The New Power Wheelchair Market
It might be down, but it's not out.
The power wheelchair segment of the home medical equipment industry took some major hits last year as CMS initiated wholesale changes in Medicare codes, fee schedules and local coverage determination guidelines.
And while manufacturers acknowledge that many of those changes left the market segment battered and bruised, nevertheless, they say, there's still room for profit and growth.
But to make the most of this market, both manufacturers and power mobility providers will need to reconsider the way they do business — and that could mean tough decisions.
Like providers, manufacturers are still cautiously sorting out the changes and trying to figure out what they will mean.
“We're still in a hunkering-down mode trying to become a leaner industry,” says Mark Sullivan, vice president and category manager, rehab, for Invacare. “People will be really busy in the next year or so trying to refine their businesses because it is really a marginally profitable industry.”
Some stakeholders say the profit margin for providers is less than 5 percent. CMS, which initially released fee schedules with cuts as high as 40 percent, ultimately boosted fees in Groups 2 and 3. Still, some categories have been cut by 10 to 30 percent.
Ross Charest, director of product management-power products, North America, for Sunrise Medical, agrees that the cuts will prompt everyone in the industry to redefine how they do business. “In the short term, everybody will be trying to figure out how to do product in this new environment and get the right certification,” he says, adding that they'll be focused on the delivery model as opposed to the product. “Everybody is being very cautious trying to figure out how to make [power wheelchairs] less expensive, more efficient [and] de-feature some of the options.”
Most manufacturers say they began reassessing their businesses three years ago when, stung by numerous cases of fraud and abuse, CMS began its efforts to reconfigure the way it handles reimbursement for power mobility. But trying to anticipate what CMS would do proved to be not only troublesome but nearly impossible, particularly as changes in coding, fee schedules and LCD guidelines were released, then revised, then revised again.
Until the current 64 power wheelchair codes were firm, manufacturers weren't even sure they had products that would be covered.