Bid expansion: Rural providers look ahead with trepidation

Friday, April 4, 2014

YARMOUTH, Maine – In its service area in Montana, Harrington Surgical Supply is often the only game in town.

“We have a salesperson once a week in some towns,” said Dan Harrington, owner of Harrington Surgical Supply in Butte, Mont. “If we didn’t come, then nobody would.”

That’s likely to get worse if CMS applies competitive bidding payment amounts nationwide, something it is required to do by 2016 under the Affordable Care Act. In February, CMS published an advance notice of proposed rulemaking seeking comment on developing a methodology to adjust payment rates in non-bid areas.

Although providers in rural areas might be spared from having to bid, an average reimbursement cut of 45% would be tough for them to absorb.

“That’s less than what we pay (to buy the products),” said Harrington. “You couldn’t sell to Medicare beneficiaries—that’s the bottom line.”

Ninety-seven percent of the respondents to a recent survey by The VGM group said costs vary based on the size of the market in terms of population and geography. Probably the single biggest cost for rural providers: deliveries.

“Our geographic area is huge,” said Shawn Murchison, operations manager for Fort Fairfield, Maine-based Acadia Medical. “Sometimes we are driving forever. We spend a lot on vehicle costs, the cost of travel, and the cost of time.”

Other factors drive up costs, as well. For example, getting freight shipped to the far reaches of northern Maine doesn’t come cheap, says Murchison.

“On the smaller stuff, it’s not a big deal,” he said. “For something big like a stairlift or a power wheelchair, it’s probably tacking on another $100 to get it here on our loading dock.”

If local providers stop accepting Medicare, CMS can’t count on having national providers fill the gap. Many providers in rural areas report a very limited presence—if at all—by the Aprias and Lincares of the industry.

“People in rural areas like to support the hometown folks,” said Mike Marnhout, owner/president of Lexington, Ky.-based Bluegrass Medical, which serves several rural areas.

In years past, lawmakers have introduced legislation seeking to exempt rural providers from competitive bidding—to no avail.

“Given that the rural providers weren’t exempted and were not able to bid based on their market, there’s been a renewed push for some sort of reform,” said Peter Rankin, government affairs manager for AAHomecare. “We’re hoping that CMS will listen to us on some things.”


We see Rural providers getting very SMART by retooling their operation now, to get ready for the ulimtate re-imbursment cuts.  The R1, the R2 and R1 rebid guys have been hit with a massive cut, and have HAD to optimize the operation, by putting infrastructure, technology in place. 


The smart rurual providers are getting ahead of it -- they enjoy "non-bid" pricing right now so there is more cash and more resources to retool the operation and get ready.  The 100 R1,R2  bid area folks did a lot of hand-wringing and hoping the bid would go away, but now the Rural folks see the writing on the wall and it's written in permanent ink!

There are so many steps people can take now and they should-- get audit ready, coonsider drop shipping, automate resupply, auto-check elibiglity, automate posting, claims, patient collections, everything.   If anyone thought they could "wait" to do all this stuff they are mistaken.