Cost-plus-20 stalks rehab

Saturday, May 31, 2003

HARTFORD, Conn. — Connecticut may join a slew of other states that reimburse rehab providers a paltry 20% over the equipment’s acquisition cost. The so-called cost-plus-20 proposal would yield about $2 million in Medicaid savings and help reduce Connecticut’s $650 million budget deficit.

“Cost-plus-20 is the lowest reimbursement in New England, possibly the country,” said Karyn Estrella, executive director of New England Medical Equipment Dealers (NEMED) association. “It doesn’t include costs for labor and fittings and the time spent with each client.”

Connecticut currently reimburses providers at the suggested retail price minus 15%. The switch to cost-plus-20% would slash the state’s reimbursement for home medical equipment by 30%.

Currently, about 10 states have a cost-plus program in place. Other reimbursement methodologies for rehab include fee-schedule payments and retail-less or list-less methods.

Paul Bergantino is president of Design Able, with three locations in Massachusetts, and Connecticut Rehab in Newington, Conn. He believes the cost-plus-20% billing method is outdated, explaining that the rehab industry is no longer just a product-only service.

“People who recommend (cost-plus-20) are uniformed about what rehab is about,” Bergantino said. “We’re not just equipment jockeys. We can not provide rehab equipment appropriately under this system. It is an antiquated payment methodology for a labor intensive industry.”

Massachusetts has had a cost-plus program in place for years. The state pays a reimbursement plus a percentage between 30% and 40%. The Massachusetts system, however, unlike the Connecticut proposal, includes a $44 an hour labor rate, which can be submitted to Medicaid for reimbursement.

While the thought of switching to a cost-plus-20 methodology, might turn the stomach of rehab providers, the suggestion of a reimbursement cut comes as no real surprise.

With states across the country facing some of the largest budget deficits in decades, many, like Connecticut are taking aim at Medicaid.

“States are being squeezed on their budgets right now,” said Seth Johnson, AAHomecare’s director of state government affairs. “They are trying to find savings any way they can.”