'I just hired a top-notch finance person'

Saturday, January 31, 2004

YARMOUTH, Maine - Providers may be spooked about all the reimbursement cuts for DME included in the Medicare Prescription Drug Act, but few, it seems, are running scared.

“One of the silver linings in this cloud is that it is not coming next week,” said Clark Robichaux, president of Oxy Care Equipment Company in Wilmington, N.C. “It will be spread out over six or seven years, and a lot can happen in that time.”

In addition to adopting a wait-and-see approach, proactive providers have begun laying the groundwork for change, looking for cost savings wherever possible.

“I just hired a top-notch finance person,” said a very successful respiratory provider, who requested that his name not be used. “Now we are really going to have to start squeezing pennies, and I need someone who can make it happen. I think having someone in here who truly understands money will make or break (us), and that’s not me – I’m an RT.”

The legislation, which President Bush signed in December, mandates a CPI freeze for five years, mandatory accreditation, reduced reimbursement for respiratory drugs, a competitive bidding program that begins in 2007 and expands in 2009 and cuts in 2005 to eight top DME items based on the Federal Employee Heath Benefit Plan.

Despite the phase-in period, it’s not too early to inform referral sources and patients that as a result of reduced reimbursement, they may eventually receive less in the way of products and services, Robichaux said.

“We deliver hundreds of portable cylinders to our patients weekly, and we are going to have to start saying, ‘Sorry, but you are going got have to come in and get those,’” Robichaux said. “Everyone wants the best of everything, but you are not going to be able to put as much money into high-tech portable systems and those kinds of things if we see a 20% to 30% cut in reimbursement.”

Even before Congress passed the Prescription Drug Act, Associated Healthcare Systems in Amherst, N.Y. anticipated cuts in Medicare oxygen reimbursement of 10% to 20%, said President Don White.

By employing high-speed scanners and other time-saving technology, White figures Associated can trim expenses by 10%. Another 10% would come off the company’s bottom line. If the cuts exceed 20%, White, like Robichaux, believes providers will have to change fundamentally how they deliver products and services.

“The challenge is how do you make these cuts in service and present them as being improvements,” White said. “Because at the end of the day, the healthcare community is still looking at you to treat these patients safely in the home. At the end of the day, I don’t know what the service component will look like.”