Providers cringe at stiff cut

Thursday, July 31, 2008

WASHINGTON--The home medical equipment industry’s progress in getting Congress to delay national competitive bidding is “bittersweet” for providers of standard and complex power wheelchairs, sources say.

In exchange for the delay, providers must accept a 9.5% reimbursement cut nationwide for all 10 product categories included in Round 1. That includes Group 3 and above power wheelchairs and accessories, even though those products would be excluded from the program in the future.

“That’s pretty stiff,” said Jim Greatorex, president of Black Bear Medical in Portland, Maine, and the Maine chair for the New England Medical Equipment Dealers (NEMED).

Providers point out that in November 2006, they had to accept a 27% reimbursement cut, on average, for standard power wheelchairs. While complex power wheelchairs escaped those cuts for the most part, providers of that equipment point out they already operate on razor-thin margins, anywhere from 2% to 6%.

As part of competitive bidding, which kicked off July 1, providers of standard power wheelchairs face a cut of 21%, on average, and complex power wheelchairs a cut of 15%, on average.

Providers like Tyrrell Hunter are even more conflicted about the 9.5% cut, because they’re not located in one of the 10 competitive bidding areas slated for Round 1 or even the 70 CBAs slated for Round 2.

“It’s self-serving, but I’m now facing a 9.5% cut that, otherwise, I wouldn’t have been,” said Hunter, president of Majors Mobility in Topsham, Maine. “If Round 1 had gone through, we could have proven what a mess this is.”

Having said that, Hunter and other providers realize that other payers could have mirrored competitive bidding reimbursement, making the 21% and 15% cuts applicable to most providers. That still might be the case with the 9.5% cut, they say.

“There’s a spiral-down effect,” said Jody Wright, president of Rocky Mountain Medical Equipment in Englewood, Colo. “If I have to give that cut to Medicare, I might as well give it to all my payers.”

Some providers hold out hope that the rehab industry will be able to lobby Congress to eliminate or reduce the 9.5% cut for complex power wheelchairs. The cut doesn’t go into effect until Jan. 1, 2009.

“I do think we need to move forward with delaying competitive bidding,” Greatorex said. “But, with some of the success we’ve had, I think we also need to go back to legislators to fight for some of that reimbursement back.”

If it’s any consolation, at least providers of complex power wheelchairs know the cut buys them an out, not just a delay, sources say.

“Any cuts right now are bad, but it’s better than the alternative,” said Carl Mulberry, president of Columbus Medical Equipment, who relies on wheelchairs for about 50% of his business.