Unless you’re a healthcare worker using durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) or are a home healthcare company, you probably have no idea what Medicare’s DMEPOS Competitive Bidding Program (CBP) is or how it affects healthcare equipment suppliers and patients.

Frankly, it’s been a thorn in the sides of many DMEPOS companies for years. Imagine their glee when the Centers for Medicare & Medicaid Services (CMS) proposed changes to the program.

All Medicare Durable Medical Equipment, Prosthetics, Orthotics, & Supplies (DMEPOS) Competitive Bidding Program contracts expired on December 31, 2018. As of January 1, 2019, there is a temporary gap in the entire DMEPOS Competitive Bidding Program that CMS expects will last until December 31, 2020. 

During the temporary gap, any Medicare enrolled DMEPOS supplier may furnish DMEPOS items and services to people with Medicare. In most cases, people with Medicare won’t need to switch suppliers on or after January 1, 2019. 

• Medicare beneficiaries may receive DMEPOS items from any Medicare-enrolled supplier until such time as new CBP contracts go into effect.
• When competitive bidding resumes, it will be under new program rules, as discussed below.

Future Competitive Bidding Program Rules

In a final rule scheduled to be published on November 14, 2018, CMS adopted a number of “market-oriented reforms” and technical policy changes for future rounds of competitive bidding. According to CMS, the new rules will simplify the bidding process, preserve beneficiary access to items and services, and make the DMEPOS CBP more sustainable.

Of particular note, CMS has finalized its proposed “lead item pricing” methodology. Rather than bid on each item/HCPCS code in a product category for each competitive bidding area (CBA), suppliers will submit a single bid for the item in the product category designated by CMS to have the highest total nationwide Medicare allowed charges.

Proposed Changes Are a Win/Win

According to a CMS Newsroom Fact Sheet, “Beginning on January 1, 2019, beneficiaries may receive DMEPOS items from any willing supplier (until new contracts are awarded under the DMEPOS CBP).”

Home healthcare supply companies are breathing a big sigh of relief about the proposed changes.

The proposed changes will benefit to small DME companies by allowing them to market their products and company to providers, facilities, and nursing agencies without limiting their customer base to non-Medicare insurances.

Even though Medicare fee schedule is low, it opens up the market to more customers and creates a fairer playing field for all companies, which will result in better service to beneficiaries.

For those companies who didn’t have contracts due to CBP, but now do, the only downside is they’ll need to jump back through the hoops of government regulations to get their Medicare claims paid.

To learn more about Medicare’s Temporary Gap Period or the future of Medicare Competitive Bidding, follow the link http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSCompetitiveBid/index.html?redirect=/DMEPOSCompetitiveBid/

Times are tough for smaller DME suppliers, but the changing healthcare landscape is also impacting larger entities.  Rising costs and shrinking reimbursements are part of the problem, but suppliers are also subjected to the vagaries of changing and even conflicting policies between Medicaid and MCOs (Managed Care Organizations).

The post is about why mergers and acquisitions provide solutions for durable medical equipment suppliers, taking some of the heat off in a challenging market.

Bigger Is Better

It’s unfortunate to note that the laws of the jungle apply in a market like the one we’re operating in, with big fish eating little fish in a system which has emphasized cost-cutting through competitive bidding.

In the case of DMEPOS (durable medical equipment, prosthetics, and orthotics supplies), a competitive bidding process is now in place but not everywhere.  The intention of the legislation behind CBAs (competitive bid areas) was to improve access and affordability for end users, but the impact on suppliers has been substantial.

Winners in CBA bids offer not only the lowest price but meet certain criteria for quality. Larger companies are better equipped to do this, with the ability to absorb pricing which proves less sustainable for smaller companies.

This is where bigger is better, as the offer to merge with a larger entity allows the smaller fish to survive, albeit in a new configuration.  Smaller suppliers augment their market presence and are enabled to offer a higher quality of care for the patients they serve, both old and new.

Mergers of this nature benefit both parties, allowing the larger company to benefit from the network of the smaller acquisition and the smaller company to benefit from the streamlined processes and market viability of its new mothership.

The Wave of the Future

Healthcare reform is ongoing and that’s unlikely to change for the foreseeable future.  As new challenges arise, this reality will further impact smaller suppliers, sending them into the arms of the DME industry’s big fish.

When going out of business isn’t an option, merging with a larger entity is an attractive option. While it may seem as though something has been lost, it must be remembered that something has also been gained.

Joining the ranks of a larger company serves to maintain existing legacy while benefiting the people who’ve worked to create it and adding value to the DME market with improved quality and patient service.

The sector has enjoyed steady growth in recent years, as well as an uptick in mergers and acquisitions, with names like Johnson & Johnson acquiring smaller suppliers, expanding their market share and creating new synergies which benefit patients.

Contact Us or Schedule a live demo http://localhost/main-site-update/live-demo/ to find out more.