Medicare: 'It's not a good business to be in'

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Monday, September 30, 2002

LEXINGTON, Ky. - Two years ago, sick and tired of what Alan Grogan termed Medicaid's "arbitrary and improper reductions in payments", Grogan's Healthcare Supply stopped servicing Medicaid customers. He's now looking for an opportunity to gracefully dump his Medicare business.

"We haven't figured out how we are going to do it," said Grogan. "It's amazing how you can get into something and then there is no way out."

For Grogan, there is a way out. The company derives 85% of its revenue from distributing medical supplies to hospitals, HHAs, hospices and other healthcare companies. His small traditional HME business contributes 15% - about 5% of that coming from Medicare, the rest from cash sales.

"We don't have to get out of it this week, or next week or next year, really," Grogan said. "We just think that in the long run it will be extremely difficult to make money in Medicare, with competitive bidding and budget pressures at every level."

Ideally, Grogan said, he'd like to sell the HME but maintain an ongoing distribution relationship with the new owners.

A number of issues have soured him on Medicare and government payers in general.

He doesn't like taking assignment, filing claims - and losing money - on products priced low for his cash sales. He's also tired of being Medicare's whipping boy.

"It gets back to the old question that Medicare doesn't expect much out of doctors," Grogan said. "They want us to police that the paperwork they sign is accurate or not. And don't expect much of beneficiaries in terms of whether they are capable of filing a claim or whose fault is should be if they lied about having a previous wheelchair. The total responsibility for following the law rests on the easiest party to squeeze under their thumb, which is the poor old DME dealer."

It hasn't help Grogan's disposition toward government payers that he's embroiled in a battle with Tricare, which insures military dependents, over an $8,000 recoupment.

"We've asked for explanations and all they say is that 'Upon review we stand by our recoupment,'" Grogan said.

The dispute is now in administrative review, and he's never lost an administrative review: "If we realize we've made a mistake, we pay."

In the end, he said: "I'm not convinced there is a future in dealing with the government. There seems to be no rhyme or reason, and when you get into an area where that's the case, it's not a good business to be in." HME

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