Will manufacturers bypass providers and sell directly to consumers? Manufacturers agree that these and other questions depend on decisions in Washington. Taking the time to educate legislators about home care is one way to shape the debate in your favor.

For the third in our occasional Washington Watch Round Table series, we asked AAHomecare Chairman Tom Ryan to act as guest moderator and facilitate a discussion about the legislative future of home care.

Tom Ryan: National competitive bidding (NCB) is the foremost concern of your customers providing equipment to Medicare beneficiaries, and this concern is exacerbated by the fear that some manufacturers will see this as an opportunity to provide equipment directly to consumers. How do you respond?

Ron Billingsley, director of government relations, Respironics, Murrysville, Pa: I am not sure that any manufacturer will be interested in meeting all of the requirements to participate as a Medicare provider. I believe that most products or product groupings selected for the competitive bidding process will demand a much more direct interface with the beneficiary than a manufacturer is accustomed to providing. Issues like ac-creditation, state licensure requirements, postpayment audits, and the yet to be de-fined quality standards are substantial deterrents for a manufacturer who may entertain the notion of becoming a provider. He will need to consider the potential impact on his fundamental business strategy and mission. Patient service, disease management, and reimbursement require a business structure that is very different than product design, engineering, production, logistics, and marketing.

I suppose that competitive bidding could present an attractive business opportunity to some nontraditional HME providers, but I don’t believe many HME manufacturers would consider changing their business model because of NCB. I do not believe that NCB presents an enhanced incentive for manufacturers to change their business.

Kathy Odell, CEO, Inogen Inc, Goleta, Calif: NCB is a concern to all HME stakeholders, including medical device manufacturers. Competitive pricing models geared toward “low ball” pricing environments often result in a shift from technically complex, advanced technologies and therapies to low-end, lowest cost alternative goods. The resultant effect on manufacturers often includes a decline in the research and development of newer, improved technologies that advance patient care in the face of artificially low market pricing.

The risk of NCB creating a direct-to-consumer market opportunity is clearly real for some product categories, especially items that may be viewed as simple, low complexity goods. Although we are not suggesting any devices fit this description, it has been mentioned that items such as certain walking aids and consumable supply items (wound care, ostomy, diabetic) may be viewed as consumer-like goods and, as such, may be appropriate to be sold direct to the patient. However, we strongly believe that for other device categories, such as respiratory, the technology is often much more complex. When combined with the necessary patient education, assessment, and ongoing interventions and support, it is a less than ideal scenario for direct-to-consumer sales. In this case, direct-to-consumer sales and service present a much more complex business model and one that medical device manufacturers are unlikely to pursue in the near term.

Health care is a moving target, subject to the ebb and flow of a number of internal and external market forces. It is hard to predict what impact these forces will have on the future. In the long term, as technology and health care and payment models continue to change and evolve, it is probable that we will see more direct-to-consumer services in some categories of health care goods and services.

Dale Tyerman, vice president/general manager, Puritan Bennett, Pleasanton, Calif: We share our customers’ concern over the negative impacts of NCB and restrictive contracting. Service and support of the patient is a critical part of the value the home care industry provides. To separate these services from the technology we provide would be a serious mistake. We must clearly say that the technology does not stand on its own.

The value we provide is innovative technology. These technologies, combined with the expertise of the home care professionals seeing patients face to face, provide appropriate professional oversight and required administrative support to complete the package.

Tom Ryan: As a manufacturer in the health care field, you have seen your customers subjected to dramatic reimbursement cuts for the products you supply. What grassroots approaches will your company take to help prevent any further payment cuts?

Billingsley: Respironics is committed to actively opposing all cuts to the home care benefit. Our government relations efforts focus on developing strong ties with our elected officials, and these relationships provide a vehicle to discuss the value of home care and the importance of maintaining reimbursement levels that appropriately reflect the services provided by the HME industry.

We have a full-time dedication to government relations and have established a political action committee. We support the efforts of AAHomecare and HME state associations. Respironics employees are actively involved as board members and committee volunteers of many state and national associations for home care providers and health care practitioners.

We routinely provide information to our sales, marketing, customer service, and product development associates about proposed legislative and regulatory changes that impact our customers. Respironics strives to be both an advocate and a resource for our customers. We will continue to work with our health care partners to protect the home care benefit from further payment reductions.

Odell: Although Inogen is a relatively new company, since our inception we have believed it is critical to make contributions to the HME industry beyond the products we produce. As a manufacturer of a product that is reimbursed almost exclusively through third-party groups such as Medicare and Medicaid, we fully appreciate how legislation, CMS policy, and frequent reimbursement cuts impact the provider’s ability to deliver quality patient care. We will continue to support the activities of key industry and professional organizations including AAHomecare, the American Association for Respiratory Care, National Association for Medical Direction of Respiratory Care, and the Coalition of Respiratory Care Manufacturers—as well as other groups who represent industry stakeholders. These leading organizations are effective in representing the values of our industry and the importance of adequate reimbursement to provide quality patient care. We support them through our consistent membership, as well as through active volunteer participation in committees and working groups.

To support our own efforts, we have a dedicated clinical and government affairs department led by long-time HME and respiratory therapy activist Joseph Lewarski. In addition, Bob Fary, our vice president of sales, has almost two decades of respiratory care experience and is active in several industry organizations. I am extremely confident in the team Inogen has assembled to support the needs of patients, providers, and the industry.

Tyerman: All politics are local, and we as manufacturers and as an industry can have great impact in our communities. We need to focus on both state and federal legislatures. It begins with getting to know them and inviting them to your plants or facilities. Elected officials are always looking for opportunities to get exposure to the electorate.

First, make sure lawmakers understand what we do as an industry. Home care adds significant value to the quality of health care, and the economic benefit of delivering care at home is unsurpassed. We deliver valuable care in the least expensive care environment. Educate our representatives and our industry on the real value we deliver and how we can effectively impact reimbursement.

Second, work closely with both the national AAHomecare organization and your state affiliates. Together we deliver the complete message, show the real value of home care, and speak clearly with a consistent message.

Do not forget the value of financial support. The selective and strategic support for those who understand the value of home care will go a long way. You can do it on your own or through PACs. You can achieve this impact through support of the AAHomecare PAC.

Ryan: The issue of quality care and service and the need for quality standards in the industry has been a large initiative of AAHomecare, in both its representation on the Program Advisory and Oversight Committee (PAOC) and the AAHomecare’s HME/RT Council initiative of introducing standards for respiratory equipment. How can the manufacturers work with the industry in support of this initiative?

Billingsley: As a manufacturer of health care devices, we continually focus on quality and outcomes. It is ironic that CMS and Congress have finally decided to recognize that quality care, service, and outcomes should be a Medicare provider requirement. A large number of HME providers have already embraced quality and standards by voluntarily becoming accredited. Most HME providers compete for referrals based on quality care, service, and patient management. Providers have continuously challenged manufacturers to develop technology and products that improve quality, service, and patient outcomes. If CMS and Congress allow the implementation of MMA 2003 to be driven by cost savings, quality care, service, and standards could be compromised.

HME providers and manufacturers must jointly support improved quality and standards. Adopting quality standards and accreditation as conditions for participation in the Medicare program will not necessarily change perceptions about the HME industry in the eyes of either Congress or CMS.

A sustained public relations program promoting how HME products and services improve the quality of patients’ lives is important. Some manufacturers and HME companies are committing resources to government relations programs that help improve the image of the industry in Congress and CMS. We can help each other by coordinating strategies and sending a consistent message that the HME industry demands quality.

Last year the industry did a tremendous job gathering and presenting data about the costs of servicing Medicare beneficiaries. This data not only mitigated the impact of cuts for inhalation drugs and oxygen, but provided a forum for the industry to illustrate that we go above and beyond providing retail commodities.
Embracing technology that supports both patient management and data analysis can validate the quality of HME services. Manufacturers and HME providers should be cooperatively developing products and programs that enable the industry to quickly and accurately validate the quality and effectiveness of home care services. We must continue to set the bar high for quality care and service and effectively spread the message that the industry has adopted more rigid quality demands and higher standards than those developed by Congress and CMS.

Odell: Inogen has been a supporter of new quality standards for respiratory equipment and care and strongly supports AAHomecare in this unprecedented and complex initiative. The medical device manufacturer is a part of the continuum of care, and we have an obligation to understand the role our products play in patient care.

Home respiratory care and the supporting technology are often both technically and clinically complex. Ensuring patients have access to quality care and the appropriate therapy is a mission HME providers and respiratory device manufacturers share. Inogen will continue to support this initiative through the contributions of our team members who volunteer their expertise and experience to the AAHomecare leadership, HME/RT Council, PAOC representative, and other working groups within AAHomecare—along with other professional organizations supporting this effort.

Tyerman: Technology is only part of the answer. The key is effectively combining our technology with the clinical expertise and high touch of home care professionals. There is a temptation to reduce service in times of reimbursement cuts. Do not lose sight that it is this service that defines the value of our industry.

Many distributors can ship products to patients’ homes, but it is our professional expertise that patients count on. Puritan Bennett develops products that are state of the art, high quality, and reliable. These products are designed to operate under professional supervision.

We at Puritan Bennett actively support the initiatives of AAHomecare to develop quality standards and reinforce the value of the services our industry provides. We must make this a focus of our legislative initiatives.

Ryan: What are some of the ways that the small HME providers and manufacturers can work together to help create a business and regulatory environment in which both can prosper?

Billingsley: We really need to look beyond what we know, and create what we need to succeed in the future. This will require a commitment to be a part of the solution. I believe that health care is going through a dynamic change and some of the fundamental practices of the past decades will become obsolete. We must anticipate the needs of the changing market, be agile learners, and build solid alliances and teams. Education, communication, and coordinated effort will help create the environment in which we can all prosper.

Odell: Manufacturers can impact provider prosperity by delivering economic solutions that allow smaller providers to operate more efficiently. That said, it is not the only component of success. Small HME providers face a laundry list of challenges in the operation of their businesses, and tackling these challenges can be a daunting task. To paraphrase David Miller of the MED Group, “HME owners spend most of their time working in their business, not working on their business.”

The day-to-day demands of running a small HME business often prevent independent providers from becoming more active in state and national HME initiatives and grassroots lobbying efforts. Manufacturers can assist the smaller providers through initiatives that fill in the gaps of information and resources not readily available.

Tyerman: Health care and politics are local. Whether it is the local branch of a national provider or the small local HME, we must act locally to affect the national agenda. We must continue to use technology to drive efficiencies, improve clinical outcomes, and emphasize the value of local service. For manufacturers, that means a focus on quality, clinical effectiveness, and intuitive operation of our equipment.