DME: Durable Medical Equipment, Disturbing Medical Expense, or Drinking Made Easy?
It’s what you make of it!
A hospice with a $5.00 formulary had been averaging $1.00 per diem for non-formulary items. Two recent ALS ventilator patients caused its non-formulary charges to jump by 300% to $3.00 for an all-in CPPD of $8.00. After four months, these two patients represented over 8% of the hospice’s total DME costs.
More hospitals and facilities are researching how to send COPD and ALS ventilator patients to home care. This arrangement can be a great way to build relationships and referrals. However, enter this process with your eyes wide open, understanding the associated costs. Contract pricing on Trilogy ventilators can range from $600 to $1,400 a month (lease programs are available).
Can I Get a Witness?!
A hospice with an all-in (formulary plus non-formulary) DME spend of $5.78 CPPD wanted to reduce their DME costs. They renegotiated an approximately 10% fee schedule reduction with their primary vendor and looked forward to their expected $0.57 CPPD in savings.
Just one challenge, the savings never materialized! After six months with the new fee schedule, their costs were $5.74 CPPD ($0.04 savings vs. the $0.57 expected).
How is that even possible?
It is important to understand that your fee schedule affects roughly 60% of your DME costs. Other factors include utilization, ordering patterns, clinical team efficiencies, patient acuity, outside factors such as referral source expectations, vendor unbundling, and vendor up-selling.
The Rest Of the Story.
Do these scenarios sound familiar?
The hospice experiencing a spike in vents took one step back and evaluated the referral source of the vent patients, their community, patient mix, etc. and decided to create an action plan that was specific to effectively managing this cost. In their case, the referring hospitals and facilities were somewhat cooperative in working with the hospice’s DME management company. As a result, the hospice’s community is now better served, expenses on vents are now managed well, and referrals of all patients has been enhanced - simply because the hospice took a leading role in actively managing vents.
The hospice in the second scenario that was disappointed when their attempts to reduce DME fees from the vendor didn’t make it to the bottom line, quickly improved their strategy. They began by recognizing the significant complexities of the DME industry and crafted an informed action plan to address all of the cost factors. Improved patient care via utilization management was the over-arching framework of this plan. From there, formulary, non-formulary, pricing, staff education, etc. all fell into place. Savings are now appearingso on their bottom line, and patient care has been enhanced.
Winning With DME Doesn’t Have To Be Hard, But It Isn’t Easy.
Winners utilize others to advance the cause, win the contest, and improve outcomes. This team approach depends on those serving the winner being aligned in every way, cohesive, and strategic. Just as there are specialists in all aspects of medicine, there are also experts in each area of the hospice industry who can help. DME is no exception.
But who to trust with helping you improve patient care while driving down DME expenses?
Who out there is unbiased, truthful, numbers-oriented, patient-care centric, and enjoyable to work with? And how do you find them? I know from experience there are those in the hospice industry able and willing to be your true teammate.
For example, my company Qualis is great at what we do in working with your selected local vendors and working with your staff, but we aren’t for everyone, and we know other great people and companies that may be a great fit for you. A reliable place to start is also reaching out to those you already trust - colleagues in the industry. The act of taking a fresh analysis on DME will likely result in tangible savings, improved patient care, and reduced administrative headaches.
Yes, it is possible!
J. Hall C. Thorp