CPAP shifts: Contracts signed, questions remain

Friday, May 24, 2013

YARMOUTH, Maine – With the majority of Round 2 CPAP contracts awarded to out-of-area suppliers, providers say they expect to see the re-supply market shift toward mail-order—a model that won’t work for the machines, they say.

“Mail order will happen for the supplies,” said Ron Evans, owner of Phoenix, Ariz.-based Valley Respiratory Services. “It’s the new set-ups that make it difficult.”

In the Phoenix area, for example, only nine out of 29 contract suppliers are local, says Evans, one of only two local independent providers to accept a contract for CPAP. While that contract gives him a chance to stay in the game, he can only service so many patients, especially with a 47% average reduction in reimbursement.

“The margins aren’t there for us to take them on and yet they’ve to go somewhere,” said Evans. “The only thing I can think of is that all of those out-of-state suppliers are going to come in and try to subcontract but there’s not much meat on the bone.”

Will suppliers even want to subcontract? Wayne Sale isn’t so sure. He did not get a contract for CPAP in his local Richmond, Va., competitive bidding area (seven local vs. 24 non-local contract suppliers), but he has been approached about subcontracting.

“Nobody has come up with a contract which is financially beneficial to both parties,” said Sale, president of Health First. “They want to keep a lion’s share of the reimbursement, but the subcontractor is doing all the work and there’s just not that much money.”

Contract or not, local providers expect to get stuck doing a lot of the “dirty work” when it comes to educating not only the beneficiaries but also the referral sources about competitive bidding.

“Guess who’s going to get all the questions, complaints and bombardments?” said Mark Ehlers, owner of Stockton, Calif.-based Ehlers Health Supply. “People in this area tell me they can’t get a thing out of these national companies. They want service and to talk to a human being.”

That’s especially troubling when it comes to the devices, say providers. While supplies can be delivered as a mail-order item, the devices often require one-on-one service.

It’s tough to say “no,” say providers, but without contracts they are going to have to.

“I am a respiratory therapist by training, but I also have to keep the business hat on,” said Robyn Parrott, president of Detroit, Mich.-based Sleep Solutions. “I have thought that I should make business cards that say call 1-800-Medicare. It’s not good for the patients, but if they don’t start screaming, Medicare isn’t going to change anything.”