If offered bidding contracts, 68% of providers say they wouldn't accept

Friday, February 15, 2013

YARMOUTH, Maine – Two weeks after CMS’s announcement of severe cuts in Round 2 single payment amounts, providers were saying “no” to contracts.

In a recent HME NewsPoll, 68% of providers said they do not plan to accept a CMS contract for Round 2 of competitive bidding.

“A 45% decrease is impossible,” said Jack Lentz, clinical director at Southampton, Pa.-based Respiratory Therapy Services. “In fact, it’s criminal and should be investigated.” 

Of the respondents who said they would not accept a contract, 39% said they plan to shift their focus to non-Medicare payers. 

“Let the people who made the suicide bids try to live with those rates and the increased audit exposure,” said Terry Racciato, president of San Diego-based SpecialCare.

Of the same group, 25% said they would look to cash sales to drive revenues—something many of them have turned to in recent years in anticipation of major cuts.  

“We’ve been focusing on cash sales since 2004,” said Joseph Magill, warehouse manager at Aston Pharmacy Home Health Center, based in Aston, Pa. “In 2004, insurance was about 85% of our revenue, now it is about 50-50, and we’re striving for an even higher ratio of cash sales.” 

There are other benefits to ditching Medicare, say providers.

“Leaving the Medicare program will save our company approximately $4,000 in direct and indirect costs that we now spend to stay in compliance with Medicare regulations,” said Brent Bradshaw, president of Austin, Texas-based Durable Medical Equipment, Inc. 

Of the 32% of respondents who said they would accept a contract for Round 2 of competitive bidding, 36% said they were banking on increased volume to offset lower reimbursement, while 27% said they would reduce services.

“We are only taking wound care contracts because they seem to be the only profitable category left,” said Thomas Hoover, owner of Advantage Mobility in Oklahoma City. 

While many respondents were optimistic about finding new channels of revenue outside of Medicare, 22% percent indicated they would sell or close their business.

“There is no way we could survive at those rates,” one respondent said. “If we cannot repeal and replace competitive bidding, we will not be able to keep the doors open.”