Interview

Adapting to HME’s ‘New Normal’

The key to addressing the constantly unfolding challenges facing HME providers is to implement strategies and solutions that help them transform, says Brightree CEO Matt Mellott.

• By David Kopf
• Mar 20, 2023

While members of the HME industry once might have referred to a near-constant flow of change management as “unprecedented,” at this point, it’s warranted to say that flow is “precedented.” Facing down a steady lineup of market, regulatory, healthcare and business trends appears to be the norm. Bearing that in mind, it’s always a good idea to review the trends facing the industry to prepare for challenges as well as to identify opportunities.

One person who’s constantly keeping an eye on broad healthcare and health trends is Matt Mellott, CEO of HME software company Brightree LLC, who recently met with HME Business to discuss some key trends he thinks HME provider businesses and other industry stakeholders should monitor. Some are more immediate than others, but all of them will directly impact — and perhaps benefit — the industry.

Immediate Issues: Labor & Supply

When it comes to challenges topping the list, two of the most pressing items Mellott notes are the labor shortage and supply shortage. When it comes to labor, Mellott notes that as the country is experiencing near-record-low unemployment, HME providers are struggling to fill positions for frontline workers, intake, administrative staff, drivers, and respiratory therapists.

That’s an issue not just for the immediate operational aspects but in terms of future revenue, Mellott says, noting that staffing shortages often lead to providers being unable to convert as many referrals as before, which at the least results in delays in care and at the worst means upset referral partners.

The issue is even more pressing because Mellott points out that many providers aren’t experiencing a decline in referrals; rather they’re seeing an increase. Leveraging talent and technology is the solution, he says.

“We all know that booking a CPAP set-up patient 90 days out is not great care,” he says. “And ensuring those patients follow up and come through the care journey 90 days later is a challenge. I think everyone realizes you need technology now more than ever. You have to do more with less staff.”

Of course, labor isn’t the only resource in short supply for HME providers. Because of supply chain issues, inflation and product recalls, providers are encountering shortages of various kinds of DME and related supplies.

Mellott recommends implementing tight inventory processes to ensure that equipment is tracked and that reconditioned or refurbished equipment is used whenever possible and permissible from a regulatory and health perspective. Providers must handle the equipment they do have well, according to Mellott.

Reimbursement Trends

Obviously, the big question on everyone in the industry’s mind is what will the end of the Covid-19 public health emergency bring? As reported in February, the Biden Administration released a statement of policy that it plans to end the Covid-19 public health emergency on May 11, a month longer than the previous extension’s end date.

But when the PHE ends, what will that mean for regulatory waivers that helped providers ensure patients had access to needed DME items, and what will it mean for the reimbursement rates that were ushered by the CARES Act? Mellott notes that there is some temporary protection but that it needs to become long-lasting.

Currently, the CARES Act extended the 75/25 blended rates for non-CBA, non-rural suppliers through the remainder of the public health emergency or until Dec. 31, 2023, whichever is later. The American Association for Homecare recently met and communicated with various CMS leaders about policy waivers, as well as payment relief in non-rural and former competitive bidding areas (CBAs). The association requested that CMS consider making 75/25 blended rates permanent in non-rural areas and applying 90/10 blended rates in former CBAs. 

Mellott underscores the need for industry leaders and stakeholders to work with government agencies and officials, while adding another reimbursement trend that providers need to prioritize:

“Another ongoing trend that’s occurring in reimbursement — and we’re seeing it across all aspects of post-acute care — is the continuing shift from traditional Medicare to Medicare Advantage,” he notes. “For the HME providers, that means really making sure they’re on top of their billing. Do they have these contracts as these patients go from traditional Medicare to Medicare Advantage? Are there special documentation items they need to collect and get prior auth and bill? Having good contracting, good rate schedules, and making sure you’re really on top of your billing is key.”

New Market Entrants

While there has been some concern in the industry about new market entrants such as Amazon, CVS, Walgreens, and Walmart getting into the HME space, these large brands have yet to pose a real threat to traditional players in the HME space. However, he says that really hasn’t yet turned out to be an immediate threat.

“I think, for some who have come into [the HME market], they’ve realized what we all know—HME is hard, right? This is not an easy business to take care of these patients with equipment in their home,” he says. “And then it’s complex billing and complex workflows. I think that is helpful to the traditional HME who lives that every day.”

However, Mellott warns while traditional industry players might have a leg up on those big brands, that might not last forever. Why? Because those brands are meeting with the payers and listening to what they have to say.

“The payers are talking more about removing friction from the referral and the authorization process,” he explains. “They’re more focused on patient satisfaction than they’ve ever been. They would like more clinical data, more than just what they get through the billing and processing of a claim. Data like network management, utilization management, and of course, good clinical outcomes.”

So the key for providers is to start listening to those payers before one of these larger players with access to large volumes of funds slides in to take their place. But again, right now, those large brands don’t have the HME provider processes and assets in place to follow through on their good intentions.

“I think this is a great opportunity for HME providers,” Mellott says. “If they can speak the language, get to the right people, and have the right capabilities in place, that feels like a long-term play for the provider to really keep the value of what they do.”

Digital Transformation

Mellott underscores that the key to remaining competitive is creating a flexible and resilient business, and that requires leveraging technology.

“We are hearing the phrase’ digital transformation’ from our provider customers and prospects more than we’ve ever heard before,” he says. “They need to digitize their processes.”

But given that is what Brightree has been doing for years with its solutions, Mellott notes that a digital transformation doesn’t start and stop with software; it goes much deeper.

“The HME needs to go on a broader journey than just implementing some software or looking for their software to fix everything,” he says. “You really need to overhaul every inefficient process; look at every touchpoint where your folks are interacting with the system and patients every touchpoint with the patient; and streamline and look for efficiency opportunities.

“I’d also say part of that strategy is digitally connecting HME providers to all their stakeholders,” Mellott continues. “That’s a real tenant of what Brighttree does: digitally connecting providers to their referral sources, patients, payers, vendors, and partners. The last part in the execution of all this is more than automation; improving the integration of our solutions, streamlining workflows, increasing accuracy, and leveraging data. That is what’s what you’re seeing happen out there as providers start going on this digital transformation journey.”