Payment pressures back niche players into corner

Wednesday, February 28, 2007

Some industry watchers believe that Invacare's decision to jettison its Kuschall line of custom manual wheelchairs may be the beginning of the end for high-end niche products.
"What other technologies are going to be chipped away at because there's no one paying for it?" queried a rehab provider. The provider predicted that several manufacturers would follow Invacare's lead and dump other lines of specialty equipment.
Others don't expect Medicare's squeeze on reimbursement to wreak havoc on high-tech options. The Jan. 22 announcement by MAP Mobility & Access Products to pick up the Kuschall line, for example, points to the ongoing viability of niche products, albeit at higher price points.
Indeed, Permobil sees brighter days ahead in high-end rehab now that a clear line has been drawn between consumer power and high-end rehab products.
"It has been the intent of CMS all along to somehow pay appropriately across the board," said Tom Rolick, vice president of sales and marketing at Permobil. "The cuts were directed at products that were determined by CMS to be over-utilized and over-reimbursed."
As the "dust settles," Permobil believes suppliers are not likely to have any more difficulty getting reimbursed for high-end products.
"Our experience has been the higher the need, the easier the justification," said Rolick. "Appropriate technology gets paid for."
However easier or tougher to get paid, what's smarting across the industry is how much suppliers are getting paid, especially as non-Medicare payers look to Medicare to benchmark their own fee schedules.
"Many [payers] are starting to try and take percentages off Medicare's rates that have already been cut," said Gary Gilberti, president of Chesapeake Rehab Equipment.
"So we are not only fighting to get paid but also fighting to get paid reasonably," he added.
As suppliers struggle to be reasonably paid, there's no question that the pressure is on manufacturers to standardize product offerings.
Invacare's jettisoning of Kuschall speaks to this issue: Unique products sometimes don't make much sense in the portfolios of major manufacturers.
"Now the tide has turned somewhat into a world of offering the best quality at the best price to meet decreased margins due to reimbursement cuts," said Jerry Keiderling, vice president of The VGM Group's U.S. Rehab.
Nearly everyone agrees that that there is more pressure on manufacturers to streamline.
This is not a new trend; providers have always wanted this. But there's more urgency for manufacturers to get it done today.
"This can be a challenge with some complex rehab products, but the variety of technology and options available is under close scrutiny," said Don Clayback, senior vice president of networks at The MED Group.
"This relates not just to the initial product cost, but also ongoing repair and maintenance," he continued.