Business Solutions

15th Annual Big 10

Once again, we proofile 10 trends that will shape the HME industry this year. The far-reaching impact of Covid-19 is undeniable, but it’s not the only factor that will define 2022.

• By David Kopf
• Feb 01, 2022

For the past 15 years, HME Business has used its January issue to summarize 10 trends that we believe will not only impact that year, but pretty much define the year for HME providers.

For 2022, it’s no surprise that many of the trends we’ve identified can be traced back to the Covid-19 pandemic. Like the virus itself, the public health emergency is far-reaching and finds its way into just about every corner of healthcare as a whole. That said, there are other issues that have nothing to do with the public health emergency, but will also shape HME’s 2022.

So, with no further introduction necessary, let’s take a closer look at 2022’s Big 10:

1. THE ONGOING PANDEMIC

The root cause of most of the industry’s challenges is, of course, the Covid-19 pandemic and ongoing public health emergency. So, what will this mean for 2022? We might be hitting a turning point in terms of the disease’s severity.

Two years ago, on Jan. 20, 2020, the CDC recorded the first U.S. diagnosis. Since that time, the United States has experienced more than 75 million Covid-19 cases and more than 890,000 deaths (as of press time). However, the Omicron variant doesn’t appear to be as deadly as previous variants. The data is still being crunched, but early report summaries are generally agreeing that while the Omicron diagnosis spike was roughly twice as large as last fall’s Delta variant spike, the rate for mortality and severe cases was substantially lower.

And with omicron accounting for nearly every Covid case sequenced by the CDC (it hit 95 percent for the weekend ended New Year’s Day, according to the CDC), it’s likely omicron will be the dominant variant for at least the majority of 2022.

That said, the patient volumes are still low. While the omicron spike is less than half what it was at its peak, as of press time, the CDC’s seven-day moving average of daily new cases was at 596,860. While that figure is expected to continue to decline, it’s clear Covid will be a fact of life for the industry and healthcare as a whole during 2022. While the severity might not be as immediate of a concern as with previous variants, all the infection control and related operational measures will still be in place given the patient groups the industry supports.

2. TELEHEALTH AND REMOTE CARE

Even in the early days of the pandemic, building the business case for supporting telehealth received a lot of pushback in HME — it costs money and providers don’t get reimbursed for it. Since then, well … things have changed.

To begin with, we saw CMS waive any limitations on the types of clinical practitioners that can furnish Medicare telehealth services. Now CMS’s telehealth list includes both two key clinical partners/staff for HME providers: Physical Therapists (PTs) and Occupational Therapists (OTs), for instance.

Plus, many providers, such as oxygen providers, readily adopted telehealth practices in their efforts to help hospitals discharge Covid-19 patients to the home setting where they where the received hospital-in-the-home care.

And when it comes to referral partners, similar policy changes have made it much easier for physicians to confer and consult with their patients via telehealth, rather than in person, to minimize contact. And their patients like it too, since they don’t have to drive to the doctor’s office for a simple consult.

With patients and referrals often preferring telehealth, HME providers can assume it isn’t going anywhere in 2022. This means they must not only adopt it, but learn to use it strategically. And to that end, there are a variety of services popping up, such as rtNOW and TeleHealth Clinical Evals, which provide outsourced clinical staff to provide telehealth consults for sleep and complex rehab evaluations, respectively.

3. THE SUPPLY CHAIN

As we all know, the supply chain issues caused by the Covid-19 pandemic have resulted in huge burdens for healthcare as a whole and HME providers in particular. The Health Industry Distributors Association recently summarized transportation issues impacting medical products noting some key bottlenecks for HME providers:

• Shipping times are 2.5 times longer, with two- to three-week backlogs at Asian ports and shipping containers costing four times higher.
• Once ships arrive on U.S. shores, they are anchored eight to 11 days while waiting for dock space, and worker shortages mean offloading takes three times longer.
• The 62 percent increase in ecommerce during the pandemic has created driver shortages, with driver availability at its lowest point in three years.

Plus, HME manufacturers are seeing component equipment costs skyrocket due to short supplies. For instance, the cost of foam used in medical devices has gone up 240 percent.

And the real kicker is that the HME industry essentially absorbs the resulting increased costs because reimbursement remains the same. Yes, programs such as the CARES Act and CMS’s recent 5 percent CPI-U increase helped, but the underpinning reimbursement rates for DMEPOS suppliers are still based on rates from 2016 and don’t compensate at all for the considerable cost increases that HME providers have experienced due to these supply chain programs. And, of course, Medicaid programs and private payers base their reimbursement largely on Medicare rates. So the industry is working to secure better reimbursement (see page 24).

4. THE MICROCHIP SHORTAGE

Narrowing our focus on supply chain issues impacting HME, there is one specific shortage that is having a profound effect on some of the most-needed equipment in homecare: the dearth of semiconductors and microchips used in many medical devices, such as oxygen concentrators, CPAPs and ventilators. Without those chips, the devices can’t get produced. Plus, given that other industries and products ranging from automobiles to consumer electronics use the same chips, the demand and supply is completely out of balance.

How bad is the shortage? Researchers AutoForecast Solutions estimated the world lost 11.3 million units of production in 2021 and will likely lose 7 million more units in 2022.

What’s causing the shortage? The two central factors are that the United States doesn’t make many chips these days, and the pandemic’s impact on the supply chain. But there are other factors, such as the recent U.S.-China trade war, fires at some key production facilities, and weather-related manufacturing problems.

So what are the fixes? There are a couple approaches: First, the United States needs to implement legislation that will foster the domestic manufacturing of semiconductors and microchips. To that end, key pieces of legislation such as the America COMPETES Act and the U.S. Innovation and Competition Act to create and fund grand programs to help manufacturers restart U.S. production.

However, that production won’t reverse the current supply problem overnight. So, the second fix must be for the federal government to implement some kind of triage for determining which manufacturers get first dibs on microchips. We can expect to see various segments of U.S. healthcare, including HME, push for legislation or regulation that would implement that during 2022.

5. CMS’S CPI-U ADJUSTMENT

In December 2021, CMS published its DMEPOS fee schedule adjustments for the calendar year 2022, and while the adjustments differed depending on whether the items serviced were competitive bidding program items or in former competitive bidding areas (CBAs), they were generally higher than in the past.

Based on the Bureau of Labor Statistics’ Consumer Price Index for Urban Consumers (CPI-U), CMS’s rate increases were:

• Competitive bidding program items in former CBAs increased 5 percent.
• Competitive bidding program items in non-CBAs increased 5.4 percent.
• Non-competitive bidding program items were up 5.1 percent.

The adjustments are made to ensure DMEPOS reimbursement adjusts for inflation. Typically, CMS’s CPI-Y increases for DME come in between 1 percent and 3 percent. Last year, for example, the inflation adjustment was less than 1 percent.

Those increases might at first seem like good news for 2022, but when factoring in the aforementioned cost increases ushered in by Covid-19 and the supply chain problems, HME providers are working under much stiffer cost structures this year.

6. THE DME PAYMENT RULE

The HME industry might consider offering orthodontia services, because getting CMS to release its final DME payment rule was like pulling teeth. As the story starting on page 18 shows, the industry had to wait a very long time — from October 2020 to December 2021 — to get CMS to release its final payment rule.

Finally unveiled at the tail end of 2021, the final rule offered the following:

• It would continue the 50/50 blended rate for rural HME suppliers. Other non-bid area suppliers would be paid at 100 percent of the adjusted fee schedule.
• It did not finalize CMS’s earlier HCPCS coding recommendation limiting manufacturers to only two submissions; a win for DME makers.
• It did not finalize CMS’s earlier Continuous Glucose Monitors coding and payment recommendations that would have changed the classification and payment for CGMs under Part B.
• It expanded the classification of external infusion pumps as DME.

However, the final rule didn’t include two key provisions the industry had asked for during the public comment period when the rule was first proposed:

• Extend the 75/25 blended rate for nonrural areas beyond the end of the PHE.
• It did not base rates in former CBAs on a 90/10 blended payment formula.

Given the aforementioned cost structures and reimbursement rates the industry must currently contend with, the industry must now move to secure those two objectives by other means.

7. REIMBURSEMENT LEGISLATION

So, industry advocates including the American Association for Homecare (aahomecare.org) have worked with lawmakers to start moving legislation down the road that would secure those two reimbursement goals.

Firstly, Reps. Markwayne Mullin (R-Okla.) and Paul Tonko (D-N.Y.) have drafted legislative language that would apply the 90/10 blended Medicare reimbursement rate for items in the 13 product categories whose bid results were not implemented in Round 2021. These increased rates would apply from Jan. 1, 2022 to Dec. 31, 2023.

AAHomecare has started a campaign calling on providers to help support draft legislation by urging their Representatives to become original co-sponsor of the nascent legislation. Providers can help by visiting action.aahomecare.org.

Concurrently, AAHomecare has launched discussions with its Senate champions to develop legislative language that would keep some of the 75/25 relief rates for non-rural areas from the CARES Act in place beyond the end of the public health emergency, since the challenges impacting providers are not going to go away. The 75/25 reimbursement would represent a significant reimbursement gain for non-rural providers. CMS did an estimate that was published by non-partisan analysis group Medicare Payment Advisory Commission (MedPAC), and the analysis showed that the 75/25 blend represented a 33 percent reimbursement increase.

Supporting those legislative efforts will be a key feature of 2022 for advocacy-minded HME providers.

8. INCREASED AUDITS

While CMS only offered a brief pause on audits during the public health emergency, it has quickly resumed and, in some cases, expanded its program integrity efforts.

CMS indicated that it intends to audit claims filed during the COVID-19 pandemic. That said, it has instead been auditing mostly non-pandemic related claims such as wheelchairs, hospital beds and urological supplies. Audit expert Wayne van Halem, president and founder of the audit consulting firm The van Halem Group, believes that is changing this year, and understanding what could happen will be important for suppliers who have filed claims with CR modifiers during the PHE.

There are other audit factors that will impact HME providers in 2022, as well. First, the ALJ backlog is nearly caught up, and the chances are high that once it is, CMS might loosen some of the restrictions it has had in place with the Recovery Audit Contractors causing an increase in audit activity. Also, a new SMRC contract with CMS’s Program Integrity Group hit the ground running in 2021 with audits on
thousands of claim lines at one time.

And those are just a few of the audit issues for 2022. On Feb 10, 2022 van Halem presented an HME Business webinar outlining 2022’s audit trends and how providers can contend with them. It is online as a free archive for a limited time at HME-Business.com/webinars.

9. EPRESCRIBING HME

Of course, one way to help ensure claim accuracy and claims acceptance is through eprescription. There has been a lot of talk about eprescription for HME, and there have been forays into implementing it on specific billing software systems, but it hasn’t taken off. However, a recent, industry-driver effort might change that.

In September, a collection of HME industry leaders formed DMEscripts LLC (dmescripts.com), a healthcare e-prescribing company that offers a platform for prescribers to electronically transmit HME/DME orders to any participating provider. Better yet, it comes from the HME industry.

The alliance of investors forming DMEscripts includes the American Association for Homecare, VGM & Associates, AdaptHealth LLC, Apria Healthcare Group LLC, Lincare Inc. and Rotech Healthcare Inc. The venture combines the leadership and resources of all founding members, as well as other digital health experts, to administer an industry-owned and operated e-prescribe platform.

DMEscripts says its ultimate aim is to improve the current order-to-delivery process by empowering and accelerating the widespread adoption of an electronic ordering application for DME. To accomplish that, DMEscripts uses proprietary e-prescription software to operate an open network for any DME supplier to join at no cost to prescribers or patients.

10. OUTSOURCING SOLUTIONS

Lastly, outsourcing will be a continuing trend for 2022. Driving efficiency has been a business imperative for HME ever since CMS decided to continually hack away at reimbursement. While providers demonstrate their value via their patient services, they can’t do that if they are spending too much time trying to keep every component of their workflows in-house.

So, providers are starting to more frequently “look within” and assess whether or not staff-intensive workflows are truly aligned with the value they deliver, or whether they are instead a costly distraction that can be fulfilled by outsourcing.

So we will continue to see that comes from the HME industry. Obviously, that means more outsourcing to billing and claims processing services. Also, we are seeing new outsourcing options come online as technology is applied in creative ways. As mentioned above in the telehealth section, services such as rtNOW and TeleHealth Clinical Evals are using telehealth to create all new types of outsourced services. And we’re also seeing clever staffing solutions such as Tactical Back Office that aren’t exactly outsourcing, but rather using technology to create dedicated remote teams that work for the provider.

Increased challenges naturally bring more solutions, so we can expect that the range of outsourcers is likely to expand over 2022 and beyond.

This article originally appeared in the Jan/Feb 2022 issue of HME Business.