MED Group Develops PMD Formulary

In an effort to help HME providers boost their margins, The MED Group has devised a power mobility device formulary of products keyed to CMS’ new PMD codes and recent changes in allowables.

The formulary is designed to help its members “identify the highest quality of PMD product while maintaining the best margins,” according to the buying group.

Using the $mart Choice tool on MED’s Web site, providers can choose base chairs, add an array of accessories and batteries and choose from a variety of funding scenarios to help figure out the best product for their customers and their best profit margin.

“It enables our members to analyze gross profit and compare product specifications, and it analyzes gross profit based on funding scenarios,” says Scott Austin, executive vice president of the Lubbock, Texas-based organization. “It saves our members what would take, in the past, days of highly paid people to gain all the information they need and do spreadsheets.”

The $mart tool has been around for several years and has evolved as allowables and products have changed, Austin notes. When CMS reworked the coding for PMDs last year, MED members began asking for help in understanding their margins in light of the new allowables. “We had it up and running the week the final codes came out,” he says.

To create the formulary, MED analyzed all power mobility products from manufacturers it contracts with and then determined the product corresponding to the new PMD codes.

The tool allows providers a lot of leeway. In addition to variables such as accessories and battery types, providers can create their own fee schedules for private payers and can even see products of many non-MED contract vendors.

“Now they can see products they might not be aware of that could make them more money,” says Todd Walling, the group’s contract specialist/product manager.

Austin cautions that gross profit is not the only basis on which to make a product decision. “We look at product reliability, we make sure — and we advise our members to make sure — that the product meets the functional needs of the client they are serving. We stress that gross profit is one piece of the puzzle. What we are trying to do and what we are trying to teach [providers] is, if you can choose a functionally equivalent product and if you can earn $300 gross margin on the product, we strongly encourage them to sell that product where they can earn $300 more profit.”

He adds that $mart Choice is one of several tools The MED Group is developing. Future “PMD Business Decisions” categories will include best practices, assessment tools and tools for understanding the market.