In this special-edition newsletter, HomeCare presents need-to-know news gathered from seminars, special events and the show floor at Medtrade 2003.

From One HME Dealer to Another: Rep. Mike Ross Opens Medtrade 2003
In Washington, trial lawyers get behind their own to have their voice heard. The same goes for pharmacists, doctors and drug companies.

"And so should the home care industry," said Rep. Mike Ross, D-Ark., at the American Association for Homecare's "Washington Update," Medtrade's Oct. 9 opening session, which was sponsored by HomeCare. "It's long overdue for those of us in the home medical equipment business to have our voice heard."

Ross knows the industry first-hand; he and his wife Holly own Holly's Health Mart in Prescott, Ark. The HME dealer also has a pharmacy, an IV therapy business and a gift shop.

"The gift shop is the most profitable part," he said. "That says a lot about the state of health care in this country."

Ross strongly opposes competitive bidding provisions in the House version of the Medicare Prescription Drug and Modernization Act of 2003 (H.R. 1), saying it will limit competition, limit choice and hurt patients. "Going to competitive bidding, where you tell seniors who their provider is going to be, is dead wrong," he said, adding that he has talked to fellow lawmakers "until I'm blue in the face" about the proposed measure. He noted that there is a lot of ignorance on Capitol Hill about the HME industry.

"Many members think you pick a price you want to charge, send it to Medicare and [Medicare] pays it," Ross said.

The congressman also spoke out in favor of mandatory accreditation for HME providers, an item that may or may not be in the final version of the Medicare bill. "I don't think [accreditation] has to be a bad thing," he said. "It can bring a new level of professionalism [to the industry]. But, it has to be done to where it's affordable, and I think [AAHomecare] can lead that effort of trying to negotiate contracts and pricing" with accrediting organizations.

AAHomecare remains a strong but relatively small voice in Washington, Ross said. Drug companies have more than 600 Capitol Hill lobbyists and donated more than $100 million to political campaigns over the last three years. As a result, the Medicare-reform bill's language now says that the federal government shall be prohibited to bring down the high cost of drugs, Ross stated. "That's just wrong," he said. For this reason, he said, it's more important than ever for HME dealers to become involved in local and national associations like AAHomecare. "It's important that you have a voice," he said.

Overall, Ross said talk in Washington and the industry in general should move away from cost. Patients can now live independently in their own homes "instead of being warehoused in a hospital or nursing home" at a higher cost. When he talks about home medical equipment to other congressmen, Ross said, "I tell them 'Don't look at what it costs you; Look at what it saves you.'"

For his service on behalf of patients in the home care industry, AAHomecare presented Rep. Ross with the first annual "Patient Advocate Award."

The Outlook for HME: 2004-2008
In a long-range overview, Wallace Weeks, president of The Weeks Group, Melbourne, Fla., told attendees at an early-morning session called "The Outlook for HME: 2004-2008" that the industry will be characterized by three conditions: growing demand, channel diversification and consolidation.

As a result of industry maturity, in fact, Weeks predicted that provider consolidation would continue "to the point where three companies will control 50 percent of the market." Currently, he said, four of HME's top providers--not necessarily the companies that will end up with a bigger share--have captured 14.6 percent of industry business, which he pegs at $18 billion. Those providers are Apria, with $1.25 billion in revenue; Lincare, at $961 million; American HomePatient, with $353 million; and Liberty Medical, $307 million.

But, Weeks added, "there may be a host of other industry participants that produce a small share of the expenditures and can remain very profitable."

Weeks also projected growth in four of the industry's strongest market segments over the five-year timeframe. Respiratory, diabetes, mobility and infusion currently make up $13.3 billion in consumer revenues, he said, and that revenue should grow.

As the strongest category presently, representing $4.5 billion, respiratory should grow to $4.9 billion by 2008. The diabetes market is projected to experience tremendous expansion by 2008, from its current $2.7 billion to $4.7 billion. Mobility, which will grow from $1.3 billion to $1.6 billion, and infusion, which will grow from $4.8 billion to $5 billion, round out the top four markets.

Hostak: RATC Rehab Codes Get Cold Shoulder from CMS
The home health care industry should not expect any new HCPCS codes to result from applications filed this year by the Alexandria, Va.-based American Association for Homecare's Re/hab and Assistive Technology Council (RATC). That was one of the revelations of the session entitled "Re/hab Issues Update," presented by Rita Hostak, chair of the council.

Hostak, who also is vice president of government relations for Longmont, Colo.-based Sunrise Medical, told the audience that, earlier this year, RATC submitted 35 new code applications for power and manual wheelchairs, alternative positioning, seating and bath safety. Preliminary recommendations by the Baltimore-based Centers for Medicare and Medicaid Services indicated that none of the applications would be approved this year, she added. However, approximately 50 new HCPCS codes for wheelchair accessories, requested by the DMERC medical directors, are likely to be added, though none of the codes are based on RATC's submissions, Hostak said.

In other news, RATC is developing an addition to the AAHomecare Web site that is intended to keep rehabilitation technology companies up-to-date on Medicaid issues, Hostak told the audience. The new section, which could be operational by early November, will feature a database that details proposed reimbursement changes in each state and a library of documents that AAHomecare members can download to use when meeting with state legislators and Medicaid officials about rehab and assistive technology issues.

In addition, RATC will soon begin contacting AAHomecare members via e-mail or fax when proposed changes to the Medicaid programs in their states are announced. The notification program is intended to allow companies plenty of time to respond to and comment on new proposals, so RATC encourages AAHomecare members and state associations to be aggressive in alerting the council to proposed changes, Hostak said.

Hostak also noted that RATC is in the process of developing both a position paper on state licensure, or consumer protection, legislation and a draft legislative template for such initiatives. The RATC also has adopted a "Standards of Practice and Protocol for Rehabilitation Technology Companies," she informed the audience. The non-binding document contains 15 recommendations for business practices.

NCB, IR and HIPAA Could Have Major Impact on Respiratory Providers
The respiratory care community well knows that legislative decisions are nothing to laugh about, because all politics eventually affect businesses in their own backyard, according to Marcia Nusgart, executive director of the Coalition of Respiratory Care Manufacturers (CRCM), and Ron Billingsley, director of government relations for Murrysville, Pa.-based Respironics. However, respiratory care manufacturers and providers still need to be more proactive about influencing the legislative process, Billingsley told Medtrade attendees.

In their conference session, "Update on Respiratory Issues Facing Manufacturers and Providers," Nusgart and Billingsley explained how CRCM was addressing several regulatory topics--competitive bidding, inherent reasonableness, the Health Insurance Portability and Accountability Act (HIPAA) Uniform Code Set issues and HCPCS coding process issues--then urged the audience to be advocates for the industry also.

Unfortunately, the home care industry does not have power equal to that of the American Medical Association or pharmaceutical industry, so "it's important to find out who your political representative is and engage them frequently so they'll begin to understand what your business is," he added.

For example, Billingsley said, "Competitive bidding is not dead, and if it is adopted, it will have an impact on your business. Even if there isn't a full prescription drug bill, we might get a downgraded version of that, such as discount cards or re-importation of drugs."

Inherent reasonableness also is an important issue to watch and speak to congressmen about, Nusgart said. IR has always been a regulatory mechanism that can be used to adjust Medicare reimbursement rates, but the process was redefined, allowing DMERCs to make changes of 50 percent without the formal rule-writing process, she said, adding that the first products to undergo IR may be power wheelchairs due to the recent federal crackdown on fraud in that sector of the industry.

"Another point on IR that's critical and goes back to competitive bidding in the House version of the bill is that it would allow you to adopt competitive bidding prices without going through the IR process," Billingsley said. Theoretically, a company could do one competitive bid demonstration project and up pricing all over the country without going through IR. "That's very frightening because we wouldn't be able to comment on whether it's a good or bad thing," he said.

HIPAA Uniform Code Set issues are also a concern because there might be a gap if there were no national HCPCS code that described the local code, Nusgart said. Consequently, over the past two years, CRMC has worked with state Medicaids to review "crosswalking" of Medicaid to national HCPCS codes and apply for new codes if gaps existed. "Because no mandate exists for uniform application of HCPCS codes across all payers ... if we don't crosswalk this right, this also could lead to problems with dual eligible patients with Medicare and Medicaid who require two different codes that can be used to bill the same product," she said.

Manufacturers and providers also need to speak out about issues such as non-invasive positive pressure ventilation (NPPV), oxygen local medical review (OLMR) policy, new respiratory HCPCS codes for 2004 and pending local medical review policies, Nusgart said.

While the Coalition represents the industry, "it's still important for respiratory manufacturers and providers to speak intelligently about issues that affect them and not to be intimidated by the Washington process," Billingsley noted. "Your congressman wants to hear what [these issues] really mean to you and to the economy. Plus, you vote for them and pick their salaries."

AAHomecare Measures Financial Performance
HME providers' overall profits have increased by 11 percent on average since last year, according to the results of the American Association for Homecare's 2003 Financial Performance Survey. This and other survey findings, such as an overall improvement in accounts receivable indicate that home care businesses are operating with a higher degree of professionalism, according to William Cron, professor of marketing at Texas Christian University, Fort Worth, Texas, who conducted the survey. At a session entitled "AAHomecare's Financial Performance Survey: Results and Benchmarks," Cron presented an overview of the home care industry's financial performance.

For the 120 companies surveyed, findings include:

--In 2002, pre-tax profits for the participating businesses totaled 6 percent; return on assets equaled 11.4 percent; and return on equity was 18.2 percent.

--Twenty (20) percent of responding businesses grew at a plus-rate of 20 percent from 2001 to 2002.

--Thirty (30) percent of the businesses earned less than $3 million; 28 percent earned between $3 million and just below $5 million; 24 percent earned $5 million to $10 million; and 18 percent earned more than $10 million.

Forty-two (42) percent of the respondents represent respiratory providers, and Cron noted a broad-based offering of sleep-disordered breathing services in the marketplace. "I'm surprised with the [sleep-disordered breathing] results," Cron said. "It is a big business."

Next year, Cron said, AAHomecare hopes to improve its survey by measuring labor productivity and further investigating companies' key operating expenses.

2003 HomeCaring Awards Presented to Adler, Williams
In a Friday morning ceremony, HomeCare presented Donald H. Adler, president and CEO of Care Medical and Rehabilitation Equipment, Portland, Ore., and David T. Williams, director of government relations for Invacare, Elyria, Ohio, with the magazine's HomeCaring Award for 2003.

Sponsored by Medtrade and judged by a five-member panel of industry professionals, the awards were established to mark HomeCare's 25th anniversary, and are given in recognition of distinguished service to the HME industry.

"Medtrade is pleased to be a sponsor of the 2003 HomeCaring Awards because they exemplify the true spirit of the industry," said Cory Smith, group show director for Medtrade. "This year's recipients are well deserving of this award and prove that this industry is founded on those who continually provide quality care that exceeds expectations."

Check upcoming issues of HomeCare magazine for profiles of the award recipients.

Medtrade Spring 2004 to Focus on Building HME Business and Improving Patients' Quality of Life
An accreditation summit included as part of the American Association for Homecare and Medtrade's Continuum of Care Conference is icing on the cake for a Medtrade Spring that promises to be bigger and better than ever.

The conference and expo, which will take place March 16-18 at the Las Vegas Convention Center, recently was recognized by Tradeshow Week as one of the 50 fastest growing tradeshows, based on its net square footage growth during the past two years.

"Medtrade Spring continues to grow with both attendee and exhibitor attendance increasing [each year]," said Cory Smith, group show director for VNU Expositions, which hosts Medtrade and Medtrade Spring. "The exhibit hall floor increased in size by 20 percent from [the year] 2000 to [the year] 2003, and attendee growth increased [more than] 50 percent" during the same timeframe.

The accreditation summit will give attendees access to accrediting organizations such as the Accreditation Commission for Health Care (ACHC), the Community Health Accreditation Program (CHAP) and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).

The Continuum of Care conference, which begins March 16, will include educational tracks for orthotic and prosthetic fitters, respiratory therapy, rehab and assistive technology, and home health nursing. For more information about Medtrade Spring, visit http://www.medtradespring.com or call (800) 933-8735.

Heard at the Show
Some of the HME industry's hottest issues were the subject of discussion among Medtrade speakers and attendees alike. Following are comments on just a few of the topics that dominated conversation at the show.

On Medicare reform and competitive bidding--

"We don't know what will really happen. [AAHomecare] is still fighting because we can't let just this small segment of our industry support the Medicare prescription drug benefit ... We have had quite a few new letters come in against competitive bidding and also against the copay for home health and a lot of other issues that are hurting the whole frame of home care.

"So, we'll wait and see. I think it's still a toss-up."

--Kay Cox, president and CEO, American Association for Homecare

*Editor's Note: According to Cox, as of Medtrade's opening last week, AAHomecare had received 20,000 responses from association members, industry providers, manufacturers and beneficiaries who signed the association's open letter to Congress, which addresses HME concerns in Medicare reform.

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On the increased use of power wheelchairs and CMS' Wheeler-Dealer initiative--

"The Scooter Store believes that there's a huge and growing need for mobility products. The senior population is certainly growing and they're living longer, and they have different expectations about quality of life.

"We believe that everybody who truly has a need for mobility products should be able to have the freedom and the independence and the personal dignity. More and more, America is coming to realize the importance of that, because seniors ... shouldn't have to choose between their health and their freedom and putting food on the table.

"There is data to indicate that those seniors who retain their mobility save the Medicare system money, as much as, potentially, $2 billion over the past seven years."

--Margaret McGukin, executive vice president, marketing, The Scooter Store

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On industry involvement--

"The American Association for Homecare and the state associations have not been fully recognized by many DME/HME dealers. These associations take the message to the state capitols and to Washington, D.C.

"If your company is not a member of AAHomecare and your state association, please join now. They represent every dealer, not just those who belong. You must give them the strength they need to speak on your behalf.

"Will both Medicaid and Medicare reduce reimbursements much further? The answer is 'yes.' This is why you must support the associations who fight for you. Keep in mind at all times that they are your voice, and as I said before, join now."

--Sheldon "Shelly" Prial, partner, HPS Healthcare Management and HomeCare columnist

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On reimbursement cuts--

"When the reimbursement dollars hit bottom, so will the service and so will the patient satisfaction, because as far as I'm concerned, payers want one thing more than they want anything else, and that's not price: They want transparent transactions. They don't want any complaints. They don't want any hassles.

"As soon as you start getting that level of service down to the point where we can get the consumer complaining about it, then I think we will see some changes. But [for providers], it is a matter of being able to hang on and have the capital to hold on while this happens."

--Simon Margolis, vice president of clinical and professional development, National Seating and Mobility, and president, Rehabilitation Engineering and Assistive Technology Society of North America

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On industry challenges--

"The pace of change over time in business is increasing at an exponential, a Malthusian, a geometric rate ... and in many instances, today's answers will not solve tomorrow's challenges.

"That's not good or bad. That's not right or wrong. It is, in fact, the nature of business today. As businesspeople, we know that what brought us to where we are in October 2003 may not carry us to where we want to be in one year, five years or 10 years, and it is a daunting challenge.

"This industry today has challenges facing it that include Medicare reform and Medicare dependence, reimbursement cuts, shrinking margins and the possibility of bidding for business, and all of those keep you up day in and day out thinking about how [this will change your business].

"But at the same time, we all know incredibly well that the patient population in this industry over the next decade is going to look like that geometric code. It is going to dramatically increase--and not just that population of seniors but that population of super-seniors ... and that throws market share right into your business."

--Timothy S. Mescon, Ph.D., Dean, Michael J. Coles College of Business, Kennesaw State University, and partner, HA&W Mescon Group

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Also Heard at the Show

While the preceding comments reflect the industry's unquestionable challenge for providers, they tell only part of the story from Medtrade 2003. Responding to the question: "What do you like about this business?", the following remarks from providers on the exhibit floor present another side of the HME story.

"It's a caring profession, a community, with results that make people smile." --Dan Acker, Peak Medical, Simpsonville, S.C.

"We provide service that helps people solve problems." --Andy Gossett, Community Medical Equipment, Lufkin, Texas

"We make a difference in helping people." --Tamim Baiou, 4 Point Enterprises, Tustin, Calif.

"I like helping people." --Ron Patterson, Sterling Medical Products, Henderson, Nev.

"No matter how bad the day, I know I have helped someone." --Tom Owen, Home Care Allies, Toledo, Ohio

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