Independent HMEs Muscle Up to NCB

TAMPA, Fla.–With national competitive bidding looming, some HME
providers are banking on networks or rollups to give them the
muscle to compete–and to survive.

Thirty-five small to medium providers in the Tampa, Fla., area
in December formed Med Trust Tampa Bay LLC, a sister to Med Trust
Corp. of Southern Florida, which was organized early last year.

Med Trust Tampa Bay is aggressively preparing for competitive
bidding, said Robert M. Arado, administrator. His company, Caremed
Respiratory Services, is spearheading the effort.

“[We are] forging ahead to meet all the requirements to satisfy
CMS guidelines for the competitive bid,” he said, noting that most
of the Med Trust members are accredited. “We are rigorously working
with those who are not to get them accredited.”

Arado said he hopes all members of Med Trust will be accredited
in four months.

In addition, he said, “We’re asking all members to increase the
credit lines with their vendors. We need to come in as a network
with big dollars in credit lines … Medicare will see that we are
a strong player.”

Meanwhile, three South Carolina providers–Adaptive Medical in
Spartanburg, ApneaRx in Clemson and Mobile Health Care in
Greenville–were rolled up into the newly formed Southern Home
Medical, a publicly held company that debuted last month. Nearly a
dozen more companies are considering joining SHM, according to Greg
Tucker, owner of Adaptive Medical and president and CEO of the new
company.

Dennis Nowak, RT, owner of ApneaRx, believes the move positions
his company and the others for competitive bidding.

“It’s a great alternative for anyone who is worrying about
competitive bidding and other things that are facing us in DME,” he
said, noting that under the Southern Home Medical umbrella, “you
can purchase better equipment, get better pricing and make a profit
at lower charge rates.”

Besides, he noted, “There’s a chance I wouldn’t be in business
if I didn’t do it.”

Waterloo, Iowa-based VGM Group is also forming a network for its
members who want to participate.

“We decided to do this because we knew [providers] were going to
need help and, simultaneously, we were getting requests,” said Jim
Walsh, president and general counsel for the buying group.

Walsh sees some benefits, especially for small providers. Being
in a network could mean they wouldn’t have to work outside their
geographical area or service needs they are not equipped or
accustomed to handling, he said.

But not everyone favors networks. In a September
HomeCare magazine survey, 61 percent of providers said
they planned to bid on their own rather than as part of a network,
with 32 percent saying they’ll take the network route. While 49
percent of respondents said they think networks are workable, 43
percent said they aren’t, giving as their main concerns too much
dependence on other companies and headaches with administration and
billing. (See “Ready or Not,” HomeCare, September
2006.)

Walsh also had some cautions for providers. “We are concerned
that smaller providers might fall into networks that don’t get the
job done,” he said. The network “has to be able to technically
handle the business … do the paperwork associated with this, get
the payments out to the individual providers without tripping over
the obstacles CMS is famous for putting in your way … Network
administrators are going to be holding their money.”

Providers must choose wisely, Walsh said. “They’re putting their
business at risk. Once that deadline goes by, they aren’t doing
Medicare for a long while.” When the bid contracts are awarded,
they will extend for three years.

Arado is confident his network has its ducks in a row. “The only
drawback we see is if the whole thing is a wash with Medicare and
they aren’t able to take care of competitive bidding, and we would
have put in all this money. But without [the network], we’re going
to see a fallout of providers that we haven’t ever seen before. We
have a better chance as a group than by ourselves.”

Meanwhile, VGM, under its Last Chance for Patient Choice
organization, remains poised to file a federal lawsuit challenging
competitive bidding on constitutional and other grounds. All it’s
waiting for is the announcement from CMS of the 10 MSAs.

“Once those unfortunate entities have been announced,” said John
Gallagher, VGM’s vice president, government relations, “we’ll be
looking for articulate end-users who would be willing to sign onto
a class-action lawsuit.”

For more information on Last Chance, visit www.lastchanceforpatients.org.

For more on Southern Home Medical, see “Taking Stock of the Market,” HomeCare,
December 2006.