Other insurances to follow Medicare

Friday, December 20, 2013

While commercial insurance contracts have long offered another source of revenue for HME providers, they aren’t quite as profitable as they used to be, says consultant Stephen Hodges. The president of HME Solution spoke with HME News recently about whether pricing in the insurance marketplace will stop its downward trend.

HME News: What’s happening to reimbursement in the commercial insurance market?

Stephen Hodges: You are seeing payers that want to go to Medicare bid rates—about 45% off the 2010 fee schedule. United Healthcare is one of the biggest payers and they just lowered their CPAP payment to $39—about a 65% reduction.

HME: What’s causing that trend?

Hodges: There are so many providers looking for contracts that there is an oversupply of capacity. The supply side loses their leverage in negotiating both access to contracts and the contract rates.

HME: Is there any way to regain that leverage?

Hodges: The only party in medicine that has been able to stem the race to the bottom is the physicians. Every time Medicare reduces physician rates—even by 3% or 5%—the physicians say they are going off the Medicare rolls and there will be fewer physicians to serve beneficiaries. Until HME providers start to restrict access to their services, you are not going to see a change in the market.