CMS recently announced that providers must be accredited or have applied for accreditation by May 14, 2008, in order to submit a bid for the second round
by Christopher Calderone, MA, MBA, AND KEVIN MAY, MA, LRT, RRT

CMS recently announced that providers must be accredited or have applied for accreditation by May 14, 2008, in order to submit a bid for the second round of competitive bidding, and that all providers must be accredited by Sept. 30, 2009, in order to continue doing business with Medicare.

Given these deadlines, now is an ideal time for all providers to sharpen their focus on some of the key issues associated with the overall HME accreditation process.

The direct and indirect costs involved in preparing for and maintaining accreditation continue to grow. In addition, providers are confronted with increasing challenges associated with a changing HME marketplace.

All providers, regardless of their current accreditation status, should seek to gain a better understanding of the issues and costs associated with preparing for and maintaining accreditation. Remember that the accrediting bodies are not the same: They do not have the same approach, the same process or the same fees.

Providers that plan well and do their research will be in a position to make more prudent choices among the various accreditation options. Moreover, they will be able to make more informed decisions on how to best utilize their scarce resources.

While it is not a given that competition among CMS' 10 approved accreditation organizations will increase with the recent deadline announcements, it is safe to assume that providers can (and should) expect more options and greater flexibility from accreditors when it comes to selecting an organization that fits their operational style and organizational structure.

Overall, most accreditation experiences tend to be favorable, yielding positive benefits for the majority of providers. However, the relationship between some providers and accreditation organizations has not always been smooth; stories of surveyors who are focused on tripping up staff or searching out flaws are not difficult to find.

Given the likelihood of increased accreditation options — and considering the challenging reimbursement environment — providers should expect a more customer-focused and educationally oriented approach to accreditation.

In short, providers need to ensure they are receiving real value from the process and not merely choosing accreditation in order to meet the Medicare requirement.

To gain a better insight into providers' thoughts on accreditation, HomeCare magazine, in collaboration with Lean Homecare Consulting Group, surveyed HME providers on both obtaining and maintaining accreditation.

Of 459 providers participating in the survey (which was fielded before CMS' round two announcement), a majority (61 percent) said they are currently accredited. Of those that are not, 86 percent said they plan to apply and, in fact, 35 percent have already begun the accreditation process.

Customer Service

With 56 percent of the survey's respondents operating in one or more of the MSAs in rounds one and two of competitive bidding, the choice to become accredited is an easy one.

For all providers participating in the survey, both those seeking accreditation and those who are currently accredited, “service provided by accreditor” is the top reason for selecting an accreditation organization. While unaccredited providers said the accreditation fee is an important factor, the quality of customer service is an even bigger consideration.

Providers that are already accredited said they based their selection on service and the type of survey process.

When comparing accrediting bodies, providers need to think of themselves as a customer of the accreditation organization — after all, they are paying for a service. As with any normal customer relationship, the customer has certain expectations they want to be met (or exceeded) based on their payment.

Quality customer service means the accreditation organization is responsive to questions and concerns. While it is important for providers to meet the required accreditation standards, they should also expect surveyors and their organizations to be flexible when unique situations arise.

To borrow a term from Medicare, a certain level of “inherent reasonableness” should apply to accreditation standards and surveyors' tactics. Providers should also expect to be treated in a courteous and respectful manner throughout the entire accreditation process.

Twenty-one percent of responding providers said they have changed accreditors for various reasons, including poor service and inflexible attitudes among surveyors. For example, weak customer service and too much focus on finding “dings” while offering little or no real improvement advice were cited by a number of providers as reasons for making a change.

Some providers who are already accredited commented they chose their accreditation organization because it was “geared toward” their business operation or was “understanding of our type of business.”

Understanding the survey process is also an important factor to consider when selecting an accreditor, meaning providers should have a good feel for the amount of paperwork and follow-up that will be required as a part of the process. This is another element of accreditation that can vary greatly among accrediting organizations. The complexity of an accreditor's standards and the frequency of revisions to those standards are other important aspects to consider.

Accreditation Economics

While it did not register as the most important selection factor, the cost of accreditation should certainly be on providers' list. For accredited providers participating in the survey, the total cost per location for one completed accreditation cycle averages $6,173. It appears that economy of scale does have some positive impact: For those providers with only one location, the average cost is $7,110, compared to $5,190 per location for providers with 10 or more locations.

When assessing total costs per location, it would be wise to include the cost of a compliance officer in any calculations. Accredited companies are more likely to have a compliance officer than those who are not accredited (94 percent vs. 65 percent).

And, while the explicit costs of obtaining and maintaining accreditation are straightforward calculations, providers must also consider the implicit costs associated with accreditation.

Implicit costs are less defined and more difficult to quantify. For example, time spent preparing for and maintaining accreditation is time that cannot be spent elsewhere in the operation. These “opportunity costs” are not reflected on financial statements, but they represent real costs nonetheless. Generally, opportunity costs will increase as the complexity of the accreditation process increases.

For example, here are some of the other costs that should be taken into account:

  • Consultants

  • Preparatory costs (including any overtime or hiring temps to assist, etc.)

  • “Beautifying” your location prior to a survey (scrubbing floors, painting, detailing vehicles, etc.)

  • Ongoing staff training

  • Complying with current and new or changed standards

  • Advertising your status as an accredited HME, and updating marketing materials

  • Lost productivity preparing for an impending survey

  • Addressing supplemental recommendations or conditional accreditation

  • Benchmarking costs

  • Purchasing accreditation materials/manuals/videos

  • Data gathering/monitoring, and maintaining data (include any software/hardware required)

  • Active costs (costs incurred during the actual survey)

In terms of preparing for accreditation, 64 percent of providers expect to receive assistance from their accreditation organization; 49 percent will buy materials from an accreditation preparation service; 18 percent plan to hire a consultant; and 20 percent expect to work through the accreditation process entirely on their own.

Does It Help?

A vast majority of providers clearly recognize the benefits of being accredited. Overall, 81 percent of providers who are accredited agree that accreditation helps their operation. (Yet, 54 percent said they feel CMS' quality standards are too tough/too prescriptive.)

Currently accredited providers had the following comments about how accreditation has helped:

  • “Allows payers to have confidence that company provides quality service.”

  • “Encourages organization of processes and observation of outcomes.”

  • “Got us into several networks.”

  • “Helps ensure quality processes and consistency between branches.”

  • “Helps us provide better service to our customers.”

  • “It keeps the standards of care high by universal policies and procedures.”

  • “It keeps us doing the right things consistently and keeps us looking for ways to become better at what we do.”

  • “Makes us a more professional company.”

  • “Referrals equate accreditation with quality standards.”

  • “We are very good at what we do, and we enjoy it. [Accreditation] just reminded us that we are that good.”

Some providers, however, believe accreditation “hinders” a company's operations. In addition to adding costs and creating “mountains of paperwork,” as many commented, they had this to say about accreditation:

  • “Does nothing to improve quality of care.”

  • “Increased administrative and time commitment.”

  • “More and more layers of paperwork that do nothing to improve service to our customers or limit/prohibit fraud.”

  • “More overhead that is mostly overkill.”

  • “More time with policies, etc., less time with patients.”

  • “Sure there will be some improvements … but I think the yield will be less than the fertilizer applied.”

  • “Will force smaller providers out of business.”

Opinions vary on whether mandatory accreditation will prevent fraudulent providers from entering the business: 34 percent think it will, 35 percent do not think it will and 30 percent are unsure.

One provider with a cynical view said he feels accreditation “will just require the fraudulent provider to be a little more sophisticated.” But many respondents noted it is difficult to fake your way through accreditation, and another wrote in that it is more difficult to fool those accreditors that utilize tracer methodology. Some said the sheer number of standards would be too much trouble for thieves to bother with.

If You Haven't Already, Start!

With CMS' accreditation deadlines rapidly approaching, there are a significant number of providers struggling with the decision of which accrediting body to embrace. No matter which is ultimately chosen, most providers feel accreditation will be a positive step for the industry as a whole.

Those HME company owners and managers who do their homework, understand their options and come to terms with the real costs of accreditation will be ahead of the game for Medicare and beyond. There is little doubt that accreditation is here to stay.

One provider's comment adequately sums up what lies ahead for providers now starting the quest for accreditation: “To quote Karen Carpenter, we've only just begun.”

Survey Fast Stats

  • Respondents are likely to operate in one or more competitive bidding areas, as 27% operate in one or more of the 10 MSAs in round one of competitive bidding, and an additional 29% operate in one or more of the 70 MSAs designated for round two of competitive bidding. 43% do not operate in a competitive bidding area. Among respondents with 10 or more locations, 83% operate in one or more current or future competitive bidding areas.
  • The majority of respondents (61%) indicate their company is currently accredited.

  • One in five respondents (21%) whose company is currently accredited indicate they have been accredited by a different organization in the past.

  • Among respondents who are not yet accredited, 86% plan to apply. In fact, 35% have already begun the accreditation process.

  • Respondents who are not currently and do not plan to become accredited are most likely to indicate they don't need it for their HME operation (38%), it is too expensive (33%) and/or they plan to stop accepting Medicare (25%).

  • To prepare for accreditation, 64% expect to get help only from their accrediting organization; 49% expect to buy materials from an accreditation preparation service; 18% plan to hire a consultant; and 20% expect to work through the process entirely on their own.

  • Overall, respondents believe that accreditation helps their company's operations (81%).

  • Opinions vary on whether mandatory accreditation will prevent fraudulent HME providers from entering the business: 34% believe it will, 35% do not believe it will and 30% are unsure.

  • More than four in five respondents (83%) have a compliance officer.

  • Among respondents who are currently accredited, 70% indicate that their other payers accept accreditation from their Medicare-approved accrediting body, while 2% said they need accreditation from another organization as well.

  • Overall, 38% of respondents indicate their company is required to participate in state licensing surveys that are similar to CMS accreditation.

  • Providers that are not currently accredited are basing their selection of an accreditation organization on a variety of factors, including: service provided by accreditor, 71%; price, 56%; time it takes to complete the process, 49%; and type of process, 47%.

Do you think mandatory accreditation will prevent fraudulent HME providers from entering the business?


  • “Accreditation is a step, but not a cure-all.”
  • “Accreditation makes you prove you are following the rules.”

  • “You can't fake your way through accreditation.”

  • “Criminals usually look for an easy way to make money. Accreditation is difficult to achieve and must be continually updated.”

  • “I don't think they will go through all the hassle.”

  • “There will be too much red tape for the fraudulent supplier to jump through to get into this business. Conversely, it makes it harder for anyone to get into this business unless they have a large sum of capital to start the business with.”

  • “They will no longer be able to run their business out of a garage and claim to have an ethical business.”

  • “Tracer methodology through unannounced visits cannot be faked where policy is concerned.”

  • “Way too much work for the bad guys to put up with.”


  • “A dishonest person will always find a way to try and beat the system.”
  • “CMS does a lousy job of enforcement.”

  • “Crooked suppliers will find ways to become accredited or buy an accredited company.”

  • “Fraud cannot be stopped by a survey.”

  • “It will just require the fraudulent provider to be a little more sophisticated.”

  • “Surveyors are looking at quality and patient standards. While there are financial standards involved as well, fraudulent providers can certainly get their activities past an auditor.”

  • “There are plenty that practice now and they are accredited.”

  • “They will look better and steal more.”

  • “You cannot regulate criminal activity. It hasn't worked in other government-regulated fields. Why would it work in this one?”

On what did/will you base your selection of an accreditation organization?

Currently Accredited Plan to Become Accredited
Service provided by accreditor 53.0% 71.2%
Price 22.8% 56.2%
Time it takes to complete the process 14.6% 49.0%
Type of process 31.0% 47.1%
Other 22.1% 9.2%
To prepare for accreditation, will your company:

Currently Unaccredited
Get help only from your accrediting organization 64.1%
Buy materials from an accreditation preparation service 49.0%
Work through the process entirely on your own 20.3%
Hire an outside consultant 18.3%
No answer 1.3%
Base = unaccredited respondents
What is your total cost per location for one completed accreditation cycle (including all survey costs and any add-on fees)?

Currently Accredited
Less than $1,500 2.8%
$1,500 to $4,999 27.4%
$5,000 to $9,999 26.7%
$10,000 or more 12.1%
Unsure 30.2%
No answer 0.8%
Base = accredited respondents

Mean = $6,173

For providers with one location, cost averaged $7,110. For providers with 10 or more locations, cost averaged $5,190.

About This Survey: Data were collected Feb. 19-March 11, 2008. Of 459 qualified responses, 74 percent came from HME providers, 9 percent from pharmacies/chain drugstores with HME and 7 percent from specialty HMEs. Nearly half (46 percent) of these companies operate one location, while 41 percent operate between two and nine locations, and 13 percent operate 10 or more locations. One-quarter (24 percent) of responding providers report revenue of less than $1 million, while 11 percent have revenue of $25 million or more. Nine in 10 respondents indicate their company is privately owned. Not all respondents answered every question, and some totals may add to more than 100 percent due to multiple responses. Survey methodology conforms to accepted marketing research methods, practices and procedures.