From: Home Care Magazine

WATERLOO, Iowa — Savvy home medical equipment providers can be the “go to” companies in the emerging world of 21st century health care, but they need to be quick to align themselves with newly forming Accountable Care Organizations, an industry analyst said.

“You want to establish that relationship with the ACO before someone else does,” advised Alan Morris, director of alternate care programs for Waterloo, Iowa-based VGM.

The reason? ACOs will soon be the new referral sources in town and if you aren’t aligned with one or more, you could find yourself shut out of the Medicare business.

Under the Affordable Care Act, physicians, hospitals and other providers can form ACOs that work together to coordinate care for Medicare beneficiaries. Such networks will be expected to improve the health and experience of beneficiaries and reduce the growth rate of health care spending. In return, the networks will share in any savings to the Medicare program, which are anticipated to tally upwards of $430 million over three years.

On Tuesday, CMS unveiled two concepts related to ACOs. Its Pioneer model will be available this summer and is aimed at ACOs that have already begun coordinating care for patients and can utilize alternative payment mechanisms, such as private payers.

In addition, the Advance Payment ACO model will allow certain ACOs participating in the Medicare shared savings program to access their savings up front as a way of covering the costs of infrastructure and staffing. CMS is asking for comments on that idea, and the agency’s Innovation Center is offering learning sessions to teach providers about ACOs, as well as ideas for improving care delivery.

At this point, CMS doesn’t recognize DME companies as network partners, Morris said, adding that VGM plans to address that in its comments to CMS. Still, there is an opportunity for industry providers to partner with networks and beef up their businesses, he said.

“There are new incentives to keep patients out of the hospital,” Morris said of the program. “[ACOs] are going to count on DMEs. DME [companies] are going to have to look at making their businesses more attractive to ACOs. There are new initiatives that we can take to prepare ourselves to be the ‘go-to’ people.”

Morris suggested the following:


  • Form your own loose network, aligning yourself, say, with an infusion company and a home health agency for an “all-encompassing” home health care network. This is especially advisable for smaller HME businesses, Morris said, because it allows them more leverage. He noted that VGM is working on creating a network for its members that would establish connections with various ACOs.
  • Invest in telehealth, that is, remotely monitoring patients in their homes. “That’s going to be a booming market at a whole new level we haven’t seen before,” Morris said. “It’s going to be a huge market. Somebody is going to have to deploy the device, and it might as well be us.”
  • Offer a health-coaching program. In addition to providing the equipment to help keep patients out of the hospital, offering a health-coaching program that enhances a patient’s health and lifestyle is a value-added service, Morris said. While such a service is not reimbursable, it does give HME companies an advantage over their competitors. As the industry has seen in Round 1 of competitive bidding, referral sources — in this case, the ACOs — tend to call on the HME companies able to provide the most services.


HME companies swift enough to position their companies to align with an ACO have much to gain, according to Morris.

“The thing about ACOs is that they are extremely expensive to implement,” he said, noting that while CMS has pegged the price of implementation at $1.8 million, physicians and hospitals say it is far beyond that, more ranging from $11 million to $26 million.

“If ACOs are going to spend the money, it has got to reach beyond their Medicare population,” he said. “They are going to go to the DMEs with all of their patients, not just some of their patients, and that will be beyond the Medicare market.” So an HME company’s reach could be expanded greatly — and that could be a benefit when competitive bidding comes to communities nationwide.

Morris said HME providers should consider the establishment of ACOs as an opportunity.

“As long as providers are proactive and put themselves in the position of offering more than just equipment, it is an opportunity,” he said. “If they are just going to stay on the sidelines and see what is going to happen, they may be stuck there.”

For a fact sheet on CMS’ ACO initiatives, go to