DUBUQUE, IA – HME experts use adjectives such as “solid” or even “strong” when predicting growth over the next few years. Alan Morris, senior vice president of Strategy and Business Development, VGM & Associates, puts the number at 6.5% year-over-year over the next three to five years.

“A lot of industries would be more than happy with that,” he says. “We’ve got some massive tailwinds behind us—an aging population, more reliance on DME to keep patients in the home, and a prevalence of chronic conditions which require our products and services.”

Admittedly that growth varies quite a bit depending on product category. Sleep medicine is pacing at about 7% growth, but oxygen is growing at a much slower rate—mainly due to fewer smokers and more former smokers. “Other categories like continuous glucose monitors [CGMs] are growing at a rapid rate because diabetes is increasingly prevalent,” Morris says. “There is also a technology shift away from other modalities to CGMs.”

Another shift from original Medicare to Medicare Advantage (MA) plans continues nationwide with more than half (55%) of Medicare eligible people opting for MA plans. MA plans are private companies with flexibility to be a little bit more creative (sometimes too creative) than traditional Medicare. “MA plans offer low premiums and cost sharing on copayments,” Morris explains. “They can also bundle things that Medicare can’t, such as bundling traditional Medicare covered items with dental, vision, and hearing coverage.”

Is the shift good for HME providers? It depends on who you ask. Fifteen years ago when competitive bidding was coming on, Morris believes that, “Most HME providers would have loved to have seen a massive shift away from traditional Medicare and effectively away from competitive bidding over to MA plans. Now we see big payers with large pools of MA consumers narrowing their networks. We saw it a few years ago with Humana. We’re seeing it in some states with Blue Cross. We’re seeing it in almost half the states with United Healthcare. Most providers would say that’s not a good thing.”

On the flip side, some providers look at MA plans as an opportunity to aggregate more volume. They can grow their business by catering to a broader population within the MA plan.

Competitive Bidding
The next round of competitive bidding will be considerably different than previous rounds because the government is 100% focused on supplies that are predominantly delivered via mail order—remote item delivery products such as CGMs, urology, ostomy, and braces. “Most providers probably are not impacted,” Morris says, “and if they are, it’s not in a big way.”

But if they are, providers must decide if they want to participate. “They must decide if they are willing and able to deliver supplies to patients all over the country,” Morris says. “That’s what this round of competitive bidding requires. If you get a contract for CGMs as an example, you’ve got to be able to supply those CGMs to patients in all 50 states.”

Rates will be a matter of going to manufacturers and finding out what kind of prices could be had in a hypothetical future of additional volume. “If I’m a DME supplier and I bring all this volume to a manufacturer or distributor, I need to determine my price point,” Morris says. “At what price point can I  bid effectively under the competitive bidding program? Do I want to participate? Broadly, I think competitive bidding will be less disruptive because there are far fewer providers who are directly impacted by the product categories in this round of competitive bidding.”

For providers who are deeply entrenched in some of the competitive bidding categories, especially CGMs, the ramifications of not winning are massive. “There will inevitably be a number of providers who are awarded contracts or get contracts coming out of competitive bidding, and it turns into a huge growth opportunity,” Morris predicts. “It’s going to be a short list, but there are going to be a few winners. Others are going to lose, and it’s going to be incredibly disruptive.”

Article is certified HUMAN. 

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