxygen on demand and provides the solution to the most common issue of fi nding an oxygen system that a patient can carry. The unit’s micro-batteries provide advanced duration times in a small package that attaches at one’s hip, on a belt or to the unit’s shoulder strap itself.

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Seated scooter features optional knee platformThe Gemini Scooter is suitable for patients recovering from a foot, ankle, hip or knee injury or illness. The product converts from a seated scooter to a knee scooter in less than a minute and no tools are required. The scooter is equipped with an easy-folding mechanism that collapses using a thumb release lever for ease of storage and transporta-tion. Features include a large padded seat, stable wheel base, 8-inch wheels with sealed bearing and an optional knee platform with adjustable pads.

Roscoe Medical(800) 376-7263www.roscoemedical.com Power chair offers stability and easy

maneuverabilityThe Jazzy Elite 14 delivers a blend of power and performance with two-motor, front-wheel drive for stability and easy maneuverability in a stylish package. The chair has 14-inch knobby tires and optimum weight distribution for traction. Features include 300 lbs. weight capacity, speeds of up to 4 mph, NF-22 batteries for maximum range and a 5-amp, off-board controller.

Pride Mobility Products Corp.(800) 800-8586www.pridemobility.comBooth 413

Bariatric knee CPM adds additional width in the thigh regionKLC Services’ Flex‐Mate K500 Bariatric Knee CPM is designed to accommodate larger or oversized patients in both the home and hospital settings. The device has all the features and functions of the stan-dard version Flex‐Mate K500 Knee CPM, but includes an additional 2‐1/2 inches of width in the thigh region. Knee CPMs are most notably used post‐surgically following total knee replacement (TKR) or anterior cruciate ligament (ACL) repair surgeries.

KLC Services Inc.(866) 532-3534www.klcfl exmate.comBooth 650

more 15 tracks, and an expo fl oor showing products from nearly 300 exhibi-tors. The expo runs March 20 and 21 and should provide a wealth of new product options to help providers expand their offerings and appeal to new patient groups. Let’s take a look at some of the offerings that will be on display:

By Cindy Horbrook

Medtrade Spring offers a chance to see the latest DME.

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24 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

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Home oxygen fi lling systemUltraFill is a home oxygen system that combines a stationary oxygen concentrator, fi lling station, and high-capacity cylinders to meet the needs of a wide range of oxygen patients, including those who are highly active or require continuous fl ow oxygen. Philips says that UltraFill’s high-capacity cylinders operate at 3,000 PSI and

High Flow Ultra Soft Cannulas with new soft comfort tubingResponsive Respiratory is offering the new Ultra-Soft Adult Cannula. The Ultra-Soft Cannula is made with a soft nasal pad and lightweight design for comfortable wear. The Ultra-Soft Cannula aids in the relief of discomfort and rubbing caused by traditional cannula wear and is designed to help prevent the developing of sores behind the ears. The High Flow Ultra is for use with fl ows of 6LPM and higher. New high fl ow humidifi er bottles are also available.

Responsive Respiratory(866) 333-4030www.respondo2.comBooth 646

Fastrack update features processes designed to reduce operating costsFastrack Healthcare Systems’ new features are designed to help providers respond to competitive bidding reim-bursement pressures by reducing operating costs through automation. The company’s newest software release features workfl ow automation functions that are designed to improve productivity. Users can schedule in advance when the system will run key fi nancial reports. The reports are automatically sent by email to all appropriate staff at the time designated. The enhanced billing process can now be segmented to match the existing processes of the provider.

Fastrack Healthcare Systems Inc.(800) 520-2325www.onlyfastrack.comBooth 843

may offer patients more than 40 percent more oxygen than comparably sized 2,000-PSI cylin-ders. UltraFill also offers features intended to save money by using existing inventory and reducing

equipment deliveries and related expenses. HCPCS code: K0738.

Philips Respironics(800)345-6443www.respironics.comBooth 1314

DME Oasis in the DesertMedtrade Spring 2013

25hme-business.com | March 2013 | HMEBusinessManagement Solutions | Technology | Products

POC promotes patient compliance and an active lifestyleCAIRE’s AirSep FreeStyle5 portable oxygen concentrator features fi ve pulse dose settings, weighs 6.2 lbs. and is FAA-approved. The AirBelt, previously used with the FreeStyle3 and FOCUS models, is compatible with the new FreeStyle5, which creates a more versatile product inven-

tory for equipment providers looking to expand their offerings.

CAIRE(800) 874-0202www.CAIREmedical.comBooth 637

Articulating foot platform accepts a wide range of leg sizesQuantum Rehab’s redesigned Articulating Foot Platform from TRU-Balance Power Positioning Systems delivers adjustment, durability and strength for a variety of client needs. The platform accepts a wide range of leg sizes, features multiple calf pad options and has a broad articula-tion range for enhanced adjustment and a wider selection of options for patients.

Quantum Rehab(866) 800-2002www.quantumrehab.comBooth 413

Back pain relief system requires no prescriptionThe TENS 7000 To Go Back Pain Relief System is a doctor recommended, over-the-counter (OTC) TENS device that provides prescription-strength pain relief associated with sore and aching muscles in the lower back. The easy-to-use device comes equipped with a conductive electrode support belt that transmits the current directly to the pain site. With fi ve preset therapy modes, users can quickly customize their therapy and target their back pain. The system also includes a snap-on lead wire, a 9-volt battery and user manual.

Roscoe Medical(800) 376-7263www.roscoemedical.comBooth 725

Medtrade Spring 2013

915

26 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

Car cylinder carrier increase safety, cut noiseResponsive Respiratory’s CarMate Cylinder Car Carrier assists ambulatory patients in safe transport of their oxygen cylinders. The carrier attaches to the built-in LATCH restraints in vehicle via two easy to use clips and folds up fl at against the car seat when not in use. Available in D/E or M6 styles, the carrier holds up to three cylinders securely in a cloth carrier, reducing the bumping and jostling during transport. The snap-shut cover holds cylinders in place, limiting movement and noise.

Responsive Respiratory(866) 333-4030www.respondo2.comBooth 646

Cylinder carts offer smooth cylinder transportResponsive Respiratory’s Quiet Ride delivery and warehouse cylinder carts feature heavy-duty, 5-inch bolt-on rubber casters for smooth cylinder transport and all steel welded construction with indus-trial powder coat fi nish. The carts are suit-able for delivery of cylinders in nursing homes or hospices. The straight handle is designed for cart-to-cart nesting in vehicles or warehouses.

Responsive Respiratory(866) 333-4030www.respondo2.comBooth 646Travel scooter easily

disassembles into fi ve lightweight piecesPride Mobility’s Go-Go Sport travel scooter offers high-performance operation, a 20 percent increase in leg room and pass-through space, and easy disassembly for convenience on the go. The travel-ready scooter features a 325-lb. weight capacity, charger port in tiller and standard front LED lighting. Additional features include feather-touch disassembly that permits simple frame separation with only one hand; black, non-scuffi ng tires; two sets of interchangeable color panels; and an all-new frame design that disassembles into fi ve lightweight pieces.

Pride Mobility Products Corp.(800) 800-8586www.pridemobility.comBooth 413

Bariatric power base provides high-performance outdoor operationThe Quantum 1450 front-wheel drive power chair features an innovative design that provides high-performance outdoor operation while delivering tight space maneuverability. The power chair accepts a complete range of seating and electronics options. Features include 600 lbs. weight capacity, maximum speed up to 4.5 mph and a high-effi ciency motor package.

Quantum Rehab(866) 800-2002www.quantumrehab.comBooth 413

Knee walker provides comfortable alternative to crutches GF Health Products’ Lumex NaviKnee Walker is ideal for individuals recovering from sprains, foot surgery, amputation or any foot or ankle injury where the user cannot bear weight on the injured leg. It can also be a more comfortable alternative to crutches where extended use can lead to underarm and/or back pain. Features include a lightweight, durable aluminum frame that weighs less than 18 lbs. and a deluxe dual-braking system that allows for quick and extended stopping.

GF Health Products Inc.(800) 347-5678www.grahamfi eld.comBooth 531

POC features large range of pulse and continuous fl ow optionsCAIRE’s SeQual Eclipse 3 POC meets the ambulatory and around-the-clock needs of LTOT patients. With a large range of pulse and continuous fl ow options, the unit provides reliable patient treatment for even the most diffi cult to treat patients. Features include adjustable rise time, autoSAT technology and adjustable pulse.

CAIRE(800) 874-0202www.CAIREmedical.comBooth 637

Portable OTC system relieves sore and aching muscles

The TOP TENS Pain Relief System is a doctor recom-mended, over-the-counter (OTC) device that provides pain relief associated with sore and aching muscles in the upper and lower extremities due to strain from exercise or normal household and work activi-

ties. The TENS technology is designed to stimulate the body’s own natural pain killers. The portable, easy-to-use device includes eight preset programs allowing users to customize their therapy and target their pain.

Roscoe Medical(800) 376-7263www.roscoemedical.comBooth 725

DME Oasis in the DesertMedtrade Spring 2013

27hme-business.com | March 2013 | HMEBusinessManagement Solutions | Technology | Products

For many months — years, in fact — the home medical equipment industry has been watching the fuse on the competitive bidding powder keg slowly burn down. As that fuse has grown shorter and

shorter, the tension has grown increasingly taught. Just like in a Hollywood adventure movie, the industry has made

many efforts to cut that fuse short. These efforts have included 2010’s H.R. 3790, the bill introduced by former Rep. Kendrick Meek (D.-Fla.) that called for the repeal of competitive bidding; and the more recent

H.R. 6490, the lapsed 2012 bill launched into the House by Rep. Tom Price (R-Ga.), that would have replaced the Centers for Medicare and Medicaid’s competitive bidding program with the industry’s Market Pricing Program. The current strategy will see Rep. Price soon launch a revised version of H.R. 6490 into the 113th Congress.

And, just like in a Hollywood adventure movie, those efforts have been frustrated at every turn. Meanwhile, the fuse keeps burning down, growing closer and closer to the point of no return. It’s enough to put

CMS’s announcement of the Round Two reimbursement rates has left the industry reeling. Where do we go from here? David Kopf

28 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

you off your popcorn, if not send you screaming from the cinema. Then tension is thick indeed.

Well, the scenario just turned explosive. At the end of January, several weeks beyond its scheduled Dec. 20, 2012 deadline, CMS released the Round Two reimbursement rates, and the shockwave was stunning: DME reimbursement saw an average 45 percent cut across the nine categories and 91 competitive bidding areas, and reimbursement for the national mail-order program for diabetic testing supplies was cut by an average of 72 percent.

The delay in the release of the reimbursement rates; the sheer size of the cuts; how they impact the efforts to stop competitive bidding; and other factors have generated a number of questions in the industry. HME Business sat down with various competitive bidding experts as well as providers to get their on competitive bidding and the fi ght to stop the program in order to get their perspective on this latest shocker in the run-up to Round Two’s July implementation.

Why The Delay?An initial hang-up with the bid amounts is that CMS took considerably longer than expected to release the bid amounts. The agency was supposed to release the bid amounts at the end of fall, which would have been Dec. 20, 2012, but instead didn’t release them until Jan. 30. Initial thoughts were why did CMS take so long to release the bid amounts, and did the timing have any signifi cance?

For starters, the size of Round Two being so much larger probably played a hand in the delays.

“We can only assume that the time was necessary once CMS sent out bona fi de bid rationale letters in November,” says John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers. “They had 91 bidding areas to review, so it will take time given the complicated nature of the bid process they designed.”

“The only reason I can imagine is it’s the workload,” agrees Cara Bachenheimer, senior vice president of Government Relations for Invacare Corp. “With 97 bid areas (remember, New York, Chicago and LA are subdivided into multiple bid areas) there was a massive

amount of information that thousands and thousands of HME providers submitted.”

“I think CMS likely underestimated the signifi cant volume of informa-tion and time that it would take to process and review the bid infor-mation,” says Seth Johnson, vice president of Government Affairs for Pride Mobility Products. “They also likely had issues that needed to be resolved internally that resulted in the delay.”

And that points to a larger problem, Johnson adds.“The release of the Round Two information well over a month later

than expected, should serve as a warning sign not only to CMS but also Congress that this program cannot be implemented July 1,” he notes.

Wayne Stanfi eld, president and CEO of the National Association of Independent Medical Equipment Suppliers, also chalks the delay up to “pure workload,” but adds with a sarcastic sting: “That and the fact that they had to manipulate the capacity numbers to get the price where they wanted it.”

And that’s the problem. No one knows if that could be the case or not, since no one knows a thing about how CMS is really doing anything.

“Because of the complete lack of transparency of the competitive bidding process, we can only speculate why it took CMS so long to release this information,” says Jay Witter IV, vice president of Legislative Affairs for the American Association for Homecare, who adds that particular fl aw of the DME competitive biding program simply points to the industry’s option as a better way.

“This problem would not occur under the Market Pricing Program (MPP),” he added. “The bid process is transparent and bidders know the results (including the price) immediately after the auction.”

But could CMS’s delays have had any political timing? Without knowing what Round Two would do to reimbursement, it’s tough for the industry to advance any legislation in Congress with a pay-for that might not necessarily apply. It’s tough to say if that is or isn’t part of CMS’s actually modus operandi.

“The timing issue will have little impact on legislative considerations,” Shirvinsky says.

How Is 45 Percent Even Feasible?Of course the biggest shocker is the size of the bid amounts. When Round One of competitive bidding was fi rst bid in 2008, the average cut to DME was 26 percent. That alone was shocking enough to the industry. The size of those cuts, in addition to 2008’s massive problem with legitimate bids getting tossed by CMS, led to the industry securing a delay to Round One and a re-bid, per the Medicare Improvements for Patients and Providers Act. Of course, that came with a 9.5 percent cost on Round One’s categories.

When Round Two was bid again, the re-bid ushered in a whopping 32 percent average reimbursement cut to Round One’s categories and CBAs. This is what scuttled the Meek bill, which was expecting an 18 percent cut and had been scored based on that. No one was expecting such a massive cut.

And very few were expecting a 45 percent cut this time around. Were providers really willing to slash their revenues by that much to get a contract? Is that even sustainable? Needless to say, Round Two’s cuts took many by surprise.

“The Round Two payment rates are shockingly low, unsustainable and the direct result of Medicare ignoring the auction expert’s recommen-

“This is war. It is a battle for the very survival of our industry.”—John Shirvinsky, Pennsylvania Association

of Medical Suppliers

“As we predicted, the fl awed competitive bidding process resulted in suicide bidding.”

—Jay Witter, American Association for Homecare

Round Two Reaction

29hme-business.com | March 2013 | HMEBusinessManagement Solutions | Technology | Products

dations and strong communications from providers, benefi ciaries, and even Congress to fi x the fundamentally fl awed bidding program prior to implementation,” Johnson says. “This type of result was predicted by the auction experts due to the fundamen-tally fl awed structure of the Medicare bidding program.”

“I think everyone was shocked, really shocked. It refl ects the fact that the CMS bid program is fundamentally fl awed, it incentives only desper-ately low bids in an effort to stay in business,” Bachenheimer agreed. “The program is anti-competitive, as it arbitrarily eliminates good competitors.”

“It’s unsustainable,” Stanfi eld agrees. “I predicted greater than Round One, but this much is appalling.

“There are no margins close to 45 percent in the DME industry and this will put both winner and losers out of business,” he adds.

Of course, while shocking as they are, the Round Two bid amounts did play right along with the argument many were making that some providers would engage in “suicide bidding” to get a contract, and that CMS’s bid system was almost engineered to encourage that.

“As we predicted, the fl awed competitive bidding process resulted in suicide bidding,” Witter says. “The Round Two prices announced by CMS are unsustainable and are not based on true market prices. Rather than paying winners the clearing price (the last-accepted bid), Medicare’s bidding program pays winners the un-weighted median price among the winning bids resulting in fi fty percent of the winning bidders being offered a contract price less than their bids. If a provider is offered a contract and declines it, its bid (no matter how low) is still included in the calculation to determine the single payment rate.”

“I am not surprised, but I am disappointed,” agrees Georgie Blackburn, vice president of Government Relations & Legislative Affairs for Blackburn’s Pharmacy. “CMS’s program is designed to drive extremely low bidding that is not binding. So fi rms bidding excessively low and accepting awards may be doing so in order to be acquired rather than take care of patients.”

Combine the low-ball bidding with an extremely Byzantine approach to scoring the bids, and the resulting system is not going to sit on solid ground. Especially if CMS is not thoroughly examining bids to see if providers’ past Medicare activity jibes with their bidding documentation.

“While it is evident that a relatively large amount of suppliers low-balled their bids (remember 45 percent is the median, which means half of the

bidders bid below 45 percent, on average), I believe there is equal blame on the CMS capacity process,” says Mark Higley vice president of Development for the VGM Group Inc. “VGM emphasized the capacity

549

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leading set of product-line and service specifi c quality standards as well as off ering on-going expert mentoring, customizable P&P manuals, self-assessment checklists, anti-fraud plans and electronic outcomes benchmarking. That’s been the case for long-time participants like Cindy Leif’s Select Care, and it is true today for those seeking to experience the EP diff erence for the fi rst time. For more details about our Exemplary Provider™ accreditation program for DMEPOS, call us at 215.654.9110 or visit: www.TheComplianceTeam.org.

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30 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

attempt to shut other bidders out). “As we know now, the demand was quickly satisfi ed with only 800

some companies,” Higley continues. “By example, assume there are 12

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offering conundrum/hazard throughout the Round Two process. This was an area where we had diffi culty ascertaining whether HMEs were increasing their unit offerings on Form B (either by ignorance or in an

Round Two Reaction

“The Round Two rates appear to be created by bidders who simply looked at the rates from Round One and cut them by 20 percent.”

—Rob Brant, Accredited Medical Equipment Providers of America

contracts awarded for oxygen in a CBA. The sixth lowest bidder (out of perhaps 75) sets the price. What happens when small suppliers offer four times or 10 times their current patient census? CMS has the authority to scale back the capacity offering to refl ect historical reimbursement appli-cable to that supplier. But to what extent was that authority used? The results suggest otherwise.”

To that point, VGM’s Higley adds that noted competitive bidding critic and University of Maryland Economics Professor Peter Cramton brought this topic to light in an online essay found at: www.cramton.umd.edu/papers2010-2014/cramton-medicare-auction-round-2-results-30-january-2013.pdf.

And the result of this fl awed system? Providers, if they are getting contract offers, are often being offered contracts for amounts that they did not bid.

“Initial feedback from our members is that they were not awarded contracts,” says Rob Brant, president of the Accredited Medical Equipment Providers of America. “Others were awarded contracts but at rates far below what they bid at. The rates are a slap in the face to established providers who have been serving the patients in their communities. These companies know the cost to consistently collect documentation, provide equipment and supplies, adhere to 30 supplier standards, bill Medicare, deal with audits and denials. The Round Two rates appear to be created by bidders who simply looked at the rates from Round One and cut them by 20 percent.”

And, at the end of the day, that result creates an unsustainable situation, according to Shirvinksy.

“These bid amounts are not serious and cannot

31hme-business.com | March 2013 | HMEBusinessManagement Solutions | Technology | Products

“We switched to QS/1’s SystemOne for HME a year ago, and I’ve been amazed at the difference. Thanks to the great training and all the online information, it was easy to learn and use – and immediately made our process more effective. Also, our claims submission errors have been virtually eliminated. The experience has made me feel so much more secure with our operation.”Learn how QS/1’s HME solutions can make you feel more secure. Call 1.800.231.7776 or visit www.qs1.com/hme today.

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be sustained over time without doing irreparable damage to both providers and the Medicare patients that we serve,” Shirvinsky says. “Most of were hoping for something better, but the results simply verify the educated predictions of the auction experts.”

Who Gets Hit Hardest? A visit to the Competitive Bidding Implementation Contractor (CBIC) site at www.dmecompeti-tivebid.com will yield a spread sheet containing all the Round Two reimbursement amounts. Digging into them, it’s clear that some of the categories have been slammed with hefty haymakers when it comes to cuts. Diabetics is one of them

“Diabetics will have a signifi cant impact since you can’t but any quality strips for $10.41 a box,” says Stanfi eld.”

“Remember, Medicare only pays 80 percent of the allowed rate, so providers only get $8.33 per box,” Brant explains. “So after paying about $6 for packaging and shipping, your left with only a few dollars per box for COGS. But Medicare believes that providers will take a $20 loss per box on One Touch, Accucheck and other brand name supplies — forget about and cost for collecting documentation, billing, dealing with denials. They also calculated overhead and profi t in these ‘bona fi de bids.’ How?”

Another hard-hit category is oxygen, which has already seen a cascade of reimbursement cuts and funding diffi culties over the past fi ve years.

“At less than $120 total for stationary and portable, no one can serve a patient for 60 months and make be profi table,” Stanfi eld says.

Round Two has “portable oxygen at $18 per month, for as many tanks as the patient needs,” Brant notes. “Medicare only pays 80 percent, or $14.40 per month in the New York City area, for example, with the highest cost of living in the country,” he says. “How?”

But as a whole, now matter how the reimburse-ment rates are examined, the obvious conclu-sion is that things are rough all over. Every single category is a point of pain. How can a “winning” provider make this situation work?

“Reimbursement rates for all categories in Round 2 are equally unrealistic,” Witter says. “These prices will be locked in for a 3 year period without any adjustment, no matter what the price is for gas or labor in 2016.”

“All the categories are severely under-priced in terms of the care and service required,” Blackburn says. “Those that sign contract at this level will have to do targeted and substantial marketing to capture market share to make the numbers work in their favor.”

“If these rates are implemented I think all product categories will be acutely and immediately impacted,” Johnson warns. “Grandfathering will help to a degree, but the average reduction in all categories, with

32 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

the exception of standard wheelchairs, is in excess of 40 percent! Those levels of reductions are simply untenable.”

Was There Any Funny Business?So far, these comments are taking the bid amounts at face value. But already some people in the industry are starting to get suspicious about at least some of the bid amounts. There are some quizzical similarities in bids for some of the categories. For instance, in the case of oxygen, under E1390, 33 percent of the Round Two bidders bid $90 to the penny, and two others bid $90.01. Does this represent a mere statistical anomaly or something else?

For Blackburn, the bids “demonstrates the irrational low bidding that took place in Round Two,” but that to her knowledge “no collusion existed within our industry among compliant providers who understand the antitrust laws.”

Altogether, Shirvinsky says the similarities might not pass the sniff test. And if they do, it illustrates Blackburn’s point about the identical numbers hinting at rampant low-ball bidding.

“Knowing the costs involved in delivering medical oxygen, the costs associated with compliance and the commitment to offering 24/7 care for 60 months while only being compensated for 36 months, rates this low are suspect,” he says. “According to the research conducted by economists and auction experts, the CMS bid program is designed to elicit low-ball bidding. Given that fact, it shouldn’t be too surprising that such bidding settles on nice round numbers safely below the last round of bidding.”

And oxygen isn’t the only category that raised such a red fl ag. Power mobility also had at least one unlikely set of bid similarities.

“How about 10 single K0823 power wheelchair payment rates at $1848.25?” Brant offers as an example. “A round number like $1800.00 I can see (and there were actually 19 of those), but $1848.25. I have to guess that the same company won those bids.

“Something smells like a dead fi sh rotting in the bottom of a bedside commode pan,” he jokes.

What About the Legislative Front?Of course the big issue is how will the Round Two reimbursement rates affect the industry’s efforts to stop competitive bidding. Looking back, the Meek bill was essentially scuttled because its pay-for was completely thrown off by Round One’s bid amounts.

Now Rep. Price is working to revise his bill that would replace compet-itive bidding with the Market Pricing Program. Do the recently released Round Two bid amounts impact that legislative effort and the industry’s lobbying gameplan?

In turns out that the incredibly low rates, and the lack of transparency and fl awed system that fostered them could surprisingly wind up playing in the industry’s favor.

“The prices announced are surprisingly low,” Blackburn says. “We don’t know who the winners are. We don’t know how their capacities were manipulated to reach the numbers supplying product. We don’t know anything except the single line pricing because this is not a trans-parent exercise. I think our arguments against CMS’s methodology are enhanced.”

“The announcement by CMS could well be the shot in the arm Congress needs to take action,” Johnson says. “We need to continue to push the Market Pricing Program alternative to correct the fundamental fl aws with the Medicare bidding program. These levels of reduction were predicted by the auction experts due to the fundamentally fl awed structure of the Medicare bidding program.”

Having the proof of a broken system sitting right in front of Congress then presents the perfect opportunity to pitch the benefi ts of the market pricing program, Witter explains.

“The legislation introduced by Congressman Tom Price will require CMS to make fundamental changes to ensure a fi nancially sustainable bid program for HME items,” he explains. “MPP is a state-of-the-art auction system, which will establish market-based reimbursement rates around the country. These changes are consistent with Congress’ original intent: to create a program that is based on competition while maintaining benefi ciary access to quality items and services.”

That said, one hang up with the effort could lie in how Price’s legis-lation ensures Congress is satisfi ed with the MPP from a budgetary perspective. There was some discussion prior to the release of the Round Two bid rates that the pending Price bill could possibly while the MPP is implemented entice Congress into support is to adopt Round Two pricing, but not the exclusive contracts. But a 45 percent cut is just not feasible.

“I can’t see how “winners” of bids at a 45 percent average discount can provide the services and products at profi table margins long term, let alone ask an industry to do that,” Blackburn argues. “To date, CMS has never shared Round One data when asked by several members of Congress. We now have 91 more MSA’s with even more catastrophic outcomes – 10 times the debris.

“We will never know how the capacities were determined and pricing was set unless committees of jurisdiction demand the data and give it close analysis,” she continues. “We feel certain there’s a reason CMS doesn’t want to share the information. It’s high time Congress demand accountability from CMS and it’s our job, every supplier, to communicate why to our legislators. The problems with their methodology will surface when those Hearings occur — if the data is in their hands.”

“If anything, these bid amounts should inspire more providers, consumers and other stakeholders to scream even more loudly to Congress.”

—Cara Bachenheimer, Invacare Corp.

“These low rates should motivate the industry to mount a swift and aggressive effort to stop this from going further.”—Wayne Stanfi eld, National Association of Independent Medical Equipment Suppliers

Round Two Reaction

33hme-business.com | March 2013 | HMEBusinessManagement Solutions | Technology | Products

And the very face that the 45 percent average cut actually means the industry might be better offer taking a harder stance, in regard to the MPP, rather than try to make up for the incredibly low rates. If CMS is expecting the impossible through its bid program, then why try to make a fantasy into reality? Better to sit with lawmakers and tell them that they need to adopt a real plan: the MPP.

“The cuts are so absurdly large that it is unlikely that we can make reasonable accommodations to achieve budget neutrality,” Shirvinsky says. “This puts the HME industry in a position similar to the physicians and the SGR: The cuts are unreasonable.

“Given that CMS was conscientiously advised of the likelihood of such irresponsible results, Round 2 essentially turned into a form of entrap-ment that elicited irresponsible bidding,” he explains. “Responsible providers cannot be held accountable for an irresponsible outcome that was entirely avoidable had CMS paid the least bit of attention to good faith warnings from independent experts. That said, there are ways to provide for a signifi cant offset in keeping with initial commitments that were made to congressional supporters.”

Just the same, now is the time to act, and the 45 percent cut should at least fi re-up any providers still sitting on the sidelines to get involved in the industry’s lobbying and advocacy efforts.

“These low rates should motivate the industry to mount a swift and aggressive effort to stop this from going further,” Stanfi eld says. “It may be the Price bill or something else, but it will help, not hurt our efforts.”

“If anything, these bid amounts should inspire more providers, consumers and other stakeholders to scream even more loudly to Congress and insist that Congress step in and stop the current program, and replace it with the industry-supported Market Pricing Program, and program designed by expert economists who have real world experience in managing successful auctions,” Bachenheimer adds.

Where Do We Go From Here?Despite all the questions, one thing is abundantly clear, the industry needs to continue fi ghting to stop competitive bidding. If the program means cuts as severe as these, the experts agree that providers must do everything they can to get involved in the effort to repeal competitive bidding and replace it with something better.

Blackburn says it comes down to taking the fi ght to lawmakers and convincing them that they must work to stop the program before it does any more harm.

“We know the MPP is true market based bid system unlike the current methodology,” Blackburn says. “… We know the MPP would work for CMS, for patients, for suppliers, for our local economies.

“We need to build upon the letters of support from advocacy groups for the MPP,” she continues. “We have audit experts denouncing CMS’s system and singing MPP’s praises. We need to make sure every House member and Senate member knows why and is paying attention to what these experts are predicting. We need to ask our senators and repre-sentatives for their immediate help. Our industry and the care of our elderly and disabled lie in the balance.”

“I am confi dent that even those in Congress who believe some payment changes are necessary understand the impact implementing a 45 percent average reduction in fi ve months will have on the industry and benefi ciary access to care,” Johnson notes. “We must communicate

clearly and passionately to Congress what the impact will be if they fail to stop this program prior to implementation.

Moreover, providers need to enlist the help of other stakeholders in the fi ght in order to bring as much pressure as possible to bear on the situation.

“Providers and patients need to educate member of Congress about the dire need to address this important issue as soon as possible,” Witter says.

And raise questions about not only the sustainability of the program, but the trustworthiness of a non-transparent system using a method-ology that forces providers to take contracts for amounts at which they did not bid.

“Providers need to get together with their neighbors who serve the community, meet with their U.S. Senators and Congressmen and ask who set these rates, because it does not appear to be the local estab-lished providers,” Brant says. “They need to explain this and the need for MPP.”

“Providers need to be contacting every Member of Congress they can reach, Representatives and Senators, and explain how fundamentally fl awed the program is, and how this program must be stopped before July 1,” Bachenheimer adds.

And if providers are mad as hell? Then they need to tap into that anger and use it to fuel the fi ght, Shirvinksy says.

“This is war,” he says. “It is a battle for the very survival of our industry. We need to make non-stop calls and visits to congressional offi ces. Call week after week after week with the same message. The squeaky wheel gets the grease. We need to engage our employees; our families; our patients. We didn’t create this mess. They did. But we are the ones who need to exercise our rights as American citizens and make certain that they clean the mess up.”

We must take our case to Congress in a way we have never done before,” Bachenheimer says. “No one can afford to sit on the sidelines. There are resources everywhere to help — national, state and regional associations have talking points and other documents to make the case. It’s now or never.” ■

“I am not surprised [by the Round Two rates] … CMS’s program is designed to drive extremely low bidding that is not binding.”

—Georgie Blackburn, Blackburn’s Pharmacy

“The Round Two payment rates are shockingly low, unsustainable and the direct result of Medicare ignoring the auction expert’s recommendations.”

—Seth Johnson, Pride Mobility Products

34 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

Mergers and acquisitions is a touchy subject in the home medical equipment industry. Most provider business owners and operators are attracted to HME not because of the profi ts they make, but because

of the care they will provide to patients that truly need it. Homecare patients represent a vulnerable group, that depends upon providers’ assistance in order to reap the true benefi ts of the medical equipment that they have been provi-sioned, and providers gain satisfaction from giving them that much needed service and assistance. The payoff is as emotional as it is material.

Moreover, just like any other business, HME provider businesses represent the care and long-term commitment to building a healthy and successful enter-prise that their owners have invested over the years. Like a painter crafting a historic masterpiece, or a farmer continually tilling the fi elds until they offer up bumper crops, HME business owners have devoted considerable time, atten-tion and care, as well as blood, sweat and tears.

Suffi ce it to say, HME businesses are a labor of love. They represent an edifi ce to the dedication to care and professionalism that providers strive to deliver.

So talking about selling or buying an HME business is a loaded discussion. It represents having to “trade in” so many inestimable and intangible elements. How do you put a price on dedication? How do you value sacrifi ce?

A Growing RealityUnfortunately, those are questions that many providers might have to ask themselves in the wake of Round Two of competitive bidding. If Round One is anything to go by, there will be a sizable portion of HME providers in Round Two — which covers 91 competitive bidding areas and essentially brings the program nationwide — that will lose important categories of their business.

If the industry cannot stop the program by the time it is brought to imple-mentation on July 1, then many providers will have to reinvent their businesses to compensate for lost revenue. Moreover, if a provider wins a contract and accepts it, who’s to say they will be able to make that contract work, given the average 45 percent cut to reimbursement per the recently released Round Two bid amounts (see “News, Trends & Analysis,” page 8). These are just some of the facts that could increase the volume and pace of mergers and acquisitions

in the HME industry’s near future.“Round Two is going to shape all mergers and acquisitions in HME,” says

Don Davis, president of Duckridge Advisors LLC (Pittsburgh; duckridge.com), a healthcare industry mergers and acquisitions fi rm that specializes in the HME industry. “It is impacting every aspect of the M&A market in terms of valuation and in terms of consolidation.”

“Up until [CMS’s announcement of the Round Two rates] there really was no market for HME companies who were affected by competitive bidding Round Two,” says Pat Clifford, managing director of The Braff Group (Pittsburgh; thebraffgroup.com), another fi rm that specializes in HME M&A. “Everyone was in a ‘wait and see’ mode.

“Now we know the rates,” he continues. “But what’s still is unknown, as both prospective buyers and prospective sellers review their bid situation, is that now that we know the rates, what does that actually mean?”

The large national providers are probably examining each MSA and the categories affected in each and determining where they won and where they might want to buy. Similarly, local providers are learning whether or not they have been offered a contract, and deciding what their next plan. This creates a vast amount of uncertainty in the M&A market.

“There are more questions than answers at this point in time,” Clifford says.Additionally, there are companies that are external to the HME industry that

might now be game to acquire provider businesses now that Round Two is in motion and appears likely to reach implementation. If providers looking to buy other providers are “strategic buyers,” then lets call these fi rms “fi nancial buyers,” Clifford says, and these new rates represent and opportunity for those players to enter the HME market space.

And whether strategic or fi nancial, interested buyers are already starting to infl uence the pace of HME mergers and acquisitions. There is a signifi cant amount of buyers looking to buy assets, Davis says.

“And that is what’s different than what has been occurring in the past several months,” he says. “There have been people looking to buy, but it’s been very methodical … it’s been posturing rather than positioning.

Davis says he suspects that the large nationals and super regional providers

By David Kopf

35hme-business.com | March 2013 | HMEBusinessManagement Solutions | Technology | Products

knew the prices they were going to have to bid in order to win contracts, but that they would have to form a plan to make the Round Two bid rates work for their businesses. And that plan involves consolidating the market further. There will be various “layers” of HME businesses that could feature into those providers’ plans, Davis says.

“There are the well-managed, larger, local HMEs that will have some value,” he explains. “Because a buyer will be looking to consolidate and will look to build a solid position in the market. Smaller providers will not be as attractive; they’ll be asset-based, patient-based acquisitions. And then there will be some larger players that didn’t get the contracts in the market, and they’ll be looking to be a full-service provider in the marketplace. There’s a lot of interest today in the market in terms of acquisitions.”

“I can tell you that [activity] has already started,” Clifford says. “Will the pace continue to quicken as we get to July 1, or will buyer’s wait until after July 1? I’m not quite sure.

“If we go back to what happened in Round One, we got a lot of calls from buyers saying, ‘I need a bid winner in Pittsburgh, or Cleveland, or Cincinnati, to protect my business,’” he explains. “But just as frequently, we saw buyers wait until after the bid winners were announced.”

If we apply what occurred in Round One to what’s happening now, then we won’t know for a few months until companies accept contract offers and CMS announces the Round Two contract holders.

Additionally, applying what happened in Round One to Round Two, then we can also expect that there will be provider business that win and accept contracts for their CBAs, but then a year or so down the road, realize that they will not be able to make the reduced reimbursement rates pencil out, and will start soliciting buyers. The question is, will they have buyer by then? Certainly a 45 percent cut to the Medicare portion of a business can signifi cant undercut its attractiveness to a buyer, Clifford notes.

Selling an HME BusinessSo certainly, because of these various factors there are already providers that are considering the sale of their HME business. They are either did not get a contract offer, or they don’t see business under the Round Two reimburse-ment as a feasible prospect. What are the things they need to consider when assessing their business, the situation, and determining whether they should sell? And, if they decide to sell, what the factors they need to consider to ensure a smooth process and optimal outcome?

“I think the fi rst thing anyone selling should do is to take the portion of their business that is supported by Medicare, and re-run their P&L with the new rates in it, and see what it looks like,” Clifford says, “and see if they can run their busi-ness with those new rates.

“Chances are they will have to make some changes,” he continues. “They might have to lay off staff, or close satellite locations, or do whatever they can to ensure that profi tability stays in the business. That’s really the fi rst step: to pro forma the new rates into their business.”

Then a provider needs to determine their personal goals and objectives when it comes to owning the business and serving patients, and then decide whether or not the business, under the new rates, can perform in such a way that they can accomplish their objectives. They need to start asking themselves some tough questions: Can they continue to grow the business? If they won the contract, could they survive to re-bid the contract at the end of its three-year term?

“Once you start answering those questions, you get to the point where you can decide if the perceived risk of owning the business outweighs the return on your investment — that you could possibly make somewhere else,” Clifford says.

In terms of the process of selling an HME business, perhaps one of the best places to start is to hire an M&A fi rm that can acts on the business owner’s behalf. In the same way a homeowner hires a real estate agent to conduct the sale of a home, a small business owner should consider hiring a fi rm that can help it navigate the ins and outs of transacting a business from one owner to another.

While providers can and do sell their businesses by themselves — just like

some owners, to carry the real estate analogy — hiring a fi rm that can act as a broker not only helps the HME business owner with the process, but it frees that owner up to attend to matters at hand.

“One very important thing is to continue running your business, and to not take your eye off the ball,” Clifford notes. “That’s why you hire someone to do this type of work for you.”

And that can turn into a competitive advantage when there are multiple fi rms trying the sell-by-owner route.

“There are 91 CBAs,” Davis says. “There’s a minimum of 10 to 20 companies at least in everyone of those markets that doesn’t know what to do [when selling a business]. There are probably hundreds and hundreds of companies that don’t know what to do. And when they show up in the marketplace, they are going to have a hard time to allow for their story to be told and for buyers to understand who they are. If they don’t go through this process, they’ll be short-changing themselves.”

In terms of the broker’s compensation, just like a real estate agent, the fee

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“Round Two is going to shape all mergers and acquisitions in HME. It’s impacting every element of the M&A market.”

—Don Davis, Duckridge Advisors LLC

36 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

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Mergers and Acquisitionscategories and patient groups, so that they can sit down and clearly describe exactly what is for sale, according to Clifford.

The next step is market research. The provider and broker can go out to the broad market of buyers and start collecting information, to draw some educated conclusions about the core market for the business. The provider

should look to see which components of the buyers’ market can best help them attain their objectives for the sale of their business.

“So it’s kind of a process to go through to get to the end game of selling your business,” Clifford says.

Valuing HME BusinessesWhen it comes to putting a price on a business, valua-tion is going to be very tricky given the announcement of the Round Two bid rates, which Davis notes have forced business values to drop precipitously since CMS broke its news at the end of January.

“Traditional model of our business were based on cash fl ow and EBITDA revenues,” he explains. “Even if all those multiples stay the same. Even if the EBITDA multiple stays three to four times EBITDA, everybody’s EBITDA has dropped so much that the value of the total

typically is a commission paid at the close of the transaction. If a provider decides to hire an intermediary, then the best thing the provider

can do is start preparing for the meeting with that broker. Good ways to prepare are to conduct such research as the pro forma application of the Round Two bid rates to their P&L, as well as a breakdown of the business showing key

460

IT and M&ABelieve it or not, one tool that can defi nitely help HME

providers both increase the value of their business and

better determine if they should sell, and if so, how it can fac-

tor into the due diligence process.

“It’s a tough process to sell your life’s business,” says

Greg Timmons, president and CEO of MedAct Software

(McKinney, Texas; medactsoftware.com). “How you put a

valuation on it is diffi cult.”

Having a sound information technology infrastructure

can boost a business’s value in the same way a homeowner

might boost a home’s value by adding improvements. IT is a

resource that HME business buyers want to see in place, in

the same way home buyers might want to see granite counter

tops in the kitchen.

Timmons says IT helps M&As in four ways:

• Operational value. This is for the DME that’s looking to

sell in the next 12 to 18 months, so that the provider has

enough time to demonstrate the value that the software

will confer in increased effi ciency and profi tability.

• Value of information. When a provider business has all

of its fi nancial, revenue and patient information in a

centralized, state-of-the-art information system, the buyer

is assured that the seller is getting all the revenues from

patients and referrals that can be obtained.

• Information integrity. A centralized data system also

demonstrates that the fi nancials being provided are

trustworthy, because all the information is in a central-

ized repository and available for inspection. It also will

show that the provider is following all the necessary claims

documentation practices and procedures.

• Integration value. A centralized data system is going to

be very important to a buyer looking for easy integration

value. If the buyer has to contend with a collection of

disparate systems and databases, trying to bring that into

37hme-business.com | March 2013 | HMEBusinessManagement Solutions | Technology | Products

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business has dropped by that much. So the multiples have stayed the same, but the valuations have dropped considerably.”

So understanding what buyers are looking for and tailoring presentations to meet those needs and expectations will defi nitely help a company tell a compelling story to a buyer. This includes recognizing how trends related to Round Two and other factors will infl uence the compa-ny’s value.

For instance, given the likely trend that large, super-regionals will be looking to consolidate in a given geog-raphy, they will need to offer a full line. If a provider in the markets served by that large buyer can help it add a key category to get them to that full line, then that seller has a compelling story to tell.

“We are seeing some segmentation,” Davis says. “But for the most part, I think the buying activity is going to be across the board ‘traditional DME-to-traditional DME.’”

And when it comes to the traditional, multi-line approach, customer service capability will not play a reduced role in the valuation of an HME business. It represents too much overhead given Round Two’s rates.

“The pricing has taken out the customer service from

the equation,” Davis explains. “So the lowest level price has become a trans-actional, delivery, logistics, compliance model, without really concern about patient care. It’s almost as though the patient care got punted to the hospitals, or wherever else.

“…I think that’s kind of how the next generation of DME companies will have

the buyer’s system could prove problematic and expensive.

This is also an important consideration for providers that

have their data stored remotely, such as in a hosted system.

Timmons advises providers with those systems fi nd out

up-front how much and in what format they will get their

data when they are prepping to sell.

All of these four values or appeals of IT are important,

because they increase confi dence and speed up the process,

which is critical, Timmons says. The longer the due diligence,

the more the buyer will “ding” the seller.

“If you’re a buyer, you’re looking for ways to reduce your

price point,” he says. “So you’re digging and digging to try

and understand what you’re getting and what you’re getting

has integrity to it.”

And, as mentioned, the purchasing provider will also seek

the smoothest possible integration path.

“The more that it is computerized and put into relational

databases, the easiest it is to convert that over to your system

as the buyer, or to use that system going forward,” he notes,

adding IT can be a true selling point to buyer’s with legacy

systems. “Maybe you, as the buyer, don’t have state-of-the-art

technology, but the company you’re purchasing does. You

just bought an asset.” ■

“You need a single version of the truth. You can’t have one database saying one thing, and another database selling another thing.”

—Greg Timmons, MedAct Software

38 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products650

Mergers and Acquisitions

to look at who they are,” he continues. “And that’s what the big guys are going to be doing.”

The ProcessA key element in the process is ensuring the seller has all the information that buyers will want when performing due diligence, Clifford explains.

“Buyers have to verify the revenue of the seller,” he says. “They have to go through and review all the patient charts that would support the billable amounts of revenue. So they have to verify. That’s the biggest step.”

Also, the buyer will need to engage in the same sort of pro forma review using the Round Two rates that Clifford mentioned earlier when discussing how a provider might decide whether or not it is time to buy.

“You have to understand the pro forma of a P&L under the new rates,” he explains. “You have to run that P&L on the prospective business, and under-stand the cash fl ow that prospective business will generate.”

And in the same way that a buyer is going to perform due diligence on the seller to ensure that the seller is going to be a good buy, the seller will want to do some due diligence on the buyer. This is important when it comes to ensuring that the buyer will be able to provide suffi cient patient care and that it will have the fi nancial wherewithal to conduct the transaction, Clifford explains.

“So the due diligence process is also an opportunity for the seller to review the buyer,” he says.

Assuming buyer and seller can make a match, there are various terms under which the deals are usually struck. One common arrangement providers should be aware of up-front is performance-based transactions. Under these terms, the buyer pays a portion of the purchase price up-front, and the remainder after a certain amount of time to ensure the business can perform as expected. Also called an earn-out, such an arrangement is typical, Davis says.

“I haven’t worked on deal where that wasn’t a component for a while,” he says. “It’s usually some sort of percentage of the total compensation that is held back to ensure that there is a smooth transition, that the referral sources do come through, and that the revenues hold up.

“Traditionally, that’s been 15 percent to 20 percent of a deal,” he continues. “That could go higher.”

As for providers’ level of comfort with such an arrangement, that varies. Certainly having a portion of the deal hinging on how a new owner manages the seller’s business can be a little disconcerting to say the least, but if the terms of such an arrangement are properly negotiated, hopefully, this will put both buyer and seller a little more in their comfort zone.

“… Or not,” Davis half jokes. “That’s a huge amount of contention of the negotiation, I can tell you.” ■

“I can tell you that M&A activity has already started. Will the pace continue to quicken as we get to July 1, or will buyer’s wait until after July 1? I’m not quite sure.”

—Pat Clifford, The Braff Group

39hme-business.com | March 2013 | HMEBusinessManagement Solutions | Technology | Products

By Cindy Horbrook

Mobility products are invaluable to a wide variety of patient groups, from individuals with temporary injuries to those with long-term disabilities

that will require perhaps lifelong mobility assistance. For providers, mobility patients represent a large demographic whose numbers continue to grow, as roughly 10,000 Baby Boomers per day celebrate their 65th birthday.

However, between the industry-wide funding cuts, the removal of the fi rst-month purchase option and converting to a business model, power mobility providers have been put through the wringer over the past year. Also, manual mobility products are not immune from industry pressures either, as that category comes up against Round Two of competitive bidding.

Also, while complex rehab providers were spared from competitive bidding and the removal of the fi rst-month purchase option, providers of higher-end mobility solutions face their own challenges, as well. For instance, complex rehab providers are working to separate itself from the Medicare DMEPOS benefi t and make their category an entirely separate benefi t along the lines of orthotics and pros thetics.

Because of all these challenges and changes, mobility providers must keep an eye on the latest product advances to see how they might help them better serve patients and possibly give their businesses a new edge. Here are some of the latest offerings: ■

Mobility Product Solutions

Automatic alternating pressure cushion for wheelchairsAPK2• Automatic alternating pressure sore-

treatment cushion features various sizes of internal air bladders.

• Includes waterproof foam exterior and anti-microbial cover, as well as optional moisture-control unit to keep skin cool and dry.

• Custom confi gured and capable of full-time off-loading under an existing pres-sure sore.

Aquila Corp.(866) 782-9658aquilacorp.com

Intuitive ControlsPronto Air Personal Transporter• Features intuitive controls, advanced

electronics, and fast break-down features that aid in quick transportability.

• Combines pressure relieving immersion foam and breathable mesh upholstery, as well as MyBody Seating that contours and supports the drivers’ primary pressure points.

• In-line motor technology emphasizes travel range and allows for a smaller chassis construction.

Invacare Corp.(800) 333-6900www.invacare.com

Heavy-duty ConstructionJazzy Elite HD• Offers heavy-duty construction, a 450 lbs.

weight capacity and high-performance operation in a stylish, maneuverable package.

• Two-motor, front-wheel drive is ideal for the bariatric population, providing more stability up front with four wheels on the ground.

• Features include a four-post seating system for improved stability and positioning,14-inch knobby tires and optimum weight distribution for traction, NF-22 batteries for maximum range and a fi ve-amp, off-board charger.

Pride Mobility Products Corp.(800) 800-8586www.pridemobility.com

Maneuverable, mid-wheel powerM300 Corpus HD• Features a highly maneuverable mid-

wheel-drive power base and the popular Corpus seating system.

• Built for users up to 450 lbs.• The M300 HD also tilts 0-45 degrees and

reclines 90-150 degrees with ultra-strong actuators for elevating the feet above the heart.

Permobil(800) 736-0925permobil.com

Easy seating adaptabilityCatalyst Frame Option• The popular Catalyst folding wheelchair

line now is available with a seating system option that enables easy seating system adaptability.

• The seating frame option makes it easy to avoid interference issues when adapting the seating system onto the 1 inch top frame rail.

• Redesigned cross braces and seat hook supports.

Ki Mobility(800) 981-1540kimobility.com

Compact SizeRival• Rugged rear-wheel drive power chair

accepts a complete range of seating and electronics options, making it fully rehab capable.

• Features include maximum speed up to 6 mph, a high-performance, high-effi ciency motor package, sliding battery tray for easy access, two suspension packages, 300 lbs. weight capacity and 10 color options.

• Offers a compact size for maneuverability in tight spaces.

Quantum Rehab(866) 800-2002www.quantumrehab.com

40 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

HME InventoryCompiled by Cindy Horbrook

Undergarments offer independence to those with dexterity and mobility issuesEasyUndies Medical Garments are designed to help individuals with dexterity and mobility issues or grasping challenges. The garments feature Quick Strips closures on each side, which allows users to put on or remove the garments whether they are standing, sitting or lying down. The tabs at the top of the Quick Strips are designed for individuals who have trouble grasping and pinching. The garments are available in women’s brief, men’s brief, boxer shorts and boxer briefs styles.EasyUndies(888) 234-3588www.easyundies.net

Catalog showcases new oxygen productsResponsive Respiratory’s 2013 Oxygen Solutions Catalog includes a myriad of products for the oxygen market including conservers, regulators and cases, carts, racks, cylinders and accessory items. The new catalog also showcases new home fi lling products and accessories introduced in late 2012. The full color, glossy catalog is a complete respiratory resource guide for the home healthcare, hospital and EMS markets. The catalog is avail-able for download in PDF format on the company’s website or can be requested by phone.Responsive Respiratory(866) 333-4030www.respondo2.com

Airway clearance technology offers alternative to traditional suctioning methods

Philips Respironics’ CoughAssist T70 is designed to provide a comfortable alterna-tive to traditional suctioning methods. The device clears secretions from the lungs by gradually applying positive air pressure to the airway and then rapidly shifting to negative air pressure. The shift in pres-sure creates a high expiratory fl ow that

simulates a deep, natural cough. Instead of introducing a suction catheter into the airway,

air is delivered through a face mask, a mouthpiece or through a simple adapter that allows the device to function with an endo-tracheal or tracheostomy tube. Philips Respironics(800) 345-6443www.philips.us/coughassistT70

Heavy-duty lift features increased weight capacityHarmar’s AL-500HD, a heavy-duty version of its Universal

Power Chair Lift, increases its weight capacity to 400 lbs. and secures the chair with ultra-safe and versatile Q’Straint retractors. The lift has been tested to ensure reliable performance, durability and convenience with one-switch operation. It does not require modifi cations to the mobility device and will accept the compa-ny’s Swing-Away option, which

allows easy access to a vehicle’s cargo area.

Harmar(866) 351-2776

www.harmar.com

Lift chairs feature super-soft fabrics selectionsPride Mobility’s LC-525 lift chair series is now available in fudge, garnet and Ppecan Ultrafabrics Ultraleather, which offers a detailed grain pattern expressive of premium grade leather. The two-tone shading of this soft fabric is the result of a laboratory process that layers grain patterns to create depth and texture. The hypo-allergenic and pet-friendly lift chair series features a “zero-gravity” position, back style, infi nite-position hand control and super-soft fabrics selections. Pride Mobility Products Corp.(800) 800-8586www.pridemobility.com

Foot-operated wheel lock designed to improve ease of useConvaid’s new foot-operated rear wheel lock replaces the current hand-operated rear wheel lock on the Cruiser, EZ Rider, Metro, Rodeo, Safari Tilt, CuddleBug, C-Sport and Clipper wheelchair models. The foot-operated lock is designed to help improve the chair’s ease of use.

Benefi ts include an audible click when the brake is completely engaged and a lock or an unlock position, which prevents partial engagement and the wheel from wearing out.Convaid (888) CONVAIDwww.convaid.com

41hme-business.com | March 2013 | HMEBusinessManagement Solutions | Technology | Products

EDITORIAL INDEXMEDTRADE SPRING PRODUCT SHOWCASE

COMPANY NAME PAGE

CAIRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 25Fastrack Healthcare Systems Inc.. . . . . . . . . . . . 24GF Health Products Inc. . . . . . . . . . . . . . . . . 22, 26Philips Respironics . . . . . . . . . . . . . . . . . . . . . . . . 24Pride Mobility Products Corp. . . . . . . . . . . . 22,26Quantum Rehab . . . . . . . . . . . . . . . . . . . . . . . . . . 22Responsive Respiratory . . . . . . . . . . . . . . 22, 24, 26Roscoe Medical . . . . . . . . . . . . . . . . . . .22, 225, 26

SPECIAL RESPIRATORY & SLEEP MANAGEMENT MEDTRADE PRODUCTS PREVIEW

COMPANY NAME PAGE

Philips Respironics . . . . . . . . . . . . . . . . . . . . . . . . 14Sunset Healthcare Solutions. . . . . . . . . . . . . . . . 14Responsive Respiratory . . . . . . . . . . . . . . . . . . . . 14O2 Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Drive Medical . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Advertiser Index

ADVERTISER INDEX

COMPANY NAME PAGE

COMPANY NAME PAGE

Contact the Editor:David Kopf(949) 265-1561dkopf@1105media.com

HME Business welcomes comments and suggestions from readers. For editorial archives and subscription information, including how qualifi ed HME professionals can sign up for HME Business, visit us online: www.hme-business.com

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National Sales ManagerCaroline Stover(323) 605-4398 cstover@hmemediagroup.com

Sales AssistantLynda Brown (972) 687-6710 lbrown@1105media.com

Upcoming Industry EventsApril 17-19Midwest Association for Medical Equipment Services Spring Convention & Exhibitionhttp://mames.site-ym.com/

May 9-10Pennsylvania Association of Medical Suppliers Annual Conventionhttp://www.pamsonline.org/

May 22-23American Association for Homecare Washington Conferencehttp://www.aahomecare.org/

May 30-June 12013 CSRT Educational Conference and Trade Showhttp://www.csrt.com/en/events/2013_conference.asp

SPECIAL RESPIRATORY & SLEEP MANAGEMENT ADVERTISER INDEX

COMPANY NAME PAGE

ACHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8CAIRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Inova Labs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Mountain Aire Medical . . . . . . . . . . . . . . . . . . . . . 11RemZzzs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Sunset Healthcare Solutions . . . . . . . . . . . . . . . . . 7The Compliance Team . . . . . . . . . . . . . . . . . . . . . 16Transcend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2VGM Group Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Worthington Cylinders . . . . . . . . . . . . . . . . . . . . . . 5

AAHomecare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43ACHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Arkray USA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Blue Chip Medical Products Inc. . . . . . . . . . . . . . . 3BOC International . . . . . . . . . . . . . . . . . . . . . . . . . 36Brightree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Computers Unlimited . . . . . . . . . . . . . . . . . . . . . . 21CPR+ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Dr. Comfort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Fastrack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Florida Orthopedics . . . . . . . . . . . . . . . . . . . . . . . 19Harmar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17HQAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Inova Labs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Invacare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Juzo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30KLC Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38MedAct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Mountain Aire Medical . . . . . . . . . . . . . . . . . . . . . 35National Ramp Corp. . . . . . . . . . . . . . . . . . . . . . . 23Noble House . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Nonin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Pride Mobility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5QS/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31The Compliance Team . . . . . . . . . . . . . . . . . . . . . 29

HME INVENTORY

COMPANY NAME PAGE

Convaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40EasyUndies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Harmar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Philips Respironics . . . . . . . . . . . . . . . . . . . . . . . . 40Pride Mobility Products Corp. . . . . . . . . . . . . . . 40Responsive Respiratory . . . . . . . . . . . . . . . . . . . . 40

PRODUCT SOLUTIONS - MOBILITY

COMPANY NAME PAGE

Invacare Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Permobil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Pride Mobility Products Corp. . . . . . . . . . . . . . . 39Ki Mobility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Quantum Rehab . . . . . . . . . . . . . . . . . . . . . . . . . . 39Aquila Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

42 HMEBusiness | March 2013 | hme-business.com Management Solutions | Technology | Products

The bariatric marketplace is on the forefront of the minds of doctors, caregivers, facilities, DME providers and manufacturers across the na-tion. Statistics prove that more than one-third of the U.S. population is

overweight, and in 2009 to 2010, it was reported that 35.7 percent of adults — more than 78 million — and 16.9 percent of children and adolescents — about 12.5 million — were obese. By the year 2030, it is predicted that 42 percent of Americans will be obese.

This demographic can be more susceptible to heart conditions, type II diabetes, stroke, rheumatology and orthopedics, and certain types of cancer. In 2008 alone, $147 billion was spent treating these conditions. Why so much, you may ask? Because people in this demographic can require specialized equipment and specialized care.

As we continue through this decade, it is likely we will see this population increase even further. As an HME provider, it is important you are poised to properly service this market segment and develop your business further.

Be Sharp and Sensitive Whether it is bath aids, mobility devices, or home modifi cations, this demo-graphic will need products that are durable, adjustable, and provide increased accessibility. Have a well educated staff that is not only sensitive to this client base, but is also up to date on the latest product offerings and innovations.

Providers who are willing to employ new and creative marketing strate-gies to drive consumer awareness on a consistent basis also drive more traffi c to their showroom, and ultimately, more sales. Include tips and testimonials about access and independence on your website and brochures.

Providers should utilize a store plan-a-gram to lay out their showroom in an effi cient and visually appealing manner, being conscious to put adequate space between products for easy browsing. Set up your showroom by grouping bariatric products together and promoting the latest and greatest solutions.

Partner with a manufacturer that offers the merchandising collateral to help you accomplish your bariatric marketplace goals. Often, a manufacturer will have a number of support services to help you meet your merchandising needs, and can often be able to offer advice on the most effective techniques to get people in your door.

Compliment Every Product Solution Consider this: 30 percent of people aged 45 to 64 are considered obese. They may not have a need for equipment or supplies yet, but, unfortunately odds are they will in the future. Providers should set reasonable expectations early on in the process in terms of meeting bariatric clients’ needs. Be thorough in your product and accessory research, and be absolutely sure you are comfortable with the diverse seating and positioning needs of these individuals.

Providers looking to supply equipment to this market should have a wide range of product offerings and brand names and incorporate a product up-sell strategy by offering accessories and aftermarket products. Make suggestions that could compliment the product you are supplying and further increase independence, such as threshold ramps and grab bars.

Whether you provide a heavy-duty manual chair or a power operated vehicle (POV), be sure the equipment you provide is the right size for your client. Providing the correct size equipment with the proper weight capacity and seating from the get go reduces the likelihood of complications arising due to improper sizing.

Once you have a product selected that supports your client’s weight, size, and unique needs, make sure it is adjusted to allow for the most amount of access and weight distribution possible so the client can safely reach the sink, transfer to a commode, navigate a hallway, etc. Do you have the measurements of his or her doorways, the height to the kitchen counters and cabinets, or space between the bed and wall? Keep all of this information in mind when properly servicing your client in his or her day to day life and use creative thinking to address potential accessibility challenges.

Build Goodwill, Leverage Referral Sources As providers, it should go without saying that communication between you and your client is of the highest importance. But, you should also understand that the role of the caregiver is of critical signifi cance with the bariatric con-sumer, so the product education for this marketplace is typically for both end user and caregiver. Therefore, build lasting relationships with people of the utmost importance to your client. They can oftentimes provide you with vital details that your client may have overlooked.

Provide quality service after the sale. You have taken the time to provide the correct equipment, so be sure that product is going to able to withstand the rigors of daily use and last for a reasonable time period. Otherwise, your clients will be frustrated and your bottom line will be impacted by numerous service calls. Remember, when your client and his or her caregiver have had a positive experience working with you, they are likely to share this news with others. Positive word of mouth is a great way to bring in additional referral sources, including occupational and physician therapists, case managers, nurse practitioners, social workers, and primary care physicians.

Market your company and the products and service you provide to your clients and referral sources. Have a wide variety of collateral materials that detail the extensive products and services you have to offer the bariatric market. Also, think about cross branding. If you’re the local mobility expert within your area, consider partnering with a home and/or automobile modifi cation supplier in the area. Sharing referrals can be a great way to pull resources and stretch your advertising dollars. Together, you may even participate in community events that can raise awareness of the products and services you provide.

If you keep your team of employees educated and armed with knowledge, have a varied product selection that is sensitive to the needs of your clients, and properly market your business by having a go-to reputation, your future

sales will grow. ■

Is Your Business Bariatric-Ready?How providers can cater to the unique dynamics of the bariatric marketplace.

Ted Raquet

Observation Deck

Ted Raquet is the senior vice president of Domestic Sales for mobility prod-ucts manufacturer Pride Mobility Products Corp. He can be reached via email at traquet@pridemobility.com.

Register today at www.aahomecare.org/advocacy/stand-up-for-homecare.

Now is the time.

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For more information, contact Ashley Jackson at 1.866.289.0492 or ashleyj@aahomecare.org.

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4 Respiratory & Sleep Management | March 2013

Even before CMS rendered its March 2008 verdict to expand coverage of CPAPS for patients diagnosed with obstructive sleep apnea (OSA) via home sleep testing

(HST) devices types II, III and IV, HME providers had been anticipating how HST might become a viable revenue stream for them.

Fast forward to 2013, and you will see that HST has grown dramatically in popularity, says Jeffrey S. Baird, Esq., Chairman of the Health Care Group of Brown & Fortunato, P.C. And he thinks the reasons are obvious: convenience for the patient and accuracy of the test results.

“Over the last 10 years, the medical community has been focusing on obstructive sleep apnea,” says Baird. “In doing so, two conclusions have been reached. First, OSA is a common problem and there are millions of Americans who are undiag-nosed. Second, OSA is a cause of a number of health problems. There are two ways that a patient can be tested for OSA. One way is for the patient to spend the night in a ‘brick and mortar’ sleep lab in which the patient undergoes a polysomnographic test. Until recently, this has been the most prevalent test for OSA. However, it is not convenient for patients to spend the night in a sleep lab. Plus, technology has improved. As a result, we are seeing a dramatic increase in the second way for a patient to be tested for OSA: home sleep testing.”

According to Baird, with a home sleep test, one of three

individuals/entities will allow a patient to take home an HST device: physician, sleep lab, or company that specializes in manufacturing/distributing such devices. The patient will hook the device up when he or she goes to sleep and then will return the device the next day. The treating physician will review the results of the HST, determine whether the patient has OSA and, if so, determine whether to order a CPAP for the patient.

Home sleep testing is defi ned as portable testing for sleep apnea, which is conducted away from a sleep lab and in most cases is unattended by a sleep technician, says John Carter, VGM Group, National Sleep Services, Associate VP Marketing and Contracting. What is measured, he says, varies depending on the device that is used. Most tests measure oxygen satura-tion, breathing effort, airfl ow, and body position.

“Like all things in healthcare, cost seems to be the main driver for HST,” says Kelly Riley, Director of The MED Group’s National Respiratory Network. “Secondly, there are numerous pieces of published data that point to both the effi cacy and similar/same outcomes with HST when compared to in lab testing. For example, the fi ndings of Samuel T. Kuna, M.D, Chief of the Pulmonary, Critical Care and Sleep Section at the Philadelphia VA Medical Center, is one of the published data sources I was referring to.”

Riley says that many payors are actually driving the

As HME providers look for additional revenue streams, they are giving home sleep testing a second look. Can it be a viable service?

By Joseph Duffy

sleep

http://www.worthingtoncylinders.com

6 Respiratory & Sleep Management | March 2013

“HST has allowed us to improve the aff ordability of sleep testing for our patients, although the patient type has been real limited to this point.”

— Ted Wawrzyniak, HealthPartners

market away from in lab testing and into an HST model now. Several, including Aetna, Humana and Wellpoint/Anthem, are now requiring that in lab testing (PSGT) be pre-authorized; that makes it easier to open the doors to HST.

Baird says that the American healthcare system is the best in the world, but unfortunately, as a country, the U.S. cannot afford its healthcare system.

“The watchwords of healthcare are ‘cost containment,’” he says. “In particular, the goal is to keep patients out of physi-cians’ offi ces and facilities and to conduct testing and deliver healthcare in the home. This saves money and is much more convenient for patients. Therefore, the genesis for HST is the

same as the genesis for many of the technological develop-ments that we see in healthcare: patient convenience and cost savings.”

What’s in it for HME Providers?Before answering whether HST is or can be a viable revenue stream for HME providers, Baird says it is important to look at the big picture.

“Approximately 75 percent of CPAP patients are commer-cial (non-Medicare) patients; approximately 25 percent are Medicare patients,” he says. “In order for a DME supplier to survive, it needs to lessen its dependence on Medicare fee-for-service. The fact that most OSA patients are non-Medicare opens up opportunities for suppliers.

“So let’s talk about commercial OSA patients,” he continues. “Unless the commercial insurer says otherwise, the DME supplier can provide the HST device to the commercial patient and then also sell the CPAP to the commercial patient. Thereafter, the DME supplier can sell, for example, every three months, the mask, fi lter and tubing necessary for the commer-cial patient to use the CPAP.”

Baird calls this the “classic ‘razor and razor blade’ model.” In other words, Gillette loses money on selling the razor but makes up for it by selling the disposable razor blades. Similarly, a DME supplier mightly only break even in selling the CPAP, but will generate a profi t in selling the subsequent supplies.

However, that business model doesn’t work when the DME supplier is working with Medicare patients, since they are barred from doing both types of services. According to 42 CFR 424.57(f): “No Medicare payment will be made to the supplier of a CPAP device if that supplier, or its affi liate, is directly or indirectly the provider of sleep test used to diagnose the bene-fi ciary with obstructive sleep apnea.”

sleep

Re-examining HST

Jeff rey S. Baird, Esq., Chairman of the Health Care Group of Brown & Fortunato, P.C., shares why HST and other outside-the-box tactics are important for DME suppliers’ survival:

“These are unique times,” he says. “Medicare went broke serving 23 million of the Greatest Generation and an additional 20 million of the Korean War generation. Medicare is now facing a tsunami of 78 million Baby Boomers (those born between 1946 and 1964). Boomers are retiring at a rate of 10,000 per day; they will live to be 85 years old; and their bodies will break down when they turn 70.

“In short, the demand for what DME suppliers have to off er is increasing exponentially,” he continues. “I call this the ‘irresistible force’ (78 million Baby Boomers) meeting the ‘immovable object’ (a broke Medicare).”

Baird says that at the same time, DME suppliers are being subjected to a “perfect storm” of challenges: • competitive bidding; • post-payment audits; • prepayment reviews; • reimbursement cuts; • increasingly stringent documentation requirements;• aggressive investigations by Medicare contractors (e.g., ZPICs and the NSC).

“In order to be successful, the DME supplier needs to think outside the box. It needs to push itself out of its comfort zone,” he says. “This means that the supplier must lessen its dependence on Medicare fee-for-service.”

There are a number of ways for the supplier to accomplish this, Baird says, starting with HST:• Knowing that approximately 75 percent of OSA patients are not Medicare benefi ciaries gives an

opportunity to the innovative DME supplier. The supplier can aggressively market for commer-cial OSA patients. The supplier can off er face-to-face OSA education seminars; the supplier can do the same thing with webinars. The supplier can market to physicians, RTs, pharmacists, and other healthcare providers. Understanding the “razor/razor blade” model, the innovative DME supplier can focus on establishing an ever-growing patient base of commercial CPAP patients who need masks, fi lters and tubing on a continuous basis.

• The supplier can aggressively move into the retail (cash) market. In doing so, the supplier can sell Medicare-covered items for cash at a discount off the Medicare allowable, so long as certain guidelines are met.

• The supplier can focus on selling (and installing) non-Medicare covered items that allow patients to stay in their homes. For example, the supplier can install a patient lift that transports a patient from one room to another. Another example is bathroom remodeling that transforms the bathroom into one that is safer and more user friendly.

• The supplier can seek out managed care and commercial insurance contracts.• The supplier can seek out VA and TRICARE contracts.• The supplier can move aggressively into the workers compensation market.• The supplier can seek out and become part of Accountable Care Organizations (ACOs) that are

created by the Aff ordable Care Act (Obamacare).• The supplier can enter into joint ventures with hospitals.• The supplier can place employee liaisons in hospitals and other facilities.• The supplier can set up loan closet (stock and bill) arrangements with hospitals and other facilities.

HST and a ‘Broke’ Medicare

“The genesis for home sleep testing is the same as the genesis for many of the technological developments that we see in healthcare: patient convenience and cost savings.”

— Jeff rey S. Baird, Esq., Brown & Fortunato, P.C.

March 2013 | Respiratory & Sleep Management 7

“In plain English, this says that if a DME supplier has any connection with the home sleep test, then Medicare will not pay for the CPAP (and subsequent supplies) sold by the supplier,” Baird explains. “This means that when it comes to Medicare patients, the DME supplier can either provide the home sleep test or can provide the CPAP, but not both. The DME supplier must choose between the two options. Compare this to commercial patients in which the DME supplier can provide the home sleep test and the subsequent CPAP (and supplies) unless the commercial insurer says otherwise.”

Growing PopularityTed Wawrzyniak, manager of home medical services, HealthPartners, says that HST is becoming extremely popular. He points out that some areas of the country are more popular than others, but it appears to be spreading across the country. Many providers are minimally experimenting with it right now. 

Wawrzyniak started doing HST as part of a pilot test with his dentists to test for oral appliance effi cacy. Once patients have the oral appliance, HealthPartners uses HST as a means of testing to see if the appliance is effective at treating OSA. In the past, HealthPartners would bring patients back for a much more expensive facility-based sleep study. Now, they are able to test the effi cacy without the expensive test. Wawrzyniak adds patients were never excited to go back for another night at the sleep center.

HealthPartners is just concluding the pilot as this article goes to press and Wawrzyniak hopes that results will determine how HST is used at his company in the future. Overall, he sees it as a positive practice.

“HST has allowed us to improve the affordability of sleep testing for our patients, although the patient type has been real limited to this point,” he says. “We think that in the future, it will greatly improve affordability of sleep testing for payors and our patients. At HealthPartners, we are doing what we can to make healthcare more affordable and improve the health outcomes of our patients.”

As far as HST goes, Wawrzyniak says it can be profi table, but not as much as facility-based testing.

“There are still inconsistencies among payors and reimbursement is generally too low,” he says. “Patients often have large out-of-pocket expenses for these tests. More payors are reconsidering this policy and they are increasing their reimbursement now to the point where it can be profi table if you can do the testing in an effi cient manner.

Because we have a complete sleep program, with a DME that provides CPAP, it can be a sustainable program that contrib-utes to our overall goals of improving the health and experi-ence of our patients, while at the same time, contributing to the increasing affordability of healthcare.”

Thomas Rothe, regional manager, Freedom Respiratory, Inc., says that HST should be a viable revenue stream for IDTFs and should not be something HME providers conduct. By remaining out of the HST arena, Rothe has been able to enhance his company’s relationship with sleep diagnostic centers.

“HME Providers should not be HST providers because HME providers are not licensed in most states to furnish patient assessment and testing,” he says. “That is the role of an IDTF.

sleep

8 Respiratory & Sleep Management | March 2013

Although Medicare/CMS has recognized that an HME can be the ‘courier’ for overnight pulse oximetry testing, there isn’t much opportunity for problems with obtaining an appropriate and accurate test — and if IDTFs are following the Medicare CMS Guidelines, they are simply dropping off the device and the patient does his or her own test and then they pick up the device to download after the test has been conducted.

“With HST, there is a need to ensure proper placement of electrodes, belts and other sensors that should be done by trained individuals in order for them to claim that the test results are reliable and can be used to prescribe therapy or additional testing,” he adds. “There is also a strong likelihood that the patient will be asking questions because of the nature or level of this test that should only be answered by licensed, qualifi ed or trained individuals, which is not likely to happen

“There are numerous pieces of published data that point to both the effi cacy and similar/same outcomes with HST when compared to in lab testing.”

— Kelly Riley, National Respiratory Network

because they are doing this in the home without a medi-cally licensed supervisor. Whereas a sleep lab, has a medical director who is responsible for providing this oversight.”

And one industry sleep veteran, who prefered to be quoted anonymously, added this reminder:

“HMEs are NOT IDTFs and Medicare aside, this type of behavior is what has hurt our industry. This is an example of why AASM wants to strip us of our role in sleep. Going after the dollars without regards to the science. We are not diagnosticians and to say we are is a real reach. It ‘reeks’ of self-referral and sets the stage to allow questioning as to the validity of not only the purpose for the test, but the outcomes. Driving awareness of the prevalence of OSA and then creating relationships between qualifi ed parties ( doctors and IDTFs or simply teaching  doctors who want to test out of their clinics how that can be done) I feel is a model that is both best clinical medicine and presents the best model to avoid scrutiny. Too many HMEs don’t know an AHI from and RDI, and how to differentiate central apneas from obstructive. This sets up some real risk.”

HST Revenue Sources for HME ProvidersAccording to Baird, in serving commercial patients, the DME supplier can realize income in two ways: First, the supplier can participate in the home sleep test and subsequently sell the CPAP unless the commercial insurer says otherwise. Second, the DME supplier can have no connection with the entity that conducts the home sleep testing, but can sell the CPAPs/supplies to the commercial patients who test positive for OSA. In serving Medicare patients, the DME supplier can realize income in one of two ways. The supplier can conduct the home sleep test and receive payment from Medicare for the test; however, the reimbursement is small. Alternatively, the DME supplier can have nothing to do with the home sleep test, but can sell the CPAP/subsequent supplies.

“DME suppliers need to understand that Medicare is more restrictive than commercial insurers,” Baird says. “An easy way to fi nd out if commercial insurers accept home sleep testing is to review their published coverage guidelines. These are normally found online. Another way to fi nd out if a commercial insurer accepts home sleep testing is to pick up the phone can call it.”

“Like it or not, HST is going to be part of what we do in the future,” says Wawrzyniak. “We have to be very careful in making sure we select the appropriate patients so that we are accurately diagnosing patients. Home medical compa-nies will benefi t by seeing more CPAP; however, we need to be careful about making sure these patients are seeing outcomes as good or better than those who get facility-based testing. By this, I mean better compliance, decreased hospi-talizations, better hypertension management, and better diabetes management.”

Joseph Duffy is a freelance writer and marketing consultant, and a regular contributor to HME Business and Respiratory & Sleep Management. He can be reached via e-mail at jduffy@hmemediagroup.com or joe@prooferati.com.

sleep

Re-examining HST

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March 2013 | Respiratory & Sleep Management 9

Without much surprise, results of RSM’s Fourth Annual Respiratory Survey shows that competitive bidding is once again the single biggest challenge facing

the homecare industry. Competitive bidding has staked this infamous claim three years in a row, with 43.6 percent of respondents pointing a fi nger at competitive bidding this year, compared with 43.9 percent from last year and 33.1 percent the year before. Coming in second with 17.8 percent of respondents was lack of understanding regarding homecare’s role in health-care. Right behind that with 16.8 percent of respondents was lack of reimbursement for home respiratory therapy services.

“Competitive bidding is not the only problem the industry faces,” said a survey-taker. “This makes it more diffi cult for all of the problems to be addressed in a timely manner. We have closed fi ve of six stores in order to keep a core business alive, and really have no where else to cut.”

Who are the respondents?This year’s survey respondents were polled from all over the United States, with 39.5 percent coming from the Midwest, 29.5 percent from the South, 21.7 percent from the East and 9.3 percent from the West. More about the survey respondents:• 62 percent have RRT certifi cation, 34.8 percent have CRT and

only 1 percent has AE-C.• 76.9 percent have 15 years or more as a respiratory therapist,

Fourth annual respiratory therapy survey shows that industry barriers continue to hamper RTs’ future. By Joseph Duffy

respiratory survey 2013

10 Respiratory & Sleep Management | March 2013

More about Competitive BiddingThe majority of respondents, 46.5 percent, are located in a competitive bidding area for Round Two; 11.6 percent are located in a Round One location, and 41.9 percent are not located in a competitive bidding area. Of those located in a Round One bidding area, 45.1 percent were Round One bidders, of which 63.6 percent did not get offered or accept a contract.

For Round Two, 61.9 percent of respondents bid for oxygen services and 60.6 percent bid for sleep services. The majority of Round Two bidders (39.5 percent) say they are somewhat confi dent that they will win a contract. Only 2.6 percent are

extremely confi dent, where 22.4 percent are not

while 1 percent has less than two years.• 49.5 percent have 15 years or more as a respiratory therapist

in the homecare setting.• 31.6 percent devote from 26 percent to 50 percent of their

time to oxygen therapy.• 29.6 percent devote from 50 percent to 75 percent of their

time to sleep therapy.• 41 percent devote less than 10 percent to asthma therapy.• 56.6 percent devote no time to ventilation therapy.• 99 percent recommend or approve products.• 28.8 percent select all products for purchase.

respiratory survey 2013

Respiratory Obstacle Course

confi dent at all.The majority of respondents who are bidding

in Round Two (60.5 percent) say they devised contingency business plans if unable to secure a Round Two contract. Respondents’ brief descrip-tions of their contingency plans include:• Our company has dropped most respiratory

services, focusing on retail non-insurance transactions.

• Hopefully we will be absorbed by one of the winners, or become strictly retail.

• We will lay off 20 percent of our personnel.• We will continue ventilator programs and

advanced respiratory services, contract oxygen, and refer out sleep.

• We plan to change our product mix to a more patient-centric model, increase our retail component of business, and eliminate as many deliveries as possible via new oxygen technology.

• Do more business with the VA, GSA contract, and retail.

• Open a retail store to attract more cash busi-ness, as well as contract more private entities for DME business.

March 2013 | Respiratory & Sleep Management 11

• We are a large hospital system respiratory-only DMR company. We are working on establishing “group” appoint-ments using two RTs to set up six patients at a time in a two-and-a-half- to three-hour time span. We just created a PAP video, which is viewed by patients before their appointment and will eliminate the RT’s initial education before setup. This makes us more effi cient and increases productivity.The industry’s attempt to improve the way that Medicare

pays for DMEPOS benefi ts is called the Market Pricing Program (MPP), a bill (H.R. 6490) now in committee. It has given the industry some hope that it could replace the competitive bidding model. When asked if the industry will be able to stop competitive bidding, either through repeal or replacing it with the MPP, before competitive bidding is implemented this summer, 44.1 percent of respondents said that it was not very likely. Only 2.5 percent said they thought the industry would stop competitive bidding before implementation.

“Our industry has done a poor job letting Congress and others know just what we have to do to get paid for our services,” says a respondent. “They have no idea that we must employ 30 percent more employees to jump through hoops just to get paid Medicare. They have no idea that we only end up with 80 percent to 85 percent of what we bill due to more strin-gent regulations and audits.”

Patient CareFunding cuts, caps and competitive bidding add pressure to HME providers trying to fi nd ways to solve patient compliance and standard of care issues. To address or improve patient compliance, respondents are making follow-up calls to patients (82.8 percent), making follow-up visits to patients’ homes (57.6 percent), distributing product literature (54.5 percent), partici-pating in patient support groups (20.2 percent), and hosting in-house meetings about equipment or medical diagnoses (12.1 percent). Respondents name bulky/burdensome equipment (34 percent) as a primary barrier to patient compliance for oxygen therapy, and diffi culty with masks or interfaces (56.6 percent) as a primary barrier to patient compliance for sleep therapy.

A respondent said, “One barrier we see more and more is the inability of patients to properly use the equipment because they are not in the proper environment. We see many people in a home setting who are early onset dementia and have family members who fi nd the decision to deal with moving a parent into assisted or SNF facilities too diffi cult to make. They want to see their elderly parents spend their fi nal days in the home they have known for so long but it isn’t always in the best interest of the patient. I’m not critical because we had to go through this same situation with my mother, but people need to somehow be taught that this decision-making process is now

respiratory survey 2013

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their responsibility for their aging parents, just as their parents were responsible for decisions for them when they were young.”

According to the survey, a majority of respondents (56.8 percent) have reduced the frequency of in-person therapist follow-up visits due to reduced reimbursement, where 21.6 percent have made no changes and 20.5 percent have elimi-nated in-person therapist follow-up visits all together.

Regarding equipment and oxygen delivery, 40.4 percent of respondents have reduced the frequency of oxygen deliveries due to reimbursement cuts.

Capping it off Finally, where 12.7 percent of respondents last year called the oxygen cap the single biggest challenge facing the homecare industry, this year, the oxygen cap fell to 5.9 percent. As

respiratory survey 2013

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of January 1, 2013, 16.9 percent of respondents said that 26 percent to 30 percent of their oxygen patients have reached the 36-month reimbursement cap. Last year, 15.7 percent of respondents said that 21 percent to 25 percent of their oxygen patients had reached the 36-month cap.

Joseph Duffy is a freelance writer and marketing consultant, and a regular contributor to HME Business and Respiratory & Sleep Management. He can be reached via e-mail at jduffy@hmemediagroup.com or jduffy@prooferati.com.

March 2013 | Respiratory & Sleep Management 13

It’s time again to hit the Vegas strip and get caught up with the industry latest developments, skills and offer-ings. With more than 70 educational sessions, including

workshops, seminars and webinars that started in January, Medtrade Spring will take place March 19 – 21 at the Mandalay Bay Convention Center in Las Vegas. The pre-show workshop, “Using Brightree as a Business Management Tool,” runs Monday, March 18.

About 4,000 HME providers attended last year’s show. This year, Medtrade Spring offers a sleep, oxygen and respi-ratory track that includes fi ve educational sessions. As of press time, all sleep/oxygen and respiratory track classes are pending 1.0 AARC CRCE approval. Classes that sleep/oxygen and respiratory professionals may be interested in are highlighted below. Following the educational opportuni-ties is a list of product demos to put on your show to-do list.

By Joseph Duffy

Providers return to Vegas to learn how to stay ahead of industry changes and about the latest tools to help their patients.

medtrade spring 2013

Sharpening Skills, Expanding Offerings

Are There Opportunities for Growth with Your Sleep Program?Tuesday, Mar 19, 2013 - 1:45 PM to 2:45 PMAmerica is not sleeping. This growing trend has presented great oppor-tunities for HME companies. This session will describe current industry practices with a sleep support program and which ones work well and which ones do not. Learn cost eff ective ways of managing your sleep patients and program while increasing revenue from other payors.Susean Nichols, President, Millennium Management Services

Justifying Oxygen Transfi lling Equipment, Options, Cost Analysis and Meeting RegulationsTuesday, Mar 19, 2013 - 3:00 PM to 4:00 PM This dealer certifi cation course helps providers/dealers select the best equipment and building options for high-pressure and liquid oxygen refi lling and cost justifi cation. Included in the seminar are demonstra-tions of several hazards of oxygen and an introduction to oxygen-refi lling regulatory requirements, and preparing for electronic FDA registration (including annual re-registration). Documentation and equipment requirements are reviewed. Also included is a fi nancial analysis of oxygen transfi lling options. This seminar is for anyone fi lling or planning to fi ll high-pressure oxygen cylinders and/or cryogenic (liquid oxygen) vessels.David Marquard, President & CEO, Applied Home Healthcare Equipment

Is Starting or Maintaining a Home Ventilator Program Worth the Trouble?Tuesday, Mar 19, 2013 - 4:15 PM to 5:15 PM This presentation explores the requirements and obstacles in starting or maintaining a quality home ventilator service. The minimum requirements for starting and maintaining a ventilator service are reviewed and discussed, while equipment needs, personnel and costs are reviewed. Learn how such a service may aff ect your accreditation, and a distinction is made between clinical respiratory services versus equipment management.Jeff rey Barch, Clinical Manager, GE Healthcare

Use of Oral Appliance Therapy in the Treatment of Sleep-Disordered Breathing: Driving Growth from the Dentist’s ChairWednesday, Mar 20, 2013 - 8:00 AM to 9:00 AMIn February 2006, the American Academy of Dental Sleep Medicine (AADSM) published practice parameters that said: “Oral appliances (OAs) are indicated for use in patients with mild to moderate OSA who prefer

them to continuous positive airway pressure (CPAP) therapy, or who do not respond to, are not appropriate candidates for, or who fail treatment attempts with CPAP” (Kushida, et al., 2006). Since then, the fi eld of dental sleep medicine has realized steady growth. This presentation will help educate the audience about the role that dental sleep medicine plays in the treatment of sleep disorders. It will also describe how HMEs and sleep labs alike can work in conjunction, not in competition, with dentists to grow awareness of sleep-disordered breathing, increase patient volumes for treatment, and improve patient outcomes by embracing a multidisci-plinary approach to treatment.Scott Blodgett, Dental Sleep Specialist, Eastern US, ResMed Corporation

Receiving and Maintaining Clean Documentation for Oxygen PatientsWednesday, Mar 20, 2013 - 9:15 AM to 10:15 AM Providing oxygen products and services to Medicare benefi ciaries has certainly changed over the years and has changed even more over the last 12 months. The days of having valid test results combined with a complete order as being adequate to be paid are long gone. We will discuss some of the most popular reasons for denials and what you, the billing team, sales team and clinical team can do to assist your company in getting paid and keeping the money.Kelly Riley, Director of Natl. Respiratory Network, MED Group

CPAP Clinic: Regulatory and Legal Update on Co-Locating PAP in Sleep Labs and Physician Practices - Regulatory Update on PAP Re-supply BusinessesWednesday, Mar 20, 2013 - 9:15 AM to 10:15 AM I. History - Co-location Limitations 1999 – Proposed Compliance Guidance 2008 - Proposed Supplier Standard 2008 – Proposed Affi liation Rule addressing affi liations between Sleep Test Providers and PAP Suppliers 2008 – Final Affi liation Rule 2010 – New Supplier Standard Prohibiting Co-Location of DME Supplier with Other Medicare Providers II. Federal Fraud and Abuse Rules Stark Law Prohibitions and Applicable Exceptions Anti-Kickback Statute, Safe Harbors and IDTF Co-Location Rule III. State Fraud and Abuse Rules Overview of State Laws that are More Permissive and More Strict than Federal Laws IV. Separating and Mixing Commercial Patients from and with Federal Pay Patients Interplay of Federal and State Rules and Recent OIG Guidance on Commercial Only Arrangements V. Regulatory Analysis of Diff erent Co-Location Models Now in the

14 Respiratory & Sleep Management | March 2013

Oxlife Independence O2 Concepts says they designed the Oxlife Independence with the patient in mind. With both continuous fl ow up to 3 LPM and pulse settings up to 6 (96ml), the Oxlife Independence gives patients freedom with 24/7 oxygen on the go. The patented ESA Technology makes the Oxlife Independence the world’s most energy effi cient concentrator, says O2, which enables it to be the only continuous/pulse POC that can be used on all settings and charged in the car. The Oxlife Independence is durable and mobile, using a lightweight metal housing coupled with its integrated cart with 6-inch recessed wheels. It has a small footprint and a long battery life that O2 claims is nearly double that of the closest competitor. This and the ability to charge the POC in the car make patient excursions easier. O2 Concepts (877) 867-4008www.o2-concepts.comBooth 523

Sunset Ruby Style ChinstrapSunset Healthcare Solution’s new and improved chinstrap is designed to be comfortable. This soft, burgundy-colored chinstrap is thinner and lighter than other available models. The Sunset Ruby Style Chinstrap is made entirely from one piece of soft latex-free neoprene and stretches to fi t without the use of Velcro straps. Similarly fashioned to Sunset’s Adjustable Neoprene Chinstrap, the Ruby Style Chinstrap cups the chin at a lower angel to provide maximum support and stay secure throughout the night. The Ruby Style Chinstrap is available in three sizes to provide a more perfect fi t. Sunset Healthcare Solutions877-578-6738www.SunsetHCS.comBooth 365

Home Filling Solutions Responsive Respiratory is off ering home fi lling solutions, including cylinders, valves, patient kits and new E home fi lling cylinders. Responsive Respiratory also have a personalization program designed to help respiratory providers enhance their image with their patients; to drive increased referrals from their partners; and to act as a theft deterrent.Responsive Respiratory866-333-4030www.respondo2.comBooth 646

Market VI. Telephone Solicitation and New Re-Supply Guidance for PAP Re-supply businesses.Daniel Brown, Managing Shareholder, Brown, Dresevic THE HEALTH LAW PARTNERS

Meeting 2013 FDA, DOT, & Accreditation Requirements for Oxygen Delivery Drivers/Techs, Warehouses, & DistributionThursday, Mar 21, 2013 - 8:30 AM to 9:30 AM This dealer certifi cation course provides an introduction to the 2013 FDA, DOT, & Accreditation requirements for oxygen delivery drivers, vehicles,

and buildings, including storage and distribution. Specifi cally, the hazards of high pressure and liquid oxygen are presented with computer visuals and several hazards demonstrated. Supervisors and drivers are introduced to 2013 FDA/DOT training and vehicle requirements, including low-cost options. Oxygen delivery truck and van vehicle requirements, including how to meet the latest DOT transport requirements (i.e., cylinder ejection, roll over, etc.), are presented. This dealer certifi cation seminar is for those who deliver oxygen or want to enter the oxygen business.David Marquard, President & CEO, Applied Home Healthcare Equipment

Joseph Duffy is a freelance writer and marketing consultant, and a regular contributor to HME Business and Respiratory & Sleep Management. He can be reached via e-mail at jduffy@hmemediagroup.com or joe@prooferati.com.

Sharpening Skills, Expanding Offerings

medtrade spring 2013

Wisp minimal contact hybrid nasal maskPhilips says that the Wisp minimal contact nasal mask, a hybrid nasal/pillow mask was constructed to off er the emotional appeal and benefi ts of a low-profi le mask with best in class performance. The mask was developed to cover four key areas: comfort, ease of use, visual appeal and the ability to fi t a wide range of patients. The modular frame comes in two styles that patients can switch between: a reversible fabric and clear silicon. This allows patients to watch television or read a book before going to bed, making it easier to live with. Philips Respironics800-345-6443www.respironics.comBooth 1314

SimplyGo Portable Oxygen ConcentratorPhilips Respironics claims that its SimplyGo Portable Oxygen Concentrator is the only POC to off er continuous fl ow and pulse-dose delivery in a single device weighing 10 pounds or less. For patients who need higher pulse settings at night, the sleep mode provides increased trigger sensitivity and a softer pulse for comfort. This gives homecare providers the option to meet the portable oxygen needs of many patients with just one POC. SimplyGo was constructed with a long-life compressor, a high-impact resistant design, and oversized cart wheels. Philips also says that SimplyGo can help providers to manage inventory, lower costs, and streamline services. The device is FAA approved.Philips Respironics800-345-6443www.respironics.comBooth 1314

Improved treatment for COPD, Cystic Fibrosis, Asthma patients.Drive Medical’s AeroNeb Go Micropump technology aims to provide effi cient treatments with shorter treatment times and increased compliance bot for pediatric and adult patients. The ultra-lightweight handset weighs two ounces, and silently delivers prescribed medications with 99.97 percent of particles generated in the respirable range. Drive aims to use the AeroNeb to increase care standards for patients suff ering from COPD, Cystic Fibrosis, and chronic Asthma, and to that end, the Allergy & Asthma Network Mothers of Asthmatics presented an Innovation Technology Award for the AeroNeb Go at the 15th Annual Allergy and Asthma day.Drive Medical516-998-4600www.drivemedical.com Booth 815

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”The Compliance Team is very easy to work with. They make a daunting process much more manageable.” At fi rst glance, maintaining a busy dental sleep medicine practice and going through a Medicare “deemed” accreditation process on their own seemed highly improbable to Dr. Keith Thornton and his staff . But that all changed when Sleep Well Solutions entered into The Compliance Team’s Exemplary Provider™ (EP) accreditation programs for DMEPOS and Sleep Care Management™. Our industry leading service specifi c Safety-Honesty-Caring® quality standards redefi ne Medicare’s accreditation

process in easy-to-understand terms. Add to that one-on-one expert mentoring by a Compliance Team Accreditation Advisor, web access to manuals, Fraud Abuse Awareness© plans and electronic outcomes (satisfaction survey) benchmarking, and it became readily apparent to Dr. Thornton and his staff that The Compliance Team’s EP program is healthcare’s best accreditation value bar none. For more details about our Exemplary Provider accreditation programs for DMEPOS and Sleep Care Management call us at 215.654.9110 or visit our web site: www.The ComplianceTeam.org.

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