SHOULD YOU RECEIVE reimbursement for service? Many in the home medical equipment industry say yes, but to date, Washington has had a difference of opinion. Medicare reimbursement rates do not reflect the costs of service — and there appears to be no change on the horizon.

That is not good news for the HME industry. In an era of decreasing reimbursement for equipment, increasing expectations for service and patient care, and rampant suspicion of fraud and abuse, the industry is pulled as tight as it has ever been.

“All of these factors have put continual pressures on the HME industry and have contributed to where we are today,” says Jim Frederick, the compliance officer at Young Medical in Toledo, Ohio. “They have caused us to move closer to a commodity-type business and less of a patient-care type of business, which may be where Medicare wanted us to go.”

How We Got Here

THE WAY THE Centers for Medicare and Medicaid Services, formerly the Health Care Financing Administration, view the Medicare durable medical equipment benefit is clear. Because of the standards set by the Social Security Act, there are device equipment benefits and a series of professional service benefits, according to a CMS representative, but they are separate.

“Medicare's position has been — and continues to be — that the benefit is for the equipment only,” explains Asela Cuervo, vice president and general counsel, American Association for Homecare, Alexandria, Va. Cuervo says this may reflect the mentality prevalent when the Medicare program was set up in the 1960s. Then, hospitals and physicians provided services and durable medical equipment was viewed as a commodity.

She also points out that the beneficiaries of that time were different than those today. “When people went on Medicare back then, they really had short life expectancies — the average life expectancy was only 68-69,” she says. “Additionally, the equipment was not as sophisticated, so there was not the ability to maintain people at home the same way we can today.”

Would legislators be open to revising their view of HME and considering adding a service component? Key Congressional players contacted by HomeCare, Rep. Nancy Johnson, R-Conn., chair of the Ways and Means Committee, and John Breaux, D-La., chairman of the Special Commission on Aging, both said their schedules would not allow them to comment on the Medicare service issue.

Determining the Cost of Service

THE ISSUE OF service took center stage when the industry was hit with across-the-board cuts by the Balanced Budget Act of 1997. Providers began to assess the cost of doing business and it became apparent that new business plans were required and choices had to be made when it came to service. The 30 percent cut to oxygen over two years was particularly damaging.

“In DependiCare's case, those cuts meant $800,000 dollars in profits that had supported a heck of a lot of service work,” says Roger Miller, president of the Broadview, Ill.-based company. “Did we cut back our service levels after those cuts? You bet. We had to reduce the frequency that we visited oxygen patients in the field and we reduced the qualifications of the people we sent out.”

Frederick says Young Medical would have liked to continue the level of service it provided before the BBA, but like others in the industry, it had to adjust. “You start looking at ways of cutting regular maintenance and follow-up,” he says. “Where once you were doing it once a month, you are now doing it every 90 days.”

Michael Flores, general manager of Huntleigh Home Medical in San Antonio, says the reduction in oxygen reimbursement forced his company to make changes as well. “We have not cut back our service, but we have streamlined the process,” he says.

Flores has asked all oxygen patients to call during business hours for refills and service. Weekend or evening calls are answered and responded to, but he wants to remain proactive in cutting down the exorbitant charges.

The Impact on Patients

ONE OF THE most pressing questions about the lack of a service component in reimbursement concerns consumers. Does non-payment for services make a difference to Medicare beneficiaries? It should, but in the unique business model in which the HME industry operates, providers continue to provide services for which they are not paid — even if it means a financial loss.

For example, Flores says he loses money on every walker and commode chair his company provides. “We deliver it to the home and instruct them on it. It is what we do,” he says. “But you lose money on it.”

The number of variables associated with providing home oxygen makes it difficult to determine the cost of service. “The overall cost of servicing home oxygen patients frequently exceeds the reimbursement and the cost of service is disproportionate to revenue as compared to the cost of the equipment,” says Joseph Lewarski, director of The Med Group's National Respiratory Network. “Many subscribers of cost-based accounting models argue that the cost of goods for oxygen may only account for 10-20 percent of revenue but that the cost of service/operations (delivery, clinical support, on-call, maintenance, supplies, billing, and the cost of money) accounts for the majority of the expense against revenue.”

Even though service continues to be a part of the industry's focus, the consumers are ultimately the ones who suffer. “The market will always adjust to what is being allowed reimbursement-wise,” says Frederick. “But at what detriment to the patient?”

“The beneficiaries are the ones who stand to lose the most,” says Cuervo. Reports from Polk County, Fla., site of the original CMS competitive bidding project, indicate the use of respiratory therapists for oxygen therapy has gone by the wayside, she says. “When you squeeze reimbursement for these products, you are really squeezing the service level that gets provided.”

The industry cannot continue to provide free services on a long-term basis, she says. “It is easy to say we are only providing the product, but if you ignore the service aspect, it becomes a self-fulfilling prophecy and there are not any services left.”

There is also a clinical concern. “Medicare does not unbundle the product payment from the service component, so it places the decision to provide home respiratory therapy services in the hands of the provider,” says Lewarski, who is also chair of the American Association of Respiratory Care's home care section. “Since there is no single standard of care or law governing this area of care, patients may receive dramatically different levels of respiratory therapy care from one company to the next.”

According to Lewarski, a company that regularly provides clinical respiratory services may offer comprehensive patient clinical education and follow-up as part of the oxygen service, while a competitor may not even employ a respiratory therapist and may only provide technical support. Both companies are paid the same and both are operating within the Medicare standards and guidelines — but for the beneficiary, it may be potluck which type of care he or she will receive.

Perfect Timing? Maybe Not

IS IT TIME to take on this giant? And, if it is, how would it be done? Some suggest a separate fee for service and others wonder if the cost of service should be incorporated into the existing reimbursement schedules. Who should be included is another consideration — would respiratory and rehabilitation companies lobby together? What about pharmacy services, home infusion providers and others?

“I think it is a great fight to take up,” says Miller. “Home health agency nurses, physical therapists, occupational therapists and social workers — all of whom work for home health agencies — get reimbursed.”

Recognizing that these groups are reimbursed on a fixed-cost model, he says, “I don't think you would find anybody in the HME industry who would squawk about Medicare proposing a fixed-cost reimbursement scenario for our respiratory therapist staff. We are getting nothing now.”

According to CMS, the type of benefit the industry could see would be similar to the physical therapist benefit. “The option is available for Congress to establish the respiratory therapy benefit,” says a spokesperson.

Within the industry, the initial steps in the process have been subtle. AAHomecare says the issue of service has crept into challenges such as inherent reasonableness and competitive bidding. “When IR was facing the industry, we worked very hard to make sure HCFA understood what the service aspects of providing equipment included,” says Cuervo. “And certainly with competitive bidding, we have tried to make the case that service will be lost if competitive bidding becomes the reimbursement model.”

The AARC and other key health care groups have long advocated the need to recognize and pay for professional respiratory therapy services, says Lewarksi. “The AARC continues to lobby extensively for this,” he says. “The HME provider community and professional organizations also continue to lobby and promote the separation of product payment from service payment.

“Unfortunately,” he continues, “professional groups alone can appear to be self-serving. We need support from physician, patient, and other professional and advocacy groups to help create new models of care that standardize and improve the level of care.”

If a time comes when Congress will truly look at adding a benefit for service, accreditation and certification would be crucial. The industry would have to establish an objectively verifiable level of service, experts say.

“The people who would be paid for providing services would have to meet an objective standard,” says Cuervo. “That is the countervailing piece to the service component: People would be required to meet a certain level in order to bill for the service.”

CMS agrees. “If we did have a benefit for respiratory therapy, we would have to address the question of credentialing and make sure there was proper training, education and licensing,” says a CMS source.

Gaining Respect

FOR MANY HME providers, the bottom line is that they are operating in a suspicious environment in which a mistake is considered fraud. So until their image improves and those responsible for paying them truly understand the value they provide to the health care system and its beneficiaries, adding reimbursement for services is an uphill climb.

A fundamental change in how the industry is viewed is needed, says Frederick. The industry's role in this will be education — education for all third-party payers, not just Medicare, he says.

Until that happens, says Miller, the industry's ability to make an argument for increasing reimbursement will be hindered.

“This industry is not what it was 20 years ago,” says Cuervo. “We really have become a professional and mature industry with companies that are accredited by national accrediting organizations [that] employ certified professionals who are licensed by their professional bodies.

“In the past, the administration has painted a picture of the HME industry being this unregulated body of unscrupulous vendors and that is really not the case,” she says.

From the Rehab Point of View

FOR REHAB PROVIDERS, evaluations, which can take 60 to 90 minutes, are a key concern, especially when you add the time for documentation and other paperwork, says Pat Aydelott, director of membership services, U.S. Rehab, Waterloo, Iowa.

Aydelott is also a member of the Re/hab and Assistive Technology Council of the American Association for Homecare. He says rehab services, such as evaluations and adjustments, should be reimbursed in a manner similar to how the orthotics and prosthetics industry is reimbursed. “The orthotics and prosthetics industry has billable codes for the time they spend doing adjustments, the time they spend doing evaluations, and the time they spend doing follow-ups — they are almost identical to rehab providers as far as service and delivery of the product,” he says.

Aydelott encourages rehab technology specialists and rehab technology companies to bill for these services even if they are not reimbursed. “At least it is setting a precedent to the managed care organizations and to Medicare and Medicaid that there is a value and there is a cost,” he says.

From Aydelott's perspective, the consumer will be the one who plays a role in changing the system. “There is no question consumers are going to be a lot more active in the care they are going to receive and carry a much greater voice,” he says. Namely, says Aydelott, consumers are going to begin identifying the providers with whom they want to work.

“The problem is, people that are not qualified are delivering products they are not qualified to deliver,” he says. “One thing that I think will play into the future of reimbursement of evaluations and services is that the consumer is going to get actively involved and be able to select the companies he or she wants to deal with because of their experiences.”
— D.H.M.

AARC at Work to Change Medicare Provision

THE AMERICAN ASSOCIATION of Respiratory Care's effort to gain recognition of respiratory therapists under the home health services benefit is in the works. Currently, home respiratory therapy is covered when it is part of a plan of care under a licensed nurse or physical therapist. The AARC wants Congress to make a simple modification to that provision and allow a respiratory therapist to serve as a substitute.

Last summer, the AARC asked its members and other health care professionals to write their senators and representatives in support of this measure. These are the suggestions it provided on its Web site:

• Ask your [legislator] to include the following language in Medicare reform legislation: “A respiratory therapist may be utilized as a substitute when home respiratory therapy is provided as part of a plan of care by a licensed nurse or physical therapist under the Medicare home health services benefit.”

• Explain that the use of respiratory therapists as substitutes should not increase Medicare costs.

• Explain that this provision does not mandate the use of respiratory therapists, but provides home health agencies with the flexibility of another provider option. This is especially helpful when there are shortages of providers, as the system is now experiencing.

• Explain why patients with respiratory diseases should have access to the services of respiratory therapists in the home.

Watch the AARC Web site (www.aarc.org) for future news and updates.
— D.H.M.