Medicare Home Medical Equipment

By Mike Kuller, RPh

To receive home medical equipment under a Medicare Part B benefit, you must get it from a company contracted with Medicare as provider (Allstar Medical Supply is not a Medicare provider – another company I used to own from 1999 to 2012, Allstar Oxygen Services, was a Medicare provider).

Medicare will not reimburse you if you purchase medical equipment from a company that is not one of their contracted providers.

What does Medicare cover?

Medicare will pay (80% of their rate – if you have a supplemental plan or Medicare Advantage, they will pay the rest) for certain items of home medical equipment as long as you meet their qualifying needs for each item.  Most other health insurances copy the Medicare guidelines.

Semi-electric hospital bed – Qualifications:

  1. Need to change body positions in ways not possible with a normal bed, or

2.  Need to be in body positions not possible with a normal bed in order to relieve pain, or

3. Need to have the head of the bed higher than 30 degrees most of the time due to illnesses such as congestive heart failure, chronic pulmonary disease, and others, or

4. Use of use traction equipment that must be attached to a hospital bed.

Standard wheelchair (weighing around 40lbs) – Qualifications:

  1. Significant mobility limitations that interfere with activities of daily living in the home.

2.  The mobility limitations cannot be resolved with a walker.

Medicare does not pay for the lighter “transport chairs”.

Front-wheeled walker – if you have difficulty walking or keeping your balance you may qualify for a walker.  Qualifications:

  1.  Significant mobility limitations that interfere with activities of daily living in the home.

Bedside commode –Qualifications:

  1. Unable to walk

2.  No bathroom on your floor

If you are able to walk at all, they may provide you with a walker but you cannot have both a walker and bedside commode. Medicare does not pay for any other bathroom equipment.

Lift-chairs – If you meet their qualifications, Medicare may pay for the lift-mechanism (around $200) in your lift chair.  Qualifications:

  1.  A diagnosis of severe arthritis of the hip or knee or a neuromuscular disease

2      Be unable to stand up from any regular chair

  1.  Once standing you must be able to walk, even with a walker

However, there are no Medicare providers who sell lift chairs in the East Bay area. 

Respiratory equipment – Home oxygen, CPAP for sleep apnea and nebulizers are covered but there is too much information to provide here.

To find the closest Medicare supplier, go to this site and type in your zip code.  Then check the box of the equipment you need.

 https://www.medicare.gov/supplierdirectory/search.html

There are not many Medicare suppliers left.  I describe why that is below in “Brief History”.

If you have Medicare Advantage or another insurance plan, you will have to call them to find who their contracted DME (durable medical equipment) provider is.

The Process of getting medical equipment through Medicare

If you are being discharged from the hospital, the RN Case Manager/Discharge Planner should take care of this process for you.

  1. Have your MD FAX a prescription for the item to the Medicare supplier nearest you.
  2. The Medicare supplier will send the MD paperwork he must fill out and sign.  Part of this includes a statement of medical necessity, a qualifying diagnosis, clinical notes from your medical chart to justify your need for the equipment and your treatment plan.  The DME company will determine if you qualify.
  3. Wait.  Because there are so few Medicare suppliers left, they are overwhelmed with equipment requests. They will not provide the equipment until they receive all of the necessary signed paperwork from the MD so they will be able to get paid from Medicare.

Brief History

In the past few years, things have changed dramatically in the Medicare home medical equipment industry.

Prior to July, 2013, this group of businesses which provided home medical equipment to people as they were discharged from the hospital or in their homes was comprised of three large national companies (Apria, Lincare and RoTech) accounting for about half the industry and about 5000 or more smaller local or regional “mom and pop” companies as the other half.   All of these companies were “Medicare certified” and could take orders to provide durable medical equipment or DME to home patients and bill Medicare or other insurances for it.

Medicare has always paid the highest reimbursement for medical equipment because of their strict requirements and the mass of paperwork involved – the HMOs set their pricing in the late1990s as a percentage off of the Medicare rates. Since all of the DME companies were Medicare providers, the best companies competed by providing better service and a faster response to equipment requests so the orders wouldn’t go to a competitor.

In 2003 Congress passed the Medicare Modernization Act (MMA) which created the Medicare Part D prescription drug benefit, which was projected to cost over $700 billion over the next 10 years with no way to pay for it. In this bill was a provision calling for Competitive Bidding for DME as a way to reduce costs to help offset the losses from the prescription drug program and to also reduce the number of DME companies Medicare had to deal with.

 Why would an industry which accounts for less than 3% of healthcare spending, when home care is the solution to high healthcare costs, be targeted for the cost reduction?  The answer is politics and a lack of lobbying clout.  While the American Medical Association and American Hospital Association can push back on Congress when Medicare cost reductions are proposed (hospital and doctor fees are the highest costs), the fragmented DME industry doesn’t have that kind of power.

The Medicare Part D prescription drug benefit began in 2005 and in 2006 Medicare began to implement their Competitive Bidding Program for DME.  It gradually moved through the country and the process was implemented in the five-county Bay Area on July 1, 2013 (I sold my company to Lincare in 2012 when I saw what was about to happen).

When the program was completed about 70% of the home medical equipment companies both here and across the country were eliminated from the Medicare program and those who got Medicare contracts saw a reduction in reimbursement of an average of 45%.  The best DME companies had over 50% Medicare patients and if they were very efficiently run, as much as a 10% net profit.  You can imagine the impact of losing this contract or getting the contract with the reduced rates would have on these companies – either ways it was no-win.

In Contra Costa County, for example, there were probably a dozen different DME companies serving Medicare beneficiaries before Competitive Bidding.  Afterward there were about 3 companies chosen for each of the products (some companies won bids for one product but not others).  As of July, 2016 there is only one company left for each type of medical equipment and a couple more for home respiratory products.  Since there are virtually no competitors and the Medicare reimbursement rates are so low, the contracted companies have no incentive to hire additional staff to get things done more quickly. This has created a very difficult situation with long delays for Medicare patients who need medical equipment.

This all comes at a time when 10,000 Baby Boomers a day are turning 65 and qualifying for Medicare. The situation is bad now and looks like it will only get worse with two of the three national companies in the industry teetering on bankruptcy.  Many of the “mom and pop” DME companies have already closed, sold their businesses at garage sale prices or are about to go under.  Many patients who should be able to get these products under their Medicare health insurance, but are unable to wait weeks to months have had to resort to renting them or purchasing them out of pocket.  Those who can’t afford to pay are doing without.

I don’t know what will become of the Medicare DME industry or the patients who rely on this equipment but I am not optimistic.  The only thing that will change this situation is for people who are covered by Medicare and their families to contact their US Senators and Congressional Representatives or CMS, who controls Medicare, and demand that something be done about this situation.