New rates raise noise level about sustainability, access

Friday, March 18, 2016

YARMOUTH, Maine – It wasn’t their first go-round, but HME providers were still surprised when they saw the payment amounts that CMS released this week for the Round 2 re-compete of competitive bidding.

“This is the second time we’ve bid and I can’t believe the numbers came out as low as they did,” said Chip Fuller, vice president of operations at Boiling Springs, S.C.-based Quality Home Medical. “On average, it was a little more than $20 less than what we were anticipating for oxygen. We’re pretty efficient as a company, and I don’t see how whoever bid those rates for our region are going to be able to do it.”

The majority of providers interviewed for this story reported lower rates of about 10% to 15% across the board from the previous rates in Round 2.

In states like Alabama, licensure laws and brick-and-mortar requirements helped to preserve rates, providers say.

“It’s impossible to know for sure, unless we saw what each company bid, but Birmingham’s rates are higher than others and the fact that we have a licensure requirement perhaps helped,”said Woody O’Neal, vice president of Pelham, Ala.-based O2 Neal Medical. 

While the majority of providers reported lower rates, there were some exceptions.

“A few of the smaller items for support surfaces in the Los Angeles area went up, so I’m wondering if we’re near the bottom,” said Chris Rice, CEO of Diamond Respiratory in Riverside, Calif.

Bottom or not, now that the competitive bidding program has rolled out nationwide, providers like Tyler Riddle say they’re worried more than ever about the trickle-down effect.

“You’re going to see private insurers, third parties and Medicaid move closer to these rates,” said Riddle, vice president of operations at Albany, Ga.-basedMRS Homecare. “The rural areas have to live with these rates, so it’s a very scary prospect, because they’re going to affect everyone.”

They’re going to affect patients, in particular, says O’Neal.

“It’s all about access,” he said. “Based on the increased administrative costs we’re having to absorb, it’s become increasingly difficult to provide services at the prices we’re being paid.”