While home medical equipment industry pioneers have long championed state licensure as a way to validate the professionalism and credibility of HME providers, licensure efforts have only recently picked up steam.

As more providers embrace the merits of licensure and state HME associations learn how to navigate the legislative process, a flurry of licensure activity is occurring. Eleven states now have licensure laws on the books, 11 other state HME associations have taken steps toward licensure, and still others are researching and developing positions on the issue, according to the American Association for Homecare.

“I think we have reached a critical mass,” says Michael W. Hamilton, executive director of the Alabama Durable Medical Equipment Association and the Georgia Association of Medical Equipment Services. Hamilton led the charge for HME licensure in Alabama, which took effect Sept. 1, 2000, and plans to push for licensure in Georgia as well. “The snowball is at the top of the hill and ready to roll down the other side. It will gain momentum as it goes,” he says.”

Still, no one will predict when — or even if — all 50 states will have HME licensure. After all, a critical question remains: How effective has it been in the states that have had it for a while? And is it worth the effort?

Why State Licensure?

Licensure efforts date to the early 1990s, when the National Association for Medical Equipment Services (now the American Association for Homecare) drafted model licensure legislation. At the time, the Health Care Financing Administration and other regulating entities were alleging widespread fraud and abuse in the industry, and provider associations in several states wanted to establish standards that showed dealers were providing ethical services and supplying products in a safe manner, says Seth Johnson, director of public policy at AAHomecare.

Licensure seemed to be the answer. But not everyone bought into the concept. State associations were hampered by their members' resistance to additional regulation and by bureaucratic obstacles, Johnson says.

Take Indiana, for example. Indiana providers began discussing HME licensure in the mid-'90s, but “a lot of people in the industry were afraid of more regulation,” says George Kucka, a consultant for Lake Ridge Service in Dyer, Ind., who has been involved in national association efforts to encourage licensure.

That has stymied movement toward state licensure for years now. Still, Kucka continues to push for licensure, which he says would put the industry “in the driver's seat” when it comes to regulation. “We were, and still are, the only segment of the health care provider population that does not require licensing or certification,” he says. “When Medicare and Medicaid start talking about cuts, we're at the bottom of the food chain for the simple reason that we don't really carry any credentials. I'm not saying licensure would stop us from being the brunt of cuts, but it would help us establish credibility in conversations [with payers and legislators].”

The cost and assorted requirements also bother some providers. State licensure laws usually require HME providers to complete an application, submit to site surveys and pay licensing fees ranging from $50 to hundreds of dollars per year.

While these requirements have soured some HME providers on licensure, tax concerns are of even greater concern, industry experts say. In fact, some state associations have decided not to go through the licensing effort because HME dealers would be subject to higher taxes if they were classified as licensed health care providers, Johnson says.

For example, HME providers in West Virginia decided not to pursue state licensure after the state some years ago instituted a temporary tax on all licensed health care providers to assist in funding Medicaid, says Les DeFelice, president of DeFelice Mobility in Wheeling. The tax amounted to between 1.75 percent and 5.5 percent of a licensed health care provider's gross income, says DeFelice, who also serves as president of the West Virginia Medical Equipment Suppliers Association.

“It was apparent that if we became licensed we would be subject to this tax,” he says. Just this year, the West Virginia legislature passed a law that will begin a 10-year phaseout of the tax, which might prompt members of the state association to reconsider. “If we ever have an environment conducive to licensure, I think we would try to pursue it,” DeFelice says.

Time and Trouble

Even if a state association is united in its drive for state licensure, however, it doesn't happen overnight. Indeed, the level of difficulty in pushing through such laws varies greatly from state to state, industry players say. In some cases, state agencies say they don't have the resources to take on additional regulation responsibilities, or legislators are wary of the costs of a new program or are opposed to expanding government regulation of small business, Hamilton says. Such difficulties can translate into years of waiting.

In Alabama, the advocacy process took eight years. It finally resulted in the creation of a self-funded Home Medical Equipment Services Provider Licensure Board appointed by the governor.

In Nevada, where HME licensure was required as of April 1, 2001, the process was somewhat smoother. The Nevada Association of Medical Products Suppliers asked the Nevada Board of Pharmacy to serve as the regulating agency for HME providers, and it was determined that this regulation could fall under an existing pharmacy board statute, says Richard Pozesky, NAMPS president.

“We were very fortunate. We didn't have to go through the cumbersome process of working with legislators to pass a new law,” he says.

The California Association of Medical Product Suppliers faced an “uphill battle” in advocating for licensure through the state Department of Health Services, says Gloria Peterson, administrative director for CAMPS. The law, which took effect July 1, 2001, was the result of two years of lobbying and advocacy by the association and its members, she says.

“We had to prove to legislators that it was necessary. Legislators often don't want to create a new regulatory body or licensure requirement if there isn't an immediate health care risk to the consumer,” Peterson says. “The fact that Medicaid was being defrauded really helped us plead our case.”

Does It Work?

After all the effort, does state licensure work? The verdict is still out in the states that have adopted it. For a few of the earliest states to adopt licensing, like Maryland, HME licenses “were much like fishing licenses,” according to Kucka. Anyone could obtain them and they didn't mean anything, Kucka and others say.

But newer licensing laws are generally more stringent, requiring providers to adhere to specific ethical and operational standards or face a fine or suspension of their license. A licensure law took effect in Illinois in 1998, but there are still many HME providers who aren't yet licensed, says Daniel Heckman, vice president and general manager of Heckman Healthcare in Decatur, Ill. In addition, Illinois regulators haven't begun site inspections yet because it is taking a while for them to be trained, he says.

Still, Seth Johnson of AAHomecare believes licensure efforts are making a positive difference. “Every once in awhile you'll hear about licenses getting revoked, but it's not all that common,” he says. “State licensure has done a pretty good job of getting rid of the bad apples in those states.”

Since licensing bodies can fine providers and suspend or revoke their ability to conduct business, licensure works best as “a deterrent to fraud and abuse,” Kucka says.

Hamilton, who led efforts for licensure in Alabama, speculates that states will be more likely to support licensure when surrounding states require it. “Where do you suppose the bad guys are going to go if your state is the holdout?” Hamilton says. “Every step the HME industry takes [toward state licensure] is a discouragement to people who may get into the business to defraud and an encouragement to honest suppliers to hang on and keep doing it right.”

Winning Strategies for HME Licensure

ADVOCATES OF HME LICENSURE GENERALLY have to overcome a few obstacles on the path to accomplishing their goal. HME providers and state association officials offer tips to help you stay on track.

Gain consensus among members of your state association

Your first and most difficult task is to garner support and enthusiasm for HME licensure laws among the providers in your state. State associations should consider holding educational sessions describing the benefits of licensure, says Seth Johnson, director of public policy for AAHomecare.

Don't reinvent the wheel

Although each state is unique, you can learn a lot from reviewing the licensure legislation that has been implemented in other states and discussing potential obstacles with providers who've overcome them. Also, you can use your own state's current regulations as “stepping stones,” says Gloria Peterson, administrative director of the California Association of Medical Product Suppliers. “Some states will have to start from scratch, but the easiest approach is to expand or modify existing regulations so that they encompass the entire industry,” she says.

Identify your allies

Most state licensure laws dictate that HME providers are regulated by either the state pharmacy board or the state health agency. Enlist the support of the entity with whom HME providers in your state are on the best terms, says George Kucka, a consultant for Lake Ridge Service in Dyer, Ind. Otherwise, he says, you won't get anywhere.

Identify your opposition

After you draft preliminary legislation, send a copy of the proposed bill to every group you can identify that may have a stake in it, including pharmacists, drugstore operators, respiratory therapists, hospitals, nursing homes and home health agencies. Invite groups to respond to your bill, and consider changing your proposal or exempting certain groups from its purview if they strongly oppose it, says Michael W. Hamilton, executive director of the Alabama Durable Medical Equipment Association and the Georgia Association of Medical Equipment Suppliers. “It's a lot easier to kill legislation than to get it passed,” he says.

Lobby, lobby, lobby!

Consider hiring a lobbyist to guide you through the legislative and rule-making process, Johnson says. And be persistent but patient in pursuing your goal — licensure laws generally don't become reality overnight, Hamilton says.
— M.M.

States that have enacted HME licensure laws:

• Alabama
• Arkansas
• California
• Florida
• Illinois
• Maryland
• Mississippi
• New Hampshire
• North Carolina
• Nevada
• Tennessee

States that have taken steps toward HME licensure:

• Connecticut
• District of Columbia
• Idaho
• Louisiana
• Maine
• New York
• North Dakota
• Ohio
• South Carolina
• South Dakota
• Texas

States researching or developing positions on licensure:

• Indiana
• Pennsylvania
• Rhode Island
• Virginia

Source: American Association for Homecare, July 2001