Better Life Home Medical

Monday, April 26, 2010

Strict regulations and below-the-floor reimbursement aren’t just hallmarks of Medicare—they’re common with just about all third-party payers. That’s why Clinton, Md.-based Better Life Home Medical is trying to forge a new business that isn’t dependent on insurance of any kind.

A look at their payer mix offers a sense of the shifting focus, with 28% of revenues coming from Blue Cross/Blue Shield, followed by private pay and retail at 26%, and Medicare at 22%. The last 24% is split between Aetna and other sources. Although third-party payers still comprise more than half of the revenue base, 22% Medicare is pretty low by HME standards.

Executive Director Larry Crum says that while the company “has made no concerted effort to move away from Medicare,” the 9.5% fee cut and 36-month cap on oxygen have had a negative effect on business. Commercial insurers have instituted similar harmful reductions, he said.

“Like many others in our industry, I believe that we can no longer be dependent on insurance reimbursement alone,” he said. “Along with the cuts in reimbursement, there are also reductions in the items considered covered items. We have therefore decided to pursue a more active role in HME retail sales.”

Better Life opened a 3,000-square-foot retail store last August and though sales have been slow, they are growing steadily, Crum said.

“Our cash sales have risen to about 10% of our total revenue, but we feel that this will continue to grow as our marketing efforts continue,” he said.

Crum said the plan is to increase the focus on retail and grow the segment to a point where the company is noticeably less dependent on any type of insurance.

“I believe we will see this happen because customers will be required to pay more out-of-pocket expenses and there will be fewer covered services,” he said. “There are so many products not covered by insurers that can benefit the caregivers who improve the quality of life for patients who need assistance.”

For now, Crum said the company will continue to participate in the Medicare program and will accept additional beneficiaries “as long as the reimbursement is financially feasible.” That may change, however, if competitive bidding continues in its current form, he said.