Washington DC HME and O&P

What HME and O&P can expect in Washington in 2017?

We are two weeks away from a Trump administration along with strong Republican majorities in both Houses of Congress. What can we expect in the post-acute healthcare world, including in HME and O&P? Here are my New Year’s prognostications:

  • Obamacare will be largely repealed. I don’t see how the Republicans can do much short of repeal. They’ve preached repeal for the 7 years since Obama signed it into law. Their base has been conditioned to expect it. Many members of Congress are reluctant to repeal given the complexities and potential consequences of repeal. I expect them to repeal and replace with a very limited set of provisions such as allowing young people to stay on parents’ health plans and some protection for pre-existing conditions. Many of their “new” health policies will be punted down the road a few years.
  • Fewer people will have health insurance. The big threat to providers involving Obamacare repeal is the impact on the number of insured Americans. Consider two facts which loom large. First, today 17 million more people have health insurance than had it prior to Obamacare. Second, people with health insurance utilize twice as much healthcare as those without health insurance and their providers get paid for that care. The increase in people insured has had a positive impact on DMEPOS suppliers and the impending reduction in the number of insureds will have a negative impact on DMEPOS suppliers. The significance of that impact will depend upon the severity of the reduction in those with insurance.
  • Medicaid reductions pose a significant threat to DMEPOS suppliers and users. The majority of the people who gained health insurance as a result of Obamacare came from additions to the Medicaid ranks. Further, nearly 60% of the disabled population gets health insurance from a public plan, such as Medicaid. Compare that to 25% of the non-disabled population age 65 and under. People with disabilities, and those serving their healthcare needs, depend upon a strong Medicaid system. There will be reductions in the number of people covered under Medicaid, but the extent of those reductions will determine the net effect of repeal on DMEPOS suppliers and beneficiaries. This is the key issue in “repeal”.
  • Price to HHS is a positive. Georgia Congressman Tom Price as a cabinet member running HHS (which includes CMS) is a welcome development. In Price we have a person who understands healthcare delivery from a provider perspective (former orthopedic surgeon), understands DMEPOS and the people who use it. Too often the Obama Administration viewed profit motive in healthcare to be an evil in need of elimination. That thinking leaves behind a legacy of 40% reduction in the number of HME suppliers, lower profit in DMEPOS and a dramatic reduction in access to necessary medical equipment and assistive technology for the frail elderly and disabled populations. Price will be a huge improvement.
  • We have a real shot at reform of the falsely named “Competitive Bidding.”  We know the program isn’t working and a lot of folks in the Beltway now understand this also.  A 40% reduction in HME suppliers over the past 5 years has limited access to needed medical equipment and assistive technology, and obviously crushed businesses.  I expect to see modest reform.  But don’t get crazy – we won’t see large increase in reimbursement, but rather reform around the edges and correction of the most egregious elements.
  • New products will be an important part of the equation for DMEPOS suppliers and beneficiaries. The importance of new products in the DMEPOS business model will increase in coming years. Look for a change in philosophy at FDA and CMS away from being a safe keeper to much more of a facilitator of new products and technology. Smart suppliers of DMEPOS will capitalize on the flow of new products.
  • Growing consumerism and out-of-pocket obligations. Republican plans will likely lead to even more health plans where consumers pay large amounts out of their own pocket. This will occur in private plans and to a lesser extent in Medicaid. Higher co-pays and deductibles are problematic for healthcare providers. DMEPOS suppliers will need to get better at billing and collecting from consumers. Further, suppliers need to be more patient-centric and get better at presenting health solutions directly to patients and their families.

7 comments

  1. With Price in charge of CMS, can we expect reform of the competitive process for the next round(s) of competitive bidding? Elimination of non-binding bids and median pricing — or wholesale adoption of Peter Cramton’s alternative bidding model — will lead to more market-based pricing which means better reimbursement for the industry. Presumably, Price can now do without legislation what he previously had to pass through 2 houses of Congress (and couldn’t). Am I expecting too much?.

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  2. The best fix for competitive bid is to open up the market to any provider willing to sell at the bid price, any chance that happens?

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