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.

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It is important for you to take charge of getting your DME.  You know best what you need and it is your responsibility to make sure you get equipment that will work for you. This process can go more smoothly if you attend to the details

1. Who can get DME?
2. What are the steps in getting DME paid for?
3. What are the most common reasons for denial of payment?

What is Durable Medical Equipment?

According to the Centers for Medicare and Medicaid Services, is a health care device that helps a person with a mobility limitation to conduct activities in their home and community.  This includes such items as wheelchairs, walkers, oxygen tanks, communication devices and hospital beds. The Centers for Medicare and Medicaid Services defines durable medical equipment  as any equipment that:

1. Can withstand repeated use
2. Is not useful to a person who does not have an illness or injury
3. Is appropriate for use in the patient’s home

It’s strange how they think we are all sick and stuck at home, and that getting around is a medical issue!

What Are Some Examples of DME?

 DME is considered to include:           

• Equipment that can help you to get around more easily such as canes, crutches, walkers, wheelchairs or scooters.
• Equipment that you may need to care for yourself at home such as hospital beds, raised toilet seats, oxygen tanks, or machines that make breathing easier.
• Equipment that can help you to hear or see better like hearing aids or magnifiers.

DME does NOT include:

• Equipment that is considered “items of personal convenience” or reusable items, such as rubber gloves, catheter tubing, or irrigation kits.
• Equipment that is not considered to be for “medical use,” such as grab bars, lifts or shower chairs.
• Equipment used exclusively outside of the home is often labeled recreational or “used to pursue leisure interests” and may not be covered as DME.

So getting around is a medical issue, but taking a shower is not?? Who writes these regulations?

Who can get DME?

People who are admitted to hospitals and skilled nursing facilities for surgeries, illnesses or injuries will get the equipment they need before being discharged.  In these situations, the equipment that people receive depends on why they were in the hospital. For example, if you go to a hospital for a hip replacement, the hospital will probably send you home with a walker and a raised toilet seat.

The process for getting DME without being in the hospital is different. You can pay for any piece of durable medical equipment yourself. However, because it can be expensive, people usually use their health insurance to pay for DME. Insurance carriers have different guidelines for what equipment they will pay for.  For example:

Medicare pays for DME when you:

1. have Medicare part B;
2. have a doctor prescribe a covered item of DME; and
3. need the device in order to function in your home.

How Do You Get The DME You Need?

Once you have decide that DME is the right choice for you, there are several steps involved in getting it.  If you are able to pay for the equipment yourself, you can go to any DME vendor in your area that has the equipment you would like and you can purchase it.  Depending on whether it’s in stock and available, you may be able to pick up the DME immediately or usually within several weeks. Follow these steps to get your DME.

What is a DME vendor?

A DME vendor is a company that specializes in DME.  DME vendors have staff who are experts in equipment. Some are physical therapists (PT), occupational therapists (OT) and Certified rehabilitation technology suppliers. The vendors work with the companies that make the equipment as well as your insurance carrier.        

How do you find a DME vendor?

Your health insurance carrier may allow you to choose your own DME vendor. However, your insurance company may have a recommended DME vendor, and they may only pay for equipment you get through this vendor. Many times the DME vendor who has the contract for your insurance may not be the best qualified to handle your needs. Ask your insurance carrier what you may do if you are not satisfied with their vendor. You are the consumer!

If you have a choice of vendor:

1. Your doctor can recommend a DME vendor.
2. Ask your friends if they can recommend a DME vendor in your area.
3. Telephone your local drug store, pharmacy or medical supply company and ask if they know of DME vendors in your area.

Who Follows Up On Your Order?

You do. To make sure everything has been filed and the process is going smoothly, you should follow up with your DME vendor. Remember, they handle hundreds of requests so you also will want to follow up with Medicare, Medicaid or your private insurance company directly to check on the status of your claim.

You should keep a copy of every form filed with your request and get any claim numbers and all contact information. Make sure your doctor knows also how long the process is taking and what is happening so that he/she will be able to assist you in following up when necessary.

Conclusion: 

Getting the right gear for your unique needs can be a challenging and time consuming process.  Using the information provided here and attending to the details can help make the process go a little more smoothly and reduce the chance of having your request denied.  It is important that you take charge of getting your DME. It is your responsibility to make sure you get the right gear.

If you need any help in contacting DME Vendors Contact us. Our team will guide and support you with selecting of right DME suppliers for your Medical issues.

For every argument about sticking to your core mission, there’s a competing philosophy that says you must adapt to the times and embrace change.  Your industry and the business owners who comprise its ranks need to be open to change and re-evaluate their businesses and how they operate.

Reimbursement changes as well as technological advances, coupled with the changing styles of consumerism, how people shop, and the fact that customers are willing to pay for an increasing amount of their healthcare all make the environment ripe and ready for a change!

So, What is a DME supplier to do?  What changes are trending in the industry that you can consider? 

Here’s a list of some common and some not-so-common trends in how businesses are changing and adapting to the new reality that is healthcare:

1.  RETAIL:  

• For many years, retail was something many if not most DME organizations avoided.  Your customer service reps were too busy answering phones to wait on customers in a showroom. 
• Perhaps because you’re more likely to be spending your own money (as opposed to insurance, Medicare, etc.), folks are more willing to visit your DME stores than before. 
• Caregivers and loved ones are increasingly involved in the purchase/search for medical care, products, and supplies. 
• You’ll need staff to handle the traffic and provide customer service along with sales and you’ll need a location that is in a convenient part of town.  But, the payoff can be considerable. 
• Most DME organizations that provide retail services report that they get more traffic in their stores than in the past and the trend is increasing.

2. MAIL ORDER: 

• If you don’t think mail order services are worth investigating, consider Amazon. 
• They’ve literally changed the way America shops. 
• Malls are closing across the country because of this trend, and if you don’t believe that this method can work for healthcare, remember that Amazon is ramping up a mail order pharmacy. 
• Their delivery model is efficient and tough to compete with.  But they don’t have licenses and credentialing to provide DMEPOS and you do! 
• Mail order has become an effective way to distribute urological, enteral products, CPAP masks and supplies, diabetic testing materials, and a whole host of other products.

3. HOME MODIFICATION

• Who better than a DME that sells grab bars, bathroom safety equipment, and mobility devices to install stair glide systems, build appropriate and safe ramps for home access, and make a person’s bathroom safe for someone that has difficulty moving around?  you know the products and you often have a built-in database of potential customers. 
• Many of the same referral sources that send a patient who needs a wheelchair to a DME are also looking for a good, reliable home modification company to send new customers to.

4. SPECIALIZE:

• As DME owners, you need to constantly re-evaluate which product lines and which services are working and which aren’t.  Gone are the days that we can be “all things to all people.” 
• If your core business is respiratory products such as PAP and oxygen but you added bent metal DME and general medical supplies over the years, would it make sense to go back to your core business? 
• Bulging off product lines that are no longer profitable can help us focus our energies on products and services that are still worthwhile.

5. GENERALIZE:

• For many organizations, narrowly focusing on a specialty makes sense.  For others, however, adding additional product lines might make more sense.  If you have set up a business to deliver hospital beds, you probably have a warehouse, an area to clean and repair equipment, delivery personnel and vehicles, and customer service to answer the phones when these hospital bed customers call you with issues.  Why not put these resources to work for you in other areas?  The goal here isn’t to become all things to all people but rather to keep your staff busy, and utilize the skills and reputation you’ve developed in other, complementary areas.

The most important aspect of reinvention is to think it through.  What’s good for other DME organizations isn’t necessarily good for you!  But staying open to change and willing to consider other options can open a whole new avenue of opportunity and hopefully a better income stream.

Time to change your DME Business model. Contact us for more information +1(302) 613-1356

DMEs Get More Audits than Other Healthcare Suppliers:

RAC Audits Make DME Suppliers Continue to Provide Services, Even if Claims are Denied:

RAC Audits Ignore Medical Necessity:

RACs Are Not Always Reasonable:

The Integrated Care Resource Center recently released a briefing titled “Facilitating Access to Medicaid Durable Medical Equipment for Dually Eligible Beneficiaries in the Fee-for-Service System.” As the title states, the brief explores the approaches of Connecticut, California, and Illinois in ensuring dual-eligible beneficiaries receive the medical equipment they need.

⇒ Beneficiaries who are dually eligible for Medicare and Medicaid often experience difficulties accessing
durable medical equipment such as wheelchairs, in a timely manner. Whether Medicare or
Medicaid covers a specific item may be unclear.

To address this issue, some states, such as Illinois, California, and Connecticut, have developed procedures for provisional prior authorization from Medicaid for such items. States may supplement these procedures by posting lists of DME items that Medicare consistently denies as non covered, and allow DME suppliers to bill Medicaid directly for these items without first billing Medicare. This can make it more likely that suppliers will provide DME to dually eligible beneficiaries in a timely way, with less confusion and uncertainty about who will pay and when.

Policies Implemented by the Three States:

Currently, fourteen states have implemented provisional prior authorization policies supported by lists of DME items that Medicare does not generally cover. The ICRC explored the policies of three states to better understand how PA improves access for dual-eligible individuals.

California, Connecticut, and Illinois have slightly different DME billing policies. California and Illinois both implemented a feature that further facilitates the provisional PA approach. Each maintains an online list of DME items that Medicare generally denies as non-covered under Part B, but that Medicaid may cover. When it is clear from the list that Medicare will not cover the item, DME suppliers can submit their claims directly to Medicaid without first submitting them for a Medicare denial. In contrast, Connecticut developed a system that allows for prior authorization of DME before a Medicare denial.

Illinois’ Approach to DME Delivery

Illinois Medicaid simplifies the adjudication and payment of DME claims for dually eligible beneficiaries by enabling providers to use:

1.  An online information system called Medical Electronic Data Interchange that lets providers
   verify multiple elements of a beneficiary’s eligibility, including QMB status.
2. An online table for providers that specifies the services/items for which providers and suppliers can bill Medicaid directly because Medicare generally does not cover them under Part B. 

Online table for DME providers:

Illinois currently maintains a table on its website that indicates whether Medicare normally covers a specified DME item. 

California’s Approach to DME Delivery:

As in all states, the California Medicaid program (called Medi-Cal) requires that DME suppliers submit most
claims for dually eligible beneficiaries to the appropriate Medicare carrier or fiscal intermediary so they can
process the Medicare benefit first. However, providers are allowed to submit claims directly to Medi-Cal
when any of the following criteria apply:

• Medicare does not cover the item or service;
• The beneficiary’s Medicare benefits have been exhausted; or
• Medicare has denied the claim, or the recipient is not Medicare-eligible.

Online Table of HCPCS codes for DME Coverage:

Connecticut’s Approach to DME Delivery;

Connecticut began to operate its Medicaid program HUSKY Health through a self-insured, managed FFS
model in 2012. The Connecticut Department of Social Services has contracts with Administrative Service
Organizations for medical, behavioral, and dental health services as well as non-emergency
medical transportation. Community Health Network of Connecticut is the ASO that administers all
medical services, including DME.

Recent Federal Developments:

Two recent developments at the federal level may make it easier for states to provide prior authorization for Medicaid DME when Medicare may also cover the item:

1. Earlier Medicare authorization of some types of power wheelchairs. As of July 2017, a new Medicare prior authorization process is in effect nationwide for two types of power wheelchairs that may make the authorization process easier for dually eligible beneficiaries and power wheelchair providers by enabling them to get an earlier Medicare decision on those DME items.

Beginning September 1, 2018, 31 additional power mobility device codes will be subject to required prior authorization. These items are currently included in the Prior Authorization of Power Mobility Devices Demonstration, which is scheduled to end on August 31, 2018.

2. New incentive for states to develop lists of DME that Medicare will not cover. A new federal law,
effective January 1, 2018, limits federal matching payment for Medicaid DME that is jointly covered by Medicare to the amount Medicare would have paid, in the aggregate, for those items. This limitation does not apply to items of DME that Medicaid covers but Medicare does not.

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Obviously, the biggest pain point has to do a lot more work for a lot less reimbursement. Everyone is getting hurt from either losing bids and, therefore, losing patients / referral sources, or winning bids at a much lower reimbursement rate than they used to receive. Either way, it is very hard to make a profit. There are even more cuts on the way.

Private insurance carriers undoubtedly will copy Medicare, as they always have, and reduce reimbursements significantly. I heard from so many DME suppliers how hard it is to make a profit in this current climate, without tons of volume. Even with the volume, the cost of labour for gathering the necessary documentation makes profitability almost impossible to achieve. Adding more revenue sources would be nice, but very difficult when all of your competitors are trying to survive by selling your products too. Cutting costs ruthlessly is the most effective way to mitigate the effects of what is going on now in the DME industry.

2. Obtaining physician documentation:

It takes a tremendous amount of time to obtain prescriptions and other medically necessary documentation from doctors and other medical service providers. Without it, they can’t dispense supplies and get paid from the insurance carrier. The problem is that it’s very hard to get through to doctors’ offices. It can take many calls and faxes to finally obtain the prescription and/or additional documentation. This adds a lot of labour costs and increases the time required to deliver the product. Many companies are eliminating some products because of the time spent on chasing documentation. These products are losers. Obtaining physician documentation is one of the biggest drivers of the outsourcing decision.

3. Dealing with excess denials:

 Denials are sky-high these days. This may sound crazy, but the denials are really low. Most of them aren’t aggressively following up on denials for lack of resources and other reasons. If you don’t follow up on denials aggressively, you won’t know how to prevent them in the future. Some of them aren’t posting the non-electronic denials because they don’t have time. How can you know what’s going on in your business if you don’t have the data?

4. Lagging behind in billing:

 I can’t begin to tell you how many of them are lagging behind in billing. It is killing their company’s cash flow. Some companies, trying to catch up, take shortcuts, dramatically increasing the denial rate. Making sure all necessary information is correct and uploaded is crucial. Operations have to be as efficient and cost effective as possible in order to stay alive in this industry.

5. Frequent Audits/ Take backs

Each of the claims retroactively denied had prior authorisation. A few of the companies got audited recently. The effort required for the company’s response caused to fall behind in billing. It’s not enough that Medicare made it so hard to bill correctly and realises a reasonable profit; they will audit you too sometimes years later, on issues that are not your responsibility.

I’m being proud to say our team is helping DME companies cut costs significantly enabling higher profitability and operational efficiency for our clients. If you’re experiencing some of these issues that I addressed here, you’re not alone. Do something about it! Think outside the box! Be innovative! Contact us today.