National pricing for Medicare looms large

‘It’s not pretty,’ says provider in the Dakotas
Friday, September 4, 2015

YARMOUTH, Maine – HME providers, especially those in rural areas, are making tough business decisions in preparation for Medicare’s national rollout of competitive bidding pricing on Jan. 1.

A number of providers in these areas say they’re limiting the number of brands they carry for each product category and giving preference to less costly products.

“It eliminates patient choice and forces us, as a company, to put out a brand that’s perhaps not as good,” said Amy Schmidt, a partner at Midwest Medical in Watertown, S.D., which stands to lose an estimated $25,000 per month as a result of reduced reimbursement.

CMS has yet to release the official zip codes for rural areas, and the final ceiling and floor rates that will be used to determine pricing in those areas.

For an idea of what providers are grappling with, however, during a recent webcast, Andrea Stark, a reimbursement consultant with MiraVista, used Bartlesville, Okla., as an example and calculated that, once fully phased in, the cut for oxygen concentrators would be $86.36 per month, representing a 47% reduction, if the town is considered a standard MSA, and $77.94, a 43% reduction, if it’s considered a rural area.

“It’s not pretty,” said Cindy Coy, manager of reimbursement for Avera Home Medical, which has 15 locations, including in North and South Dakota, and relies on Medicare for about 46% of its business.

A number of providers also say they’ll be looking to beneficiaries to take a more active role in their health care—paying out of pocket if they demand certain brands, and picking up their products and supplies, instead of receiving them in their home.

“We’re definitely looking to reduce our windshield time,” said John Novak, president of Total Respiratory & Rehab, which has a location in Lincoln, Neb., and which stands to lose about $10,00 per month as a result of reduced reimbursement (It would be more, but complex rehab, which is exempt from competitive bidding, makes up a good chunk of the company’s business, he says).

Providers say they’re also looking internally, to what they can do to make the most of what reimbursement they get.

“Our company is really looking at Lean concepts to figure out how we can do things more efficiently,” Coy said. “How can we eliminate the waste but keep patients at the forefront?”