Editor's Note

Hopping Out of CMS's Pot

What one amphibian’s dinnertime dilemma can demonstrate to the HME industry.

• By David Kopf
• Apr 01, 2014

Ever hear of the frog and the cooking pot? Indulge me, because the story is an apt metaphor for where the home medical equipment industry finds itself with the Medicare program.

The story basically goes like this: a frog is put into a cooking pot full of water. The cook turns on the gas very low. At first the hot water is too uncomfortable for the frog, but eventually the frog gets used to it. After a while, the cook turns up the heat a little more. The new level of heat is initially unpleasant for the frog, but eventually it gets used to it. Again, after a little bit, the cook turns up the heat again, and after initial suffering, the frog grows accustomed to the new heat. This process repeats itself multiple times until the frog eventually is boiled alive.

The moral of the story is that you can only stand so much heat before you’re cooked.

Which Brings Us to Medicare

And in the case of Medicare, providers are the frog and CMS is the cook. I know that’s a grim scenario to describe, but in many respects it is true. Just look at how competitive bidding has unfolded: first Round One was announced and bid; then the industry secured a delay; Round One was re-bid again; then Round One was implemented; then Round Two was set into motion; it was bid out; and it reached implementation. And now what’s happening? The President is suggesting that bid rates be applied to the Medicaid program, and CMS just recently asked for comments on a plan to expand competitive bidding pricing nationwide by 2016 (see, News, Trends & Analysis on page 8 to read more about these two developments).

Or, we could look at the pressure cooker that is audits. Here, the industry has worked to adapt to very hot waters indeed, but just when it looks like providers might be treading water, CMS announces that will delay assigning Administrative Law Judges to audit appeals by two years. If you read this month’s cover story on audits, found on page 18, you’ll see that arrangement poses a very clear and present danger to HME providers businesses. It’s not simply an issue of having recouped fees hanging in limbo for two years, because, as the experts show, when you factor in the various fees and penalties, providers will pay massive sums.

These examples are why HME Business has been steadily starting for several years that providers must develop new business models. To that end, we have provided in-depth coverage of cash sales, home access, orthotics & prosthetics, senior care, wound care and other business models into which providers can expand in order to diversify their revenues. (We even present another new business model in this issue, which is featured in this month’s “People in HME” section, on page 14.)

Many times, when I talk about the need to pursue new business models, people make it a point to tell me that they wholeheartedly agree with that message. They say they get it and are pursuing new sources of revenue beyond the Medicare benefit.

Other times, people tell me that for an industry that has been built around Medicare’s DMEPOS benefit, such a suggestion isn’t realistic. I completely understand that point of view, and can’t argue against it. Medicare is a key service to a multiplicity of beneficiaries who depend on the services HME providers deliver. Moreover, I agree without equivocation that the industry must continue to fight to protect the DMEPOS benefit and the patients that depend on it. (Heck, that seems to be my regular mantra in many of these Editor’s Note columns.)

But at the same time, competitive bidding, CMS’s audits, face-to-face, capped rental and a multiplicity of Medicare challenges demonstrate very clearly that CMS is turning up the heat, little by little, and eventually there are going to be many providers that find the waters simply too hot. That’s when we need to remember what our amphibian friend forgot: We can hop out of CMS’s pot.

This article originally appeared in the April 2014 issue of HME Business.