HME News

SEP 2018

HME News is the monthly business newspaper for home medical equipment providers. This controlled circulation publication reaches 17,100 home medical equipment services providers, including traditional HME dealers & suppliers, hospital- and pharmacy-o

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6 WWW.HMENEWS.COM / SEPTEMBER 2018 / HME NEWS Editorial PUBLISHER Rick Rector rrector@hmenews.com EDITOR Liz Beaulieu ebeaulieu@hmenews.com MANAGING EDITOR Theresa Flaherty tfl aherty@hmenews.com CONTRIBUTING EDITOR John Andrews EDITORIAL DIRECTOR Brook Taliaferro EDITORIAL & ADVERTISING OF FICE 106 Lafayette Street PO Box 998 Yarmouth, ME 04096 207-846-0600 (fax) 207-846-0657 ADVERTISING ACCOUNT MANAGER Jo-Ellen Reed jreed@hmenews.com ADVERTISING COORDINATOR Cath Daggett cdaggett@hmenews.com PRODUCTION DIRECTOR Lise Dubois ldubois@unitedpublications.com REPRINTS For custom reprints or digital reuse, please contact our reprint partner, The YGS Group, by calling 717-505-9701, ext. 100, or unitedpublications@theygsgroup.com ART CREDITS Steve Meyers: cartoon SUBSCRIPTION INFORMATION www.hmenews.com/subscribe HME News PO Box 1888 Cedar Rapids, IA 52406-1888 800-553-8878 Publishers of specialized busi ness newspapers including HME News and Security Systems News. Producers of the HME News Business Summit and the Home Health Technology Summit. CEO J.G. Taliaferro, Jr. PRESIDENT Rick Rector Lincare, in the lead again CARA'S CORNER Proposed bid methodology explained C MS'S RECENTLY issued proposed rule proposes two key improvements for the competitive bid- ding program: lead item pricing and clearing price to establish the single payment amounts (SPAs). LEAD ITEM PRICING CMS is proposing to implement lead item pricing for all product categories, a concept CMS introduced in its 2016 final rule and that has been supported by auction economists and the industry. Under lead item pricing, suppliers bid on one item in a product category. This one item, the "lead item," is determined based on the item with the greatest national allowed charges in the product category, for the year preceding each competition. The lead item will, therefore, be the item with the high- est expenditures in the category. The bid submitted by the supplier on the lead item would be known as the "composite bid," and the sup- plier's bid could not be greater than the 2015 fee schedules. CMS announced the increase of the bid ceiling in its 2016 regulation, increasing the bid ceiling for future com- petitions from the previous bid ceiling to the higher 2015 fee schedules. The single payment amount for the non-lead items will be based on the relative difference in the 2015 fee schedule amounts for the non-lead item and the lead item in2015. Therefore, the payment level of the lead item will determine the prices of the remaining items in the prod- uct category. However, because the current product categories include a wide range of items that are not similar to one another, the product categories will be split into multiple and more discrete product categories. CMS is collecting comments on the product groups to conduct lead item pricing. CLEARING PRICE/MAXIMUM WINNING BID CMS is proposing to replace its methodology of using the median bid to set the single payment amount with the clearing price, or as CMS describes it, "maximum winning bid." This means that the single payment amount will be determined by the "last man in" for the lead item. This is a signifi cant improvement from previous payment policy, and one that the industry and auction economists have been urging the agency to do for years. It means that no contract supplier will get paid less for the lead item than its bid. IN SUMMARY Over the last several years, AAHomecare has provided CMS with a series of detailed recommendations on how to improve the bid program, including specifi c regulatory and sub regulatory changes the agency needed to make. These two policy changes were among those, with the clearing price being the most important. The combination of these two improvements with the higher bid ceiling and the additional protection of bid surety bonds (designed to prevent speculative inexperienced bidders) should result in a significantly improved bidding program. Remember, this is a proposal (there may be changes and additional improvements), and public comments are easy to submit. Watch for the final rule in the fall. —Cara Bachenheimer, chair of the government affairs practice at Brown & Fortunato T HE LIST of top 100 suppliers of DME- P O S b y a m o u n t allowed for 2017 is in. The top five looks like this: No. 1, Lincare, $539, 604, 080 N o . 2 , A c c re d o H e a l t h Group, $475,577,257 No. 3, Lincare Pharmacy Services, $277,122,027 No. 4, Walgreen, $215,880, 876 No. 5, Zoll Services, $212,308, 306 The top five for 2016 looked like this: No. 1, Lincare, $651,783, 993 N o . 2 , A c c re d o H e a l t h G ro u p , $482,764,158 No. 3, Lincare Pharmacy Services, $290,162,919 No. 4, Apria Healthcare, $224, 300, 906 No. 5, Zoll Services, $204, 036, 809 So once again, we have Lincare at No. 1, albeit with an about 17% reduction in amount allowed; Accredo Health Group at No. 2, with about a 1.5% increase; and Lincare Pharmacy Services at No. 3, with an about 4.5% reduction. A notable change from 2016 to 2017: Apria Healthcare drops out of the top five for 2017, while Walgreen moves in. Apria moved to No. 6 in 2017, with $200,648,591 in amount allowed. Wal- green had been No. 6 in 2016, with $182,037,356 amount allowed. Apria wasn't the only provider to drop one or more spots from 2016 to 2017. Coram Alternate Site Services dropped from No. 8 to No. 11; KCI USA dropped from No. 10 to No. 23; and Arriva Medical, which was No. 12 in 2016, didn't make the list at all in 2017. The embattled Arriva, as you know, closed for good in 2017. But other providers moved up one or more spots in 2017, including United Seat- ing and Mobility (No. 16 to No. 12), 180 Medical (No. 14 to No. 9), Byram Healthcare Centers (No. 13 to No. 10), and Liberator Medical (No. 19 to No. 14). Other providers that made the top 100: No. 18, Option Care, $57,766,599 No. 22, National Seating and Mobility, $51,158,113 No. 24, Verus Healthcare, $45,476,878 N o . 2 6 , A m e r i c a n H o m e P a t i e n t , $43,311,284 No. 38, Norco, $25,849,469 No. 46, Super Care, $21,648,832 No. 50, Binson's, $19,658,545 No. 56, Inogen, $17,495,682 No. 57, Hoveround, $17,161,379 No. 58 Aeroflow, $16,275, 277 Check out the new State of the Indus- try Report, published online in Decem- ber, for a more complete list. hme LIZ BEAULIEU Bachenheimer

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