Starting a new DME business
Tuesday, August 13, 2013
I know it’s hard to believe, but there are many new DME suppliers getting into the business these days, in both competitive and non-competitive bidding areas. Our office is constantly contacted about what it will take for a business to get a Medicare and/or Medicaid number and begin servicing patents.
We can’t be surprised that this is happening. Nationally, we are inundated with the statistics that, since Jan. 1, 2011, between 8,000 and 10,000 people reach the age of 65 every day and will do so for the following 18 years. This well-publicized information about the aging of the Baby Boomers in the United States is the subject of many business seminars. Speakers point to the opportunities available to create a business to serve this group. These speakers also point out that Baby Boomers will need health care services from Medicare and Medicaid in a demand unlike anything in previous years. This may be true, but two important considerations are usually left out of these discussions:
Medicare and Medicaid do not want to monitor thousands of suppliers.
Time and money are necessary to cover non-reimbursed expenses—DME is not a business that one can open quickly and easily.
Just because there is a need for services does not mean that Medicare and Medicaid are happily going to pay for them and make life easy. As the government struggles with budget deficits and increasing expenses, Medicare and Medicaid are no exception. As the Baby Boomers move out of the workforce, their payroll contributions to Medicare disappear. Their need for Medicare services now begins, and the costs of health care rise every year. As more people struggle with unemployment, enrollees in Medicaid also increase every year.
Since Medicare does not want hundreds of suppliers in each state, we have competitive bidding, audits and restrictive enrollment regulations in place. Even in a competitive bidding area that would exclude Medicare beneficiaries, we know that to become a state Medicaid provider, the supplier must first obtain a Medicare supplier number. We are aware that the process is costly and time-consuming and there is no guarantee that everyone will be successful in operating a business.
Additionally, since March 1, 2007, Medicare requires that all new suppliers be accredited. There are currently nine accrediting organizations (AOs) to choose from, and new businesses need to research which accreditor is best for them. New businesses should call these accreditors, speak with their customer service staff, compare prices and workloads and decide which of these organizations best suits the needs of their business.
Once their choice of accreditor has been made, the business must obtain the accreditor’s standards, customize their Policy and Procedure Manual accordingly and complete the accreditor’s pre-survey process. Applicants must also provide a list of DMEPOS items they wish to be accredited to provide to at least 10 patients, including product type and item category they would like to provide.
Once a business has compiled this list, they will need to notify the accreditor that they are ready for their unannounced, initial on-site survey. This survey may not be scheduled immediately, but should occur within about 60 days. All items provided to initial customers, and any others before the supplier is accredited, are not reimbursed by Medicare or Medicaid during this start-up period. All equipment is provided at the business owner’s expense.
All expenses incurred during this start-up time can never be recovered, as Medicare and Medicaid do not allow for retroactive or back-billing. A supplier can start billing Medicare after their accreditation is successfully completed and they have been notified of their accreditation date. Then the supplier can file with the NSC for a provider billing number. This process from start to finish can take at least six months or longer. The process can cost a new business thousands, from the accreditation fees and expenses and the administrative staff, to the business expenses (such as office space, telephone, employee expenses) and the equipment itself.
Becoming a DMEPOS supplier is not an easy or inexpensive business to start, but new suppliers are out there every day vying for Medicare business in non-Medicare areas and for Medicaid and third-party business in competitive bidding areas.
