ACOs Spell ‘Opportunity’ for HMEs

WATERLOO, Iowa — Savvy home medical equipment providers
can be the “go to” companies in the emerging world of 21st century
health care, but they need to be quick to align themselves with
newly
forming Accountable Care Organizations, an industry analyst
said.

“You want to establish that relationship with the ACO before
someone else does,” advised Alan Morris, director of alternate care
programs for Waterloo, Iowa-based VGM.

The reason? ACOs will soon be the new referral sources in town
and if you aren’t aligned with one or more, you could find yourself
shut out of the Medicare business.

Under the Affordable Care Act, physicians, hospitals and other
providers can form ACOs that work together to coordinate care for
Medicare beneficiaries. Such networks will be expected to improve
the health and experience of beneficiaries and reduce the growth
rate of health care spending. In return, the networks will share in
any savings to the Medicare program, which are anticipated to tally
upwards of $430 million over three years.

On Tuesday, CMS unveiled two concepts related to ACOs. Its
Pioneer model will be available this summer and is aimed at ACOs
that have already begun coordinating care for patients and can
utilize alternative payment mechanisms, such as private payers.

In addition, the Advance Payment ACO model will allow certain
ACOs participating in the Medicare shared savings program to access
their savings up front as a way of covering the costs of
infrastructure and staffing. CMS is asking for comments on that
idea, and the agency’s Innovation Center is offering learning
sessions to teach providers about ACOs, as well as ideas for
improving care delivery.

At this point, CMS doesn’t recognize DME companies as network
partners, Morris said, adding that VGM plans to address that in its
comments to CMS. Still, there is an opportunity for industry
providers to partner with networks and beef up their businesses, he
said.

“There are new incentives to keep patients out of the hospital,”
Morris said of the program. “[ACOs] are going to count on DMEs. DME
[companies] are going to have to look at making their businesses
more attractive to ACOs. There are new initiatives that we can take
to prepare ourselves to be the ‘go-to’ people.”

Morris suggested the following:

• Form your own loose network, aligning yourself, say, with an
  infusion company and a home health agency for an “all-encompassing”
  home health care network. This is especially advisable for smaller
  HME businesses, Morris said, because it allows them more leverage.
  He noted that VGM is working on creating a network for its members
  that would establish connections with various ACOs.

• Invest in telehealth, that is, remotely monitoring patients in
  their homes. “That’s going to be a booming market at a whole new
  level we haven’t seen before,” Morris said. “It’s going to be a
  huge market. Somebody is going to have to deploy the device, and it
  might as well be us.”

• Offer a health-coaching program. In addition to providing the
  equipment to help keep patients out of the hospital, offering a
  health-coaching program that enhances a patient’s health and
  lifestyle is a value-added service, Morris said. While such a
  service is not reimbursable, it does give HME companies an
  advantage over their competitors. As the industry has seen in Round
  1 of competitive bidding, referral sources — in this case,
  the ACOs — tend to call on the HME companies able to provide
  the most services.

HME companies swift enough to position their companies to align
with an ACO have much to gain, according to Morris.

“The thing about ACOs is that they are extremely expensive to
implement,” he said, noting that while CMS has pegged the price of
implementation at $1.8 million, physicians and hospitals say it is
far beyond that, more ranging from $11 million to $26 million.

“If ACOs are going to spend the money, it has got to reach
beyond their Medicare population,” he said. “They are going to go
to the DMEs with all of their patients, not just some of their
patients, and that will be beyond the Medicare market.” So an HME
company’s reach could be expanded greatly — and that could be
a benefit when competitive bidding comes to communities
nationwide.

Morris said HME providers should consider the fact that ACOs are
being established as an opportunity.

“As long as providers are proactive and put themselves in the
position of offering more than just equipment, it is an
opportunity,” he said. “If they are just going to stay on the
sidelines and see what is going to happen, they may be stuck
there.”

For a fact sheet on CMS’ ACO initiatives, go to
http://www.healthcare.gov/news/factsheets/accountablecare05172011a.html.