Medicare HMOs up and down

Friday, January 31, 2003

WASHINGTON - If the momentum to privatize the Medicare program accelerates under the leadership of incoming Senate Majority Leader Bill Frist (R–Tenn.), HME providers see advantages and disadvantages to moving off the fee schedule and into the hands of private payers.

The first, most obvious benefit, say many, is a reduction in the administrative burden. “I can take less money if you can reduce my work,” said Jim Clark, president of Clark Respiratory and Medical Supply in Catskill, N.Y. “If I have to pay somebody to manage CMNs and corporate compliance, and all the additional add-on costs hidden in employee labor, that makes a difference.”

About 3-5% of Clark’s current business comes from Medicare HMOs. “They pay well. They pay on time. They pay without all the nonsense,” he said.

Currently, 5.6 million Medicare patients (14%) have opted into HMO programs. The remaining 34 million beneficiaries have stuck with the straight fee-for-service program.

Another New York provider is more wary about what more Medicare HMO business means for his business and wonders whether competitive bidding, if there’s to be change at all, might prove to be the lesser of two evils.

“Look at some of these Medicare HMO contracts that pay $110 for a concentrator,” said the provider. “And then let’s say oxygen comes down to $180 with competitive bidding.”

How much reimbursement are you willing to give up to mitigate the administrative burden, he asks.

In Ohio, Mario LaCute is not sold on the idea that privatization necessarily means less administrative burden. “That wasn’t our experience with” one managed Medicare contract, said the president of Seeley Medical in Andover, Ohio. “It turned into more and more documentation even after we delivered more reduction in rates.” HME