Prevention with Profit

It’s been 16 years since Congress passed the Medicare Therapeutic Shoe Bill. In that time, home care providers have helped a lot of seniors and made a profit, a win-win in today’s battered HME market.

According to Michael Barr, vice president and co-owner of OrthoFeet, Northvale, N.J., although there is a tough and time-consuming service component involved, the margin on diabetic patients can add up.

With the demand for diabetic footwear showing no signs of slowing, it is not too late to get involved. To recap the basics, Medicare covers the yearly cost of one pair of therapeutic shoes (also called diabetic shoes) and three inserts. As long as documentation of medical necessity is there, CMS pays the full fee in hopes that patients will avoid even more costly complications or amputations. CMS does not consider therapeutic shoes for diabetics to be DME or orthotics, but instead the footwear falls under a separate category of coverage under Medicare Part B.

While shoes must be prescribed by primary care physicians, podiatrists or other qualified doctors, they must be provided by an orthotist, prosthetist, pedorthist, certified fitter or other qualified individual (check with your Medicare DME MAC for specific definitions). Providers looking to expand their business and capitalize on this opportunity must ultimately get certified, or hire someone who is.

Despite all those years on the books, many diabetic patients still don’t know about the Medicare shoe program, which started as a Medicare-only proposition before expanding to include some insurance companies and HMOs that are providing similar deals for younger patients. With the help of the media, and better communication from clinicians, awareness will likely increase.

From a demographic perspective, the market for diabetic shoes will grow based on pure need. The American Diabetes Association reports that there are 23.6 million diabetics in the United States, or roughly 8 percent of the population. Total cases went up 13.5 percent from 2005 to 2007, and Americans still receive approximately 80,000 diabetes-related amputations per year.

Despite the undeniable demographics and reasonable profit, some providers are still hesitant to dive in. After all, the clinical stakes are high. The American Podiatric Medical Association estimates that poorly fitted shoes account for as many as half of the problems that lead to amputations.

“In the shoe business, we have to admit that there is a big responsibility, especially if you compare it to a cane or so many other things,” says Barr. “You have to put something on the foot that will make a difference. It is not for nothing that Medicare is asking for some certification, education, knowledge and training before they allow you to implement this treatment … This is real treatment, and it takes responsibility.”

For providers looking to profit in the long term, Barr is adamant that shoe quality must be considered first above all. “For the short term, you can look for the least expensive shoe that will give you the best profit, because the reimbursement does not look at what your cost is,” says Barr.

“Looking at the long-term health of your business, you must look at the quality of the shoe. For example, the lining of the shoe must be as seamless as possible. It’s like you are putting your hand in a glove, with no irritation or pressure points.”

Gladys Fournet, owner of Fournet’s Pharmacy & Professional Home Medical in Franklin, La., carries several different brands of diabetic shoes. After taking the classes and putting in the hours, Fournet became a certified fitter and certified orthotist, distinctions that Medicare has deemed necessary to be in the shoe business.

In addition to operating a full-service pharmacy, Fournet also carries oxygen, hospital beds, power chairs, scooters and a full selection of DME.

“If the shoe business was stand-alone, it would make money,” says Fournet. “But we service the whole patient, and the shoe business is only a fraction of what we do. A pharmacy without HME is on its way out, and an HME without a pharmacy is on its way out.”

Cultivating referrals from a variety of clinicians yields reimbursement mostly from Medicare but also Louisiana Medicaid and private insurance. All these payers require certification, and Fournet believes this is often the main barrier for HME providers who wish to enter the market.

“Some HME providers want the fast buck, and they are not thinking of service and caring for people,” laments Fournet. “This is not an easy product to distribute. It takes a certified person. It takes patience, inventory, and you have to be trained to fit the shoe.”

With real clinical consequences for poor fitting, the service component is sizable. When a shoe customer comes in, Fournet immediately stops what she is doing to fit the patient. If follow-up is necessary two or even more days later, she is there for the customer.

“If you are trained and you are certified, this business is very profitable, but it is not a fast buck thing,” says Fournet, whose company includes three locations serving a 40-mile radius of Louisiana’s Cajun Coast. “It is a great patient-builder. It ensures patient loyalty to your pharmacy and to your business.”

Beyond Diabetes

Orthopedic footwear, which includes inserts, arches and orthotics, can also be useful for patients without diabetes.

“The diabetic part is only a small part of the business that HME companies could participate in when it comes to pedorthics and/or foot care,” says Jonathan Fogg, CPed, national sales manager for Cleveland-based Acor Orthopaedic. “There are millions of patients out there with foot problems.”

One overlooked challenge often stems from the user’s familiarity with shoes, a product that everyone has experience with. Framing shoes as medical devices can help, but ultimately everyone has an opinion about footwear.

Fogg cautions that without the proper training, education and manufacturer support, patients will inevitably end up telling you what they want.

“Can you imagine somebody walking into a pharmacy with a prescription for pills, and then telling you what pills they want?” he asks. “But they will walk in with an opinion on therapeutic footwear.

“Patients need to know that shoes are medical devices, and they should work in conjunction with providers to select the right medical device — and this is based on the prescription provided by the doctor — usually a podiatrist.”

Fogg says qualified providers who enter the market will likely benefit from solid demand for the foreseeable future. When providers become qualified to provide diabetic shoes, they can easily turn their hand to many other foot conditions. While diabetes is certainly prevalent, 80 percent of patients who come in are not diabetic, and some of them are willing to pay cash for effective foot solutions.

The bottom line, emphasizes Fogg, is that if you have the right qualified person in your business, you can generate profit from more than just the Medicare therapeutic shoe segment.

“For HMEs to narrow their focus to just the diabetic aspect of footwear is wasting a well-trained individual,” says Fogg. “There is a reason why television is full of infomercials for people who have hurt feet and need orthotics. The demand out there is vast, and the additional demands from people who are not diabetic exists, and in some ways it is an undiscovered country.

“It all depends on making the investment to get the right person trained,” he says. “When you do that, your horizon needs to be broader than just what you can do under the Medicare shoe bill.”

Fogg points out that many providers are concerned that the educational pathway may be too difficult, and some question the long-term prospects of the business model. Picking the right manufacturer can also be daunting. Whichever manufacturer you choose, Fogg believes providers should look for the customer support that encourages expansion to all areas of pedorthics, with a full range of training and products.

Questions to ask include “Is your vendor going to be a partner?” and “Where can they take you two to four years down the road?”

“I am looking for an opportunity to build your company brand,” says Fogg. “Our products may ultimately form a small part of your business, but we want it to be good.”

Experts Interviewed

Michael Barr, vice president and co-owner, OrthoFeet, Northvale, N.J.; Jane Bunch, president and CEO, Jane’s Healthcare Consulting, Marietta, Ga.; Jonathan Fogg, CPed, national sales manager, Acor Orthopaedic, Cleveland; Gladys Fournet, owner, Fournet’s Pharmacy & Professional Home Medical, Franklin, La.

Watch Those Modifiers

“With the growing number of diabetic patients in the U.S., the diabetic shoe business is growing by leaps and bounds,” notes Jane Bunch, CEO/president of Jane’s Healthcare Consulting. “But, please be cautioned that this is a highly audited item due to the ‘KX’ modifier and the fraud and abuse in the past in this category.”

However, the billing expert points out, “If you go into this business correctly, it can be a great addition to your existing business. You will need a certified fitter or someone qualified to perform the fitting of the shoes and inserts on staff. If you reside in a licensure state for O&P, be sure you have that state license as well upon adding this business. Be cautious, train your staff on how to bill the products, ensure you have all of the required documentation per policy and this will be a great service to your customers — and a great addition to your business model.”

Providers can be successful and make a profit, Bunch says, if they make certain “that billing is performed promptly and correctly the first time, and spend the time required to properly fit the patient right the first time.”