top of page

Obtaining DME Contracts with Private Payers is tricky; this summary may help!

Updated: Jul 31, 2023



woman waiving the money

Direct-to-home (DTH) companies, such as Home Medical Solutions or Directly Home Healthcare, are also known as Durable Medical Equipment (DME) companies. DME is a subcategory of healthcare businesses that supplies equipment and services to patients at home and out of the home. These include wheelchairs, walkers, hospital beds, oxygen machines, and many others. Private payers in any state typically contract with one or two preferred vendors for this sort of service. To win the contracts with private payers can be challenging but not impossible. If you want to start a business that provides direct medical equipment services to patients at home or out of the home, there are some things you should know before you sign up for a contract with a private payer.



What to Know Before Starting a DME Business

Before you start a DME company, you should be aware that there are two types of DME companies - independent DME companies and home care agencies. Independent DME companies: Provide equipment directly to the patient Are not required to have a business license to operate Are not required to have a Medicare or Medicaid provider number Are not required to be covered by any insurance Are not required to obtain a Certificate of Need (CON) or a licensure or registration Independent DME companies serve a specific patient population and have a limited set of products and services. On the other hand, home care agencies provide equipment to patients through their network of home health care providers. Home care agencies serve as the intermediary between the DME and the patient. They bill Medicare and private health insurers for the equipment and services provided to the patients. Home care agencies are required to have a business license, a Medicare or Medicaid provider number, and be covered by insurance.



Private Payers and DME Contracts

A DME company can obtain contracts with private payers by conducting a network analysis. A network analysis identifies which payers are important to the DME company’s business and how best to approach them. Network analysis helps a DME company identify the payers that are most appropriate for its business model. The first step in network analysis is to identify the payers that are important to the company’s business. The best way to do this is to focus on the patient population. Start by identifying the types of patients that the DME company wants to serve and the geographical areas where they live. Once you know the types of patients you want to serve and the areas where they can be found, you can identify the payers that are most appropriate for your business.


Contract Requirements for Private Payers

Before you can begin negotiating a contract with a private payer, you need to be aware of the contract requirements for every payer. Contract requirements are the minimum standards a DME company must meet in order to win a contract with a private payer. Knowing the contract requirements for each private payer can help you prepare for negotiations and prevent any surprises. Here are the contract requirements for a few common payers: - Medicare DME Contract Requirements. Medicare DME contractors must be approved and bonded, keep their equipment in good repair, and provide excellent customer service. In addition, Medicare contractors are subject to federal regulations and the rules of the Medicare Administrative Contractor (MAC). - Medicaid DME Contract Requirements. Medicaid contractors must be licensed and meet the licensure requirements in each state. In addition, Medicaid contractors must meet the minimum requirements set by the Centers for Medicare and Medicaid Services (CMS). - Private Insurer DME Contract Requirements. Private insurer contractors must be licensed and meet the licensure requirements in each state in which they operate. In addition, private insurer contractors must meet the minimum requirements set by the National Association of Insurance Commissioners (NAIC). - VA DME Contract Requirements. The VA has its own set of requirements for contractors. VA contractors must be licensed, meet the licensure requirements in each state in which they operate, and meet the minimum standards set by the VA.







Some Common Mistakes When Starting a DME Company

There are a few common mistakes people make when starting a DME company. Here are the most common ones: Selecting the wrong business structure - It is important to select the business structure that is best for you. One of the most common mistakes is starting a DME company as an S-corp when it would be more advantageous to be an LLC or a C-corp. Selecting the wrong insurance - It is important to have the right insurance coverage. Selecting the wrong equipment and pricing it incorrectly - The equipment you select and price can make or break your business. It is important to select the right equipment. Pricing the equipment incorrectly can make it difficult to obtain contracts with private payers.


7 Steps to Start a Successful DME Company with Private Payers

The following steps will help you start a successful DME business with private payers: Get familiar with the industry - Take the time to understand the industry and the key players. Research the companies you would like to do business with, learn about the different types of equipment, and understand the regulations that apply to your business. Identify the payers that are most appropriate for your business model - As discussed above, network analysis is the first step in identifying the appropriate payers for your business. Conduct a marketing campaign - Marketing is the key to success in any business. If you don’t know how to market your business, you will have a hard time obtaining contracts with private payers. Contact the appropriate private payers for contracts - Follow the steps discussed above in this article to learn about the payers that are most appropriate for your business. Then contact the payers to obtain contracts. Keep a record of your contacts, and track the progress of your marketing campaign. This will enable you to make adjustments as necessary. Start providing equipment and services as soon as you have contracts with the appropriate private payers - Don’t wait until your business is fully operational to start providing services to your customers.



Conclusion

Although you may have to jump through a few hoops, it is possible to start a DME business with private payers. The first step is to get familiar with the industry and understand how private payers operate. After that, it is important to identify the payers that are most appropriate for your business model. Once you have completed these tasks, it is time to conduct a marketing campaign and start contacting the appropriate private payers for contracts.





8 views0 comments

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating
bottom of page