N.H. providers accuse Gulf South of going direct; not so, company says

CONCORD, N.H. - The sole-source supplier contract that Gulf South signed with the state last year for incontinence products has turned out much worse than providers ever imagined.

“To me, this is the first time where a distributor or manufacturer has blatantly gone direct to the consumer,” said Jim Greatorex, a board member for the New England Medical Equipment Dealers Association (NEMED). “This could be devastating to our industry if (this practice) continues.”

State officials did not return a phone call for this story.

In an e-mail to HME News, Gulf South said it “does not sell products directly to Medicaid recipients.” However, “Pursuant to our contract with the State of New Hampshire, Gulf South also contracted to provide billing services to those Medicaid recipients who choose not to use a provider.”

New Hampshire's deal with Gulf South requires providers to buy incontinence products from the distributor. The arrangement has reduced profit margins by about 20%, but what's more, providers now say, it also has robbed them of business and given it to Home Delivery Incontinent Supplies (HDIS). The Missouri-based provider of medical supplies is the company Gulf South hired “to provide billing services to those Medicaid recipients who choose not to use a (state) provider,” providers say.

“We're not happy with that,” said Karyn Estrella, NEMED's executive director. “Why would the state want to send money and jobs out of state?”

On November 18, the New Hampshire Department of Health and Human Services sent a one-page letter to Medicare beneficiaries, explaining “some changes to the incontinence supplies benefit” beginning Dec. 1, 2009. The department included a list of providers, and stated that “some of the providers of supplies have changed.”

The letter continued: “If your provider is not on the list, please call Home Delivery Incontinent Supplies (HDIS) at 1-800-367-8360. They will deliver supplies to your home.”

Many Medicaid beneficiaries read the letter and assumed they should switch from their existing provider to HDIS. Herron & Smith in Hooksett, N.H., for example, has lost about 60 incontinence patients to HDIS because of how the state “mishandled” patient education, said CFO Tamme Dustin.

“We got calls from (customers) thinking we were out of business—that our company shut down.” Dustin said. “It's frustrating.”