Medicaid miasma

Monday, February 28, 2005

YARMOUTH, Maine - Medicare isn’t the only program to have providers reaching for the antacid over funding - there’s plenty of queasiness surrounding Medicaid issues as well.

As is typical with state-administered federal programs, states share the fiscal roller coaster ups and downs and the current cycle is characterized by industry leaders as definitely being on a downward slope. With President Bush’s proposed budget paring $45 billion from Medicaid over the next 10 years, the provider community is woefully short on optimism for the program’s future.

“It doesn’t look real good,” Sharon Hildebrandt, executive director of the National Coalition for Assistive and Rehab Technology, said before the federal budget was announced in early February. “We anticipate that the cuts will filter down to the states and will be pretty bad at the state level.”

By law Medicaid spending is required to rise about 2.2% to $198 billion, but published reports say the Bush plan contains provisions to change the way states are reimbursed for expenses as well as new anti-fraud measures to ferret out additional savings.

Health and Human Services Secretary Michael Leavitt recently offered tacit approval of the changes when, during his confirmation hearings, he reportedly told the Senate Finance Committee that Medicaid is “flawed and inefficient” and “not meeting its potential.” Leavitt also indicated he was open to the idea of a cap on Medicaid spending.

The proposed cuts exacerbate what has already become a hardscrabble Medicaid landscape for HME providers. For some time the mobility manufacturing sector has seen incremental declines in power chair coverage, a situation that concerns Dan Meuser, president of Exeter, Pa.-based Pride Mobility Products.

“Our industry continues to falter with state Medicaids,” he said. “It worries me more than anything else in 2005.”

Likewise, Elyria, Ohio-based Invacare said in its year-end report that Medicaid pressures are taking a toll on its custom mobility business.

“[It] has a particularly strong impact on the higher-margin custom power chair and custom manual wheelchair segments,” the statement read. “Power wheelchair reimbursement uncertainty is expected to continue throughout 2005.”

There is plenty of cynicism coming from the states, with California leading the way.

“The last couple years have been rough - a lot of changes in funding and reimbursement, with almost every aspect of DME being changed,” said Bob Ackermann, executive director for the California Association of Medical Product Suppliers. “The only thing that hasn’t happened is true competitive bidding and that has been proposed.”

Consequently, CAMPS filed suit last July against the state over Medi-Cal reductions that took effect in November 2003 and January 2004, challenging how those cuts were made. Medi-Cal is the state’s $20 billion Medicaid program. At press time in early February, Ackermann said the case was in a discovery phase, with a stay of 45 days to see if the state would enter a settlement discussion.

“Suing is not something we do lightly, but it has gotten that bad,” he said. “We’re not asking for monetary damages - we’re asking for consistency.”

A medical equipment recycling program for New Jersey’s Medicaid beneficiaries has also caused a ruckus with the Jersey Association of Medical Equipment Suppliers. Executive Director Terri Maggio says the contractor that won the recycling contract has overstepped its bounds by claiming equipment that wasn’t purchased by Medicaid in the first place.

“Our members have told me they’ve seen reps from the recycling company going into patient homes and nursing homes putting bar code stickers on equipment that wasn’t even originally part of Medicaid,” she said. “They are doing this to build their inventory. I thought this was suspect, so I went to our local senior center to check for myself and saw stickers on chairs all over the place.”

What’s especially disconcerting, Maggio said, is that New Jersey is a demonstration project for Medicaid recycling and that there are plans to take the concept nationwide.

Other states are taking a more tempered stance, though officials at the New England Medical Equipment Dealers Association and Ohio Association of Medical Equipment Services remain cautious.

“We are concerned with the downward trend in reimbursement as well as with federal Medicaid cuts,” said NEMED Executive Director Karyn Estrella. “We will continue to work with state Medicaid departments in each New England state and continue the working relationships we have developed.”

Similarly, OAMES Executive Director Kam Yuricich said the association’s legislative committee is crafting a position paper that compares Medicaid reimbursement of surrounding states with the Medicare program on common HME items.

“The study is expected to demonstrate that Ohio is getting a fair price and no reductions should be made,” she said.