Small HMEs Ask, ‘Do They Want to Put Everyone Out of Business?’

ATLANTA–While CMS is couching its revised DMEPOS supplier
standards as enhanced tools for waging war on fraud and abuse,
smaller providers see many of the changes as weapons of destruction
aimed at eliminating them from the home medical equipment
industry.

By creating five new standards and revising seven of the 21
existing standards that providers must meet to enroll with the
National Supplier Clearinghouse, CMS is proposing, among other
things, that:

–Locations be open a minimum of 30 hours a week. The agency is
also seeking comments on whether to establish a minimum square
footage requirement.
–Suppliers have comprehensive liability insurance of $300,000 per
incident.
–Cell phones, beepers and answering machines can’t be used as the
primary business phone during operating hours.
–Suppliers can’t use “a contract individual or entity to provide a
licensed service,” requiring instead that personnel be on
staff.
–Suppliers can’t share a location with other Medicare suppliers,
such as physicians or home health agencies.

Published in the Federal Register Jan. 25, any one of
these proposed requirements could be the tipping point for the
majority of small businesses that make up much of the HME industry,
providers and others said.

“This is totally against small companies,” said Joan Cross,
co-owner of C&C Homecare in Bradenton, Fla. Although she is
chairman of the NSC Advisory Committee, Cross said her committee
had no input on the proposed standards, which she regards as
“punishment” for the fraud and abuse that has tainted the
industry.

“If they are looking to prevent people from going into this
business, they’re doing a good job,” she said.

Michael Rivera, office manager/public relations, for AWA Medical
Supplies in Danbury, Conn., questioned whether CMS even wanted
small providers to stay in business. “Do they want to put everyone
out of business? I think that’s what they want to do,” he said.
“These little mom-and-pops can’t afford this.”

For most small providers, it is too costly to have respiratory
therapists on staff, he noted, so they contract out that job. And
they can’t necessarily afford to grow bigger just because CMS
decides to implement a minimum square footage. “The entire place
here is 2,000 square feet, but the showroom is about 600 square
feet,” he said. “It could be an issue if [CMS] wanted more than
that; we’d have to break a wall down.”

Consultant Mary Ellen Conway, president of Capital Healthcare
Group in Bethesda, Md., said many of the provisions in the proposal
are unrealistic. Not being able to use a cell phone is a prime
example, she said. Small providers might have to leave the main
office to attend to a patient emergency. “So you can’t use a cell
phone [when you go out] on an emergency?” she asked.

“I totally understand what CMS is trying to do in identifying
fraudulent providers,” she continued, “but they are penalizing
small providers in doing this. I don’t know that this is an attempt
to get rid of small suppliers, but it’s kind of hard to argue that
they are trying to keep them in business.”

While she termed some of the revised standards “decent,” Miriam
Lieber of Sherman Oaks, Calif.-based Lieber Consulting warned that
in its zeal to rein in fraud and abuse, CMS is risking eradication
of an entire strata of the industry–and putting beneficiary access
in question.

“What they have to be wary of is that the small provider is
really at risk here,” she said. “The number of providers will
definitely shrink because of this. I think [CMS] needs to be aware
that the level of service will also be commensurate with the level
of suppliers.”

Tim Safley, clinical advisor for the Accreditation Commission
for Health Care, said he generally supports the standards proposal.
But he is concerned in particular, he said, about the requirement
for liability insurance of $300,000 per incident. “I feel like it
will limit access to the rural provider, and that is one thing CMS
has said it wasn’t going to do,” he said, noting that in some areas
of the country, such coverage is not even available and in any case
might be “outside the fiscal resources of a small provider.”

Industry attorney Neil Caesar of the Greenville, S.C.-based
Health Law Center observed that “a number of these provisions seem
to be insensitive to the very small supplier or imply a relative
indifference to small operations. A number of these changes seek to
establish supplier operations in the traditional retail business
vein,” he noted, “with set hours of substantial quantity and … an
operation that looks like you are walking into a store, regardless
of necessity or practicality.” (See Caesar’s analysis of the
proposed changes to standard No. 1 in this issue.)

Esta Willman, owner of Medi-Source Equipment and Supply in Yucca
Valley, Calif., is a small supplier who supports many of the
proposed changes, although she questions whether CMS isn’t
overextending its reach in some areas.

“I do worry at times that some of the requirements get overly
prescriptive and do not really serve the purpose that they are
intended [for],” she said. “I think sometimes providers can meet
the intent without there being so much mandated detail.

“I think having standards in place is a good thing. I think
accreditation in lieu of state licensure is a good thing to require
and is sufficient enough to place a barrier to entry into the
market by unscrupulous providers,” Willman continued. But, she
added, “CMS needs to allow providers to run their businesses as
they see fit.”

Jason Rogers, president of the Georgia Association of Medical
Equipment Services and owner of Care Medical in Athens, as well as
a member of the board of directors of the National Association for
Independent Medical Equipment Suppliers, took strong exception to
what he perceives as CMS’ attempt to control his business.

“On the one hand, CMS wants to reduce DME to a commodity, going
so far as to contract the provision of DME out to the lowest
bidder,” he said, referring to CMS’ competitive bidding project.
“If DME is a commodity, then providers must be given the latitude
to operate in a lean manner to fulfill orders in the most
cost-effective ways.

“On the other hand,” he continued, “CMS wants to ‘protect’ the
value-added components of the services we provide–not a
characteristic of a commodity–by imposing unprecedented
restrictions on how DME companies operate: telling us when we have
to be open, how we handle phone calls, whether we can use 1099
employees versus W-2 employees, who we are accredited with,
etc.”

Rogers said such measures will do little, if anything, to curb
criminal activity in the industry. “Putting standards in place only
curtails criminal activity if it is partnered with a sensible
enforcement policy,” he said. “Putting policies in place with
ineffective enforcement results in restrictions that only hinder
honest providers while doing little or nothing to hinder the
criminals that are hopefully the target of such measures.”

Rivera, too, sees this and other recent moves as a bid by CMS to
control his company’s business.

“All they want is control, and right now, they don’t have
control,” he said. CMS’ proposed standards, reimbursement cuts and
competitive bidding, as well as its proposal to require a surety
bond of all HME providers, is “more communist than capitalist. It’s
just to discourage us so we shut down or just don’t do business
with them anymore.”

That could happen. Rivera said his company is already looking to
make major changes. “We’re reorganizing and trying to get more cash
sales,” he said. “And eventually, if they keep on with the same
thing and it’s tougher to do business, we may have to say, ‘Well,
we aren’t taking Medicare any more.’ Because after a while, it’s
not worth it.”

Willman is also starting to rethink being in the business. Right
now, she is waiting to see if she has won any bids in the first
round of competitive bidding. One half of her territory is within
the bidding area, one half is out. But together, Medicare patients
comprise 70 percent of her business.

“We are waiting to hear who won to determine if we are in this
business,” she said.

Even if she wins a bid, there’s still a question of whether or
not to stay in HME. Willman bought her company 15 years ago. “I
thought I was building a business for my family’s future,” she
said. “And I have done everything as legally and as correctly as I
possibly could. We have never crossed the line, unless it was a
clerical error.”

But over the last several years, she said, her business has been
“chipped away and chipped away. I ask myself why am I continuing to
invest my energy and resources in this. What retirement? What
future? It’s not right that the government, with a swipe of a pen,
can wipe it all out.”

So far, Willman said, it’s been the patients who have kept her
going. That’s why she got in the business–to take care of people.
Now, although there are national companies, she’s the only local
provider left in her area. All the others have disappeared.

“I can’t tell you how many of my patients have said, ‘What will
we do if you’re not here?’ We’re trying to be one of the last of
the Mohicans left standing after all this shakes out. As a small
provider, I don’t know whether we can do it. I will take care of my
customers and nearly go broke doing it, but at some point, I have
to draw the line.”

CMS is accepting comments on the proposed standards rule through
March 25.

View the
proposed rule.

View the
current supplier enrollment standards.