'Precarious situation'

Monday, April 26, 2010

WASHINGTON – Providers are trying to envision what life will be like without the first-month purchase option for standard power wheelchairs, and they don’t like what they see—for themselves or their patients.

First, they see cash flow issues. If they have to wait 13 months to get all of their reimbursement, they’ll have to ask lenders for capital to finance their equipment purchases. Have you tried to squeeze money from a bank these days, they ask?

“Let’s say you provide 10 power wheelchairs in a month, you’re going to need $250,000 in credit, about half of your revenue, to finance those products for 13 months,” said Mark Leita, senior director of government relations for The Scooter Store in New Braunfels, Texas. “In the credit market we’re in today, that’s going to put a lot of providers in precarious situations.”

Providers say banks won’t be the only place they look to for help. They want manufacturers to pitch in, too.

“We’re hoping manufacturers have plans to extend payment terms so that cash-flow issues will be shared, somewhat, by us and them,” said Rick Perrotta, president of Network Medical Supply in Charlotte, N.C. “Instead of the normal 60-day terms, maybe its 180 days or longer. That would soften the blow.”

Second, providers see used equipment issues. If a patient dies or switches insurers prior to 13 months, they’ll be stuck with only a portion of their reimbursement and a used wheelchair.

“Providers, in some instances, will be forced to provide beneficiaries with used and refurbished power products,” said Jim Greatorex, president of Black Bear Medical in Portland, Maine. “That is not a positive turn of events for end users.”

Finally, providers see access and choice issues for patients. They predict consolidation in the industry, which would reduce the number of providers significantly, and limited product selection.

“We don’t think this benefits anybody, least of all patients,” Leita said.

The number of providers has been reduced by at least one already. City Medical Services announced shortly after the provision was passed as part of the healthcare reform bill that it would drop power wheelchairs from its product mix.

“We don’t do that many power wheelchairs, anyway, and now, it’s too much of a gamble,” said Rob Brant, general manager and COO of City Medical Services in North Miami Beach, Fla. “We can’t risk that a patient, after a few months, will switch to, say, Medicare Advantage, no longer using Medicare as its primary, and we’ve been paid only $4,000 on a $6,000 wheelchair.”