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

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:


  • 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

  • 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

    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

    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

  • “Got us into several networks.”

  • “Helps ensure quality processes and consistency between

  • “Helps us provide better service to our

  • “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

  • “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

  • “More overhead that is mostly overkill.”

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

  • “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

    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

  • 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

  • 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

  • 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

  • “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

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

  • “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


    • “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

  • “There are plenty that practice now and they are

  • “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

    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
    What is your total cost per location for one completed
    accreditation cycle (including all survey costs and any add-on
    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

    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.