Medicaid drives giant N.Y. provider to exit rehab

Saturday, April 30, 2005

MOUNT VERNON, N.Y. -- Two of the largest providers of custom rehab equipment in New York stopped doing business with Medicaid in March rather than endure low reimbursement and a lengthy, uncertain prior approval process.
Landauer Metropolitan and New York Home Health Care Equipment exited the business following Medicaid's decision to shift its New York City area prior approval operation to Albany last November. Since then, gridlock has gripped the state's prior approval process, slowing it to a virtually stand- still, said President Alan Landauer.
"(Medicaid) won't care about us," Landauer said. "What they will care about is when the disabled community has difficulty in getting access to the products. That's when it will be a problem and it is getting to that point now. People are being told that it will be at least a year wait in New York for a chair. This is going to be a major problem."
Spurred on the by change in the prior approval processing, New York Home Health has exited all phases of custom rehab -- Medicare, Medicaid and private pay. Landuaer has exited Medicaid and Medicare but will continue to provide rehab services to its HMO customers. The companies will now focus on more lucrative components of the DME business.
"It was always a crappy business," said a New York provider who has exited the Medicaid rehab business. "It is low margin, and so expensive and so time consuming and so labor intensive and they don't understand that. Medicaid thinks a wheelchair is a wheelchair is a wheelchair."
The state Health Department decided last year to consolidate its claim-review offices to cut down on fraud and waste and to insure processing uniformity, said Bill Van Slyke, a Health Department spokesman. In the New York City office, employees regularly Ok'd claims without collecting and reviewing all the documents required to prove medical necessity, he said.
"We can't ignore the rules," Van Slyke said. "Once we became aware of the issue, we corrected it. By protecting tax dollars and the sanctity of the program, we are also protecting the viability of the vendors who serve it."
Van Slyke said that "any reasonable vendor or provider" understands the department's responsibility to act on the problem. Only "a handful of individuals are making a whole lot of noise about it." If these suppliers have a problem getting claims processed, it might be because they are unable to provide all of the legally required documentation that supports medical necessity, he said.
Overall, the state's DME denial rate is a very low 1.7%, and that doesn't' indicate an access problem, he said, adding that the department is working with providers to make sure they understand what's required in the prior approval process.
Landauer and other New York providers scoffed at Van Slyke's claim that the state has not seen a slow down in prior approval processing since consolidating the operation into the department's Albany office. For a power wheelchair, Landauer said, Medicaid requires a "a six or seven page medical review on these patients, and it's not going to happen."
"Unless you are requesting a piece of equipment that provides an adequate return it is not worth the time and effort you have to spend to obtain the necessary documentation to get approval," said Rex Maxey, president of Penn York Medical Supplies in Binghamton, N.Y. "It is becoming ridiculous. And your referral sources get mad at you for bugging them, and paper work from them trickles in, and your customer gets angry because it is taking so long. It is a no win situation."