Bidding fallout: Jobs cut, plans on hold

Friday, March 22, 2013

Provider Mike Kernes withstood Hurricane Sandy in October only to get hit with the disaster that is the Round 2 payment amounts in January. With an average reimbursement reduction of 45%, Kernes and many other providers are taking stock and tightening their belts.

Sit tight

Kernes, who didn’t submit bids in Round 2, had planned to expand his retail presence and start a disease management program. Now, he’s not so inclined to take risks.

“At this point, we’re going to sit tight,” said Kernes, general manager of Hackensack, N.J.-based Reliable Medical. “We’re being conservative. We’re going to see what happens over the next couple of months.”

Unkindest cut

After seeing the low single payment amounts, provider John Eberhart thinks it’s almost better to have not won a bid. Still, he had to lay off two employees—including a highly paid respiratory therapist—and implement an across-the-board reduction in employee pay to offset the loss of Medicare business.

“I had to cut pay by about 30%—that’s a big hit—including me,” said Eberhart, president of Eberhart Home Health in San Clemente, Calif. “That’s no fun, but others are in a worse position than we are in.”

Job killer

In no market was the impact of competitive bidding felt more than for diabetes testing supplies, which saw a draconian 72% average cut. Adding to the pain: It applies to all providers, not just those that do mail-order. Samuel Kim spent 12 years growing an efficient mail-order business with 20,000 patients, 80-plus employees and a solid Medicare track record. He didn’t win a contract and has been hard hit by audits to boot.

“I had to lay off 25 people and might have to lay off more,” said Kim, COO of Chatsworth, Calif.-based Care Concepts Louisiana. “The whole Medicare system—it doesn’t make sense how it’s operating.”