Reports of fraud and abuse, the subsequent government crackdown and a CMS revamp of the Medicare mobility benefit have left both providers and manufacturers of power wheelchairs uncertain of the future. Yet the industry could emerge better off, say those working in the sector.
For one, providers can say goodbye to the all-inclusive K0011 billing code — long a source of frustration — and hello to a bevy of new codes tailored for specific uses. Add new Medicare coverage policy based on functional criteria, set for imminent release as of press time, and experts say both high-end rehab and basic power chair sales are poised for growth.
“I see growth in all [power chair] segments, but in consumer power, I see the largest growth,” says Mike Serhan, executive vice president of Drive Medical. “The majority of the market is consumer power … and [it's] much easier to get into. You need to fit a person to a chair, but it's a relatively easy fit.”
“[High-end rehab] is alive and well,” says Tom Rolick, vice president of business development for Permobil. “These people need a power chair, and they're getting them.”
“Once we're through this whole coding process, I think you'll see reasonable growth again,” says Mark Sullivan, vice president and category manager of rehab products at Invacare. “Just look at the demographics.”
New Coverage Policy, Different Industry
Who qualifies for a power chair, and what kind of documentation should back it up? Those have been up-in-the-air questions during the past year. But Medicare's new coverage policy should provide the answers.
A policy draft released earlier this year is rooted in a function-based definition of “non-ambulatory,” and takes prescribing clinicians through a “stepped” approach. Which chair a patient receives will depend on that patient's ability to perform activities of daily living in the home. The new policy will apply to all mobility aids, including 49 new power wheelchair and scooter codes. The new codes will take effect Jan. 1, 2006, and are grouped into categories that describe the product's use. (See page 40 for a breakdown.)
“Our customers are being asked to re-evaluate how they provide product and, as a manufacturer, we have to change our business model,” says Paul Banz, senior marketing manager, power, for Sunrise Medical. “I think our customers are taking their time to understand the new regulatory changes, but they are still providing products to the people who need them.”
“I think these codes will do what they were designed to do, which is to prevent unexpected spikes in use,” says Joe Ticer, director of mobility and rehab at Graham-Field Health Products. Overall, he continues, this will mean “much more controlled, but continued growth.”
Sheila Ewing, a medical device research analyst from Frost & Sullivan, agrees.
Don't expect the $1 billion-plus in allowed Medicare charges the industry saw in 2003 — the highest peak of a growth spurt spawned by over-utilization and, in some cases, outright fraud, she says. After the government increased scrutiny of K0011 claims, payments for the equipment dropped, drastically in some areas of the country. But this year and for the next five, Ewing expects market revenues to increase steadily by a few percentage points each year.
She adds, though, that the new coverage and coding changes will lead to a decrease in average selling price, a result of more basic power wheelchairs entering the market. Medicare's new reimbursement system will pay only what the patient qualifies for — and many beneficiaries, Ewing predicts, will qualify for only a bare-bones product.
“You're going to see the market go more toward basic models,” she says, “instead of the fully loaded products. Medicare coding won't allow it. Anything extra [not deemed medically necessary will come] out of the patient's pocket.”
Some may not even have the option to be reimbursed for power chairs, says DuWayne Kramer, president of Leisure-Lift. “If [CMS policymakers] do what they say they're going to do, you're going to see more scooters sold than you're going to see power wheelchairs sold,” Kramer says.
The draft coverage policy details the full range of mobility aids — from walkers to manual wheelchairs to scooters to power wheelchairs. “If I can turn a tiller,” Kramer explains, “then I'm going to get a scooter before I get a power chair, which in the long run is the way it should have been all along.”
For power chairs, most agree that the coding changes aren't designed to spur innovation but instead to control costs. Yet they still will have a lasting effect on how manufacturers tackle product development.
“I think you're going to see more specialized products because the codes are so defined,” says Scott Higley, vice president of sales for Quantum Rehab, a division of Pride Mobility Products. “You've got to make chairs fit very specific codes.
“We view this as an opportunity to better serve providers,” Higley continues. “Now, rehab products are truly separated because of the definition of these codes.”
Ultimately, says Permobil's Rolick, the government focus on power chairs should let the industry do what it does best: improve people's lives. “The spotlight allows us to tell our story,” he explains, adding that, with the headlines during the past few years, “the story has not been so positive. Now, we get to show the good things we do and how we enrich lives.”
Retail Catch-Up
But over the next decade, rehab isn't where Ewing predicts the market's most dramatic growth, which she says will stem from basic models designed for patients who, while they may not need advanced features like tilt-in-space, do need some assistance.
Before Medicare turned its attention toward wheelchairs, “manufacturers were adding all these bells and whistles patients didn't need,” Ewing says. “The [chairs had] everything because CMS was reimbursing it. Now, they're cutting back.”
That means, she contends, that manufacturers must carefully focus product development to meet consumer needs — nothing more, nothing less. For example, some now offer what she calls “hybrid” chairs that are smaller, lighter, more durable for both indoor and outdoor use and will break apart easily for transport. The problem with traditional mobility devices for the Medicare population, she says, is that “pieces are too big and too heavy for an elderly person to transport.”
Invacare's Sullivan also believes that portable power chairs, “including retail versions that people will pay cash for, will grow tremendously.”
Baby boomers have, or at least are willing to spend, more disposable income than their parents, Ewing says, and she expects that many of these consumers will simply buy wheelchairs for themselves or their loved ones.
“Different stores will be selling these products, not just providers who specialize in mobility,” she explains. “You're going to see different methods of selling, different types of distribution,” with all players forging “different kinds of alliances” to reach the cash-paying consumer.
It's no secret that retailers like Wal-Mart, Amazon.com and even Pep Boys are experimenting with home mobility. Wal-Mart now has more than 50 locations in its chain featuring providers that offer a mix of HME products, including power chairs and scooters. Unlike rehab, the success of wheelchair sales in retail outlets will depend on how much cash consumers are willing to spend — and experts say that may be a lot.
“It's all about marketing right now,” says Drive's Serhan, adding that in this area, the HME industry needs to play catch-up. “The long-term success is more in the dealer's hands, and less with third-party payers.
“Some of the car parts places are actually selling DME,” he continues, and “they're doing far better than a standard DME dealer. Drive has been contacted by many large mass marketers,” Serhan adds, “and they all see [power chairs] as a good revenue stream within the next 20 years. All the mass marketers want to get into it.”
Some providers are taking advantage of these new opportunities, says Ferretti Chang, CEO of C.T.M. Homecare.
“Dealers are becoming much better merchandisers,” she says. “Prices for chairs are allowing dealers to take advantage of more retail sales. Anytime a dealer can provide multiple options, and present the products well, they open themselves to a good number of additional opportunities.”
Concludes Invacare's Sullivan: “There is a whole untapped market that has nothing to do with Medicare. Whatever Medicare does, this market segment will grow.”
Experts Interviewed
Paul Banz, senior marketing manager, power, Sunrise Medical, Longmont, Colo.; Ferretti Chang, CEO, C.T.M. Homecare, Riverside, Calif.; Sheila Ewing, medical device research analyst, Frost & Sullivan; Scott Higley, vice president of sales, Quantum Rehab, a division of Pride Mobility Products, Exeter, Pa.; DuWayne Kramer, president, Leisure-Lift, Kansas City, Kan.; Tom Rolick, vice president of business development, Permobil, Lebanon, Tenn.; Mark Serhan, executive vice president, Drive Medical, Port Washington, N.Y.; Mark Sullivan, vice president and category manager of rehab products, Invacare, Elyria, Ohio; Joe Ticer, director of mobility and rehab, Graham-Field Health Products, Atlanta.
Tracking Technology
According to manufacturers, technology advances in power chairs all point to common goals: patient comfort and increased efficiency.
“Up until today our industry has not kept up with the incredible technology transformation seen in other industries such as consumer electronics,” says Paul Banz of Sunrise Medical. “We anticipate the mobility industry will finally watch some of this technology move into our business.”
As electronics get smarter, so, too, does the drive technology those electronics control. “Drive-wheel technology will always be important,” Banz adds, “because it is hard to accommodate everyone with one single [kind of] technology. Soon, our industry will be able to provide multiple drive technologies from fewer bases. [Providers] want modular parts, streamlined inventory and better reliability. Manufacturers will have to supply these requirements to continue to compete.”
Newer drive technology more closely mimics natural human movement, says Quantum Rehab's Scott Higley. “If you stood up right now and turned around, you wouldn't turn on a central axis,” he explains. “Instead, you'd make a small radius during your turn, and mid-wheel drive is designed to emulate that.” In some power chair designs, he says, because wheels are slightly outside of being center, the wheels “operate more like a foot to create that small radius.”
Beyond drive technology, “consumers are becoming more demanding as far as the ride feel,” Higley points out. “That's where suspension comes in.”
Suspension serves two purposes on a power chair: to improve performance and increase comfort. “We're getting past the simple spring,” Higley notes, explaining that suspension systems in the market now are becoming a lot more advanced, with strategically placed armatures and linkages. Today's suspension reacts more to what the wheels encounter on the ground and less to a person's weight in the chair, he says.
On the horizon, Graham-Field's Joe Ticer says he sees more experimentation with lighter-weight materials like composites, especially considering rising steel costs. “Looking at alternative materials for frames will not only contain costs overall but improve the function of the power chair,” he says, explaining that lighter materials will lead to longer range and battery life.
As well, he says, “There are alternative energy sources that are more efficient,” adding that Graham-Field is partnering on the development of lithium-ion battery technology that could save space and weight. “When you go to [an energy source] that's less than 20 pounds, your design parameters become different. You could put [the battery] higher up, or even behind the wheel, instead of between the four wheels,” which could lead to lower seat-to-floor heights and better ground clearance at the same time.
Cracking the New Codes
The 49 new power chair and scooter codes CMS unveiled earlier this year are designed to match patient need with available technology, far different than the all-inclusive K0111. To take effect Jan. 1, 2006, the codes break down as follows:
-
Pediatric power wheelchairs: 12 codes
-
Adult power-operated vehicles: 5 codes
-
Adult power wheelchairs: 11 codes
-
Adult specific-purpose use, single-power option wheelchairs: 7 codes
-
Adult high activity-no power options: 1 code
-
Adult high activity use-single power option: 4 codes
-
Adult high activity use-multiple power option: 2 codes
-
Adult specialized use-multiple power option: 4 codes
-
Miscellaneous: 3 codes
For more information on the new billing codes, visit the SADMERC Web site at www.palmettogba.com.
To Attract Active Seniors, Providers Must Sell Convenience
As active seniors seek to maintain their lifestyles, experts say providers who want to capitalize on this growing demographic must tweak their sales and display strategies. Past selling medical devices, they say, providers must show they are selling convenience.
- Referrals
Because many think basic power chair sales will increase at retail, more referrals could come from mass retailers as well as from physicians and other health professionals. According to Drive Medical's Mike Serhan, if the mass retailer can't meet a consumer's specific need, they may send business toward local mobility providers who can.
- Product Selection
Carrying the gamut — from basic power to wheelchairs with all the bells and whistles — brings a classic retail strategy into the HME showroom, says Graham-Field's Joe Ticer. Providers should prominently display low-priced items with mid- and high-range items nearby, accompanied by a balanced inventory. With this set-up, the provider “can describe the value differences between [several models],” he says. History shows that, in this situation, many consumers will purchase upgrades rather than the bare-bones model.
- Strong Display
Featured power chairs — elevated on a pedestal in the middle of the showroom, for example — attract attention and, ultimately, more sales, Ticer explains. “I've seen providers have a ‘power chair of the week or month,’” he says, adding that such a display “draws your eye to it … and makes people talk about it.”
