Life After the Removal of the First-Month Purchase Option
After almost five years of rental, how is the mobility market faring?
It’s been nearly five years since mobility providers saw the complete removal of the first-month purchase option for power mobility on Jan. 1, 2011, but it’s worth taking a look at how they are faring since that time.
Prior to the elimination, a patient with a permanent mobility condition could opt to purchase a power mobility device. But with the removal, that was not the case; providers had to rent that device to patient over a 13-month rental period and bill Medicare in monthly installments over that time.
Given that the majority of power mobility patients have lifelong conditions, and thusly providers built their business models around the notion that they would purchase the chair and have it funded in one month, the elimination completely threw mobility providers’ business models and cash flow into disarray. The entire revenue model was now upside-down.
In short order, those providers had to transition to a rental model, having to somehow fund the cost of expensive medical equipment without reimbursement. Fortunately, there were inventory financing offerings from manufacturers and other credit sources to providers them handle this transition, and mobility equipment manufacturers rolled out an array of mobility options that fit the new rental reality, but it’s fair to say it wasn’t an easy transition.
So, let’s fast-forward to today. Have standard PMD providers figured out the right business model?
“I think providers pretty well settled into it, for the most part,” says Jim Stephenson, rehab reimbursement manager for Invacare Corp. (while rehab is in his title, Stephenson works with mobility providers of all types). “Don’t get me wrong, they would prefer to get their money up front, because it takes them three to four months before they’re made whole on the investment they had to make in the product.
“And then with the audits, they wind up fighting 13 claims, instead of one,” he adds. “It just creates a new list of challenges that provider have to contend with.”
Retail Mobility
About the same time that the removal of the first-month purchase option hit, mobility providers also began focusing more attention on selling standard power mobility items — especially scooters — on a retail basis to some of the customers. Now that we’ve had some years for the trend to take hold and mature, are providers seeing an upside here, and if so, where could that emerging segment of the market be headed?
“Part of the problem with the retail market, as far as mobility is concerned, is the mentality shift that it requires,” Stephenson notes. “Not only from the provider perspective, but also from a patient perspective. They [patients] generally know that their insurance will cover mobility under certain circumstances. It’s a fairly largely dollar amount that a lot of folks can’t dig out of their pocket, or write a check for a couple grand, or whatever it is. So it’s a bit of a challenge from the perspective of retail funds.”
That said, some providers that have been fed up with the Medicare regulatory and reimbursement have approached retail mobility with zeal.
“There are some providers out there that are absolutely tearing it up from a retail perspective,” Stephenson says. “They chose to dive in head-first. … If you have a good sales pitch and you can work with a patient on payment terms or something along that line, I think that it’s an avenue.
“But as far as it becoming mainstream, I think we’re a long way away from that,” he adds.
And likely, retail mobility will never be “the norm,” but rather, it’s just one more possibility for providers to reshape their business strategies.
This article originally appeared in the November 2015 issue of HME Business.