ANSWERS TO YOUR INDUSTRY QUESTIONS What is meant by retailing HME? Can I do it from my regular home medical equipment business?

The traditional HME business is a far cry from retail. The HME products are stored in a commercial or industrial storeroom, provided to customers and then billed to and paid for by third-party payers. In a retail home health care business, location is first and foremost. The business is located in a highly visible and easily accessible area where customers already are shopping for retail products. The more similar an adjacent business' products and customer needs, the higher the crossover of customers, such as when a home health care business is located next to a chain drugstore.

Second, the business is operated as an attractive retail showroom where products are displayed openly for customers to touch, try and buy. A complete product selection is offered, enabling customers to chose between two or three options, from basic to deluxe models. Customers are treated as top priority, regardless of ringing telephones or billing issues. And at least one employee is dedicated as a salesperson to greet customers, determine their needs and demonstrate the products that will offer them the most personal benefits.

Finally, HME products in a retail setting are sold in exchange for money-whether cash, check or credit card-with no 60- to 90-day payment delay. Cash then is deposited daily to help fund ongoing operating and marketing expenses.

That's retail!

-Answered by Jack Evans; Global Media Marketing, 5703 Calpine, Malibu, CA 90265; 310/457-7333; fax: 310/589-5733; e-mail: Glblmkt@aol.com; www.retailhhc.com

How much space do I need to have a retail HME showroom?

According to some statistics, the average around the country is 1,200 square feet, with a usual range from 800 to 1,500 square feet. Obviously, not all categories and products can be displayed or sold in this area.

The key to successful sales, inventory turns and profits is matching the categories with your customer demographics. Focus on two or three core and related categories, then display depth within these categories. For example, baby boomers would buy diabetic products on a monthly basis and also need compression stockings and orthopedic supports. You should also use a front window to display lifestyle and comfort products from these categories on a monthly rotational basis.

-Answered by Jack Evans; Global Media Marketing, 5703 Calpine, Malibu, CA 90265; 310/457-7333; fax: 310/589-5733; e-mail: Glblmkt@aol.com; www.retailhhc.com

When Medicare patients die while they have a capped rental item, who owns the equipment?

It depends when during the capped rental period the patient dies. If the patient has been renting the equipment for less than 13 months, the equipment belongs to the HME provider. Even if the patient has been offered the option to purchase the equipment and has elected to do so, until the title to the equipment transfers to the beneficiary, the equipment is the property of the HME provider.

On the other hand, if the patient has elected to purchase the equipment and then dies after the 13th rental month, the equipment belongs to the patient.

Finally, if the patient elects to rent the equipment and then dies, the equipment remains the property of the provider-no matter the month.

-Answered by Miriam Lieber; Lieber Consulting, 15030 Ventura Blvd., #1038, Sherman Oaks, CA 91403; 818/789-0670; fax: 818/990-9466; e-mail: mllieber@pacbell.net

I did a purchase option to a Medicare patient who chose to purchase. I have received the last rental payment; however, the patient has never paid the $20 copay. Do I still have to transfer ownership?

This is somewhat murky. However, my reading of the capped rental rules tells me that once Medicare has fulfilled its payment commitment through the 13th month, ownership of the equipment transfers to the patient. There is no mention of patient copayment (or lack thereof) affecting the transfer of ownership.

It also is important to mention that your company should have attempted to resolve the payment issue with the patient long before the 13th rental month. Collection efforts directly with the patient should begin no later than 90 days past due. These efforts might result in the patient's becoming eligible for Medicaid, the patient's obtaining some other form of supplemental insurance, a payment plan with the patient or a determination that the patient is unable to pay, with the amount owed then treated as a hardship write-off.

-Answered by Lisa Thomas-Payne, MRS/Medsource LLC, 4665 Indian School Road N.E., Suite 112, Albuquerque, NM 87110; 505/255-0004; fax: 505/255-0550; e-mail: LThomasP@aol.com

How will implementation of the prospective payment system for home health agencies affect home medical equipment providers?

PPS will stress home health agencies significantly-and open new opportunities for HME providers.

When PPS is implemented, it creates even more chaos, disruption and change for home health agencies. As a result, we will continue to see more HHAs close-perhaps as many as 2,000-with hospital-affiliated agencies in particular challenged to stay in the business. Cash flow will be a serious problem, especially for providers highly dependent on Medicare. And access to home care, particularly for longer-term and more complex patients, might be limited.

The good news is that the agencies that are successful and make it through the next 12 months will enjoy much larger market share and have very good long-term prospects. Those that tough it out will find less competition, better pricing and a more sympathetic regulatory environment.

During all this, HME providers must be careful in developing business and referral relationships with HHAs. They will need to pick their allies carefully and be willing to work creatively with HHAs through this time of transition.

PPS also opens opportunities for home health agencies to do more than just make visits. Technology, education and even certain noncovered equipment items can be used under PPS episodes-which means HME providers need to be in the forefront with technology that can offset the need for making costly home visits.

Innovative patient care is necessary for survival under PPS, and HME businesses need to be partners with home health agencies in offering that innovation.

-Answered by Schuyler F. Hoss; Northwest Health Care Management, 3501 S.E. 168th Ave., Vancouver, WA 98683-9429; 360/253-8000; fax: 360/891-8322; e-mail: SFHOSS@aol.com