Internet Sales: Turning the Tables from Foe to Friend

WASHINGTON–For years, HME has played the role of Internet
ostrich, hiding its proverbial head in the sand and hoping the
trend of online sales to consumers would somehow magically melt
away. But with more than 200 million people–75 percent of the
nation’s population–currently online in the United States and the
HHS Office of Inspector General actively looking at Internet
pricing to gauge the future of reimbursement, providers have a
choice to make–pull your head out of the sand or end up laying an
egg.

In a Feb. 7 American Association for Homecare teleconference,
“The Internet–Friend or Foe of the HME Industry,” Ben Cheah,
director of sales operations for ResMed, Poway, Calif., and Ron
Richard, senior vice president of sales and marketing for SeQual,
San Diego, outlined several courses of action for providers who
hope to step out of the shadow currently cast by low Internet
pricing.

According to Cheah and Richard, data show that now more than
ever, patients are turning to the Internet to research diagnoses
and treatment offers. HME providers who do not therefore
distinguish themselves from their competitors are likely to be
bypassed based exclusively on price.

“These localized and regional payers will go on the Internet for
pricing and then try to approach HME companies to receive products
at the same rates as can be found on the Internet,” Richard
explained.

But there are steps HME companies can take to protect themselves
from Internet low-ballers.

“One of the most important things you can do [to differentiate
your business] is voice the importance of the services you
provide,” advised Cheah, who also touts the profitability of
research. “Go online and look at the [competitor’s] product prices
of the things you sell,” he said.

Among the many pitfalls of Internet sales, Cheah and Richard
noted the following:

–Medical devices are not “out-of-the-box” consumer products,
meaning a consumer cannot just open the equipment and be fully
prepared to understand and operate it.
–Medical devices sold online do not include the costs of services
necessary to ensure proper use and patient compliance.
–Medical devices sold online are not required to meet and often do
not meet Medicare standards.
–Medical devices sold online often offer no “responsibility after
the sale.” Online companies that offer products may offer
over-the-phone assistance, but that is often inadequate.

And while many in the industry have pointed out these facts to
the OIG, its findings that billing at the “median Internet price
would save Medicare $39 million in the first quarter of 2008” and
that “data available through the Internet shows most oxygen
equipment can be purchased for $1,000 or less” have been used as a
powerful tool against the industry.

Such findings have already proven detrimental to HME providers,
as evidenced by reimbursement reductions by privatized insurance in
Buffalo, N.Y., where CPAP devices were cut 30 percent, and in
Virginia, where they were reduced by 23 percent.

So what can HME providers do to make a positive impact on the
Internet pricing fight? Cheah and Richard advise the following
steps:

–Educate payers and patients on the value of the services you
provide and, in the case of payers, request reimbursement based on
that value. “Home care providers need to do really good
documentation on what services they are providing to prove that
what they are getting paid for is the service component and not
just the product,” Richard said.
–Consider options for retail sales for patients looking to be
active in their therapy decisions.
–Support industry organizations and manufacturers that support you
and your patient care services.

“It’s not so much about being online as it is about
understanding the role that the Internet can play in driving
consumer awareness, and possibly the patient’s desire to pay for
something in cash or in a retail setting. That’s something that HME
should have a strategy to address,” Cheah said.