Providers feel burned in California

Under a proposal, Medi-Cal reimbursement for an oxygen concentrator would drop to $55.19
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Friday, September 6, 2019

SACRAMENTO, Calif. – California’s Medicaid program, Medi-Cal, may find itself in a bind for HME providers if a drastic reimbursement cut goes through as planned, say industry stakeholders.

To comply with the 21st Century Cures Act, the Department of Health Care Services has proposed paying 80% of Medicare’s non-rural fee schedule amounts for most DME. For providers in the state, who are currently reimbursed at the 2016 Medicare fee schedule amounts, that’s a cut of up to 60%.

“From what I’m hearing from members they are not going to be able to continue or they will be more selective in what they provide,” said Bob Acherman, executive director of the California Association of Medical Products Suppliers. “As a state, we’ve hit rock bottom. You can’t look at 80% of Medicare and say it’s OK.”

Under the proposal, which CMS must approve, reimbursement for an oxygen concentrator would drop from $144.74 to $55.19. For a Bi-PAP device, from $188.51 to $83.06. For a standard wheelchair, from $47.30 to $17.46.

That math doesn’t work for provider Glenn Steinke. He says that’s unsustainable, especially when he factors in the cost of doing business in the state.

“I’d have to bill 134 concentrators each month just to break even with the $6,400 I paid (this year) for the six licenses I am required to have,” said Steinke, owner of Airway Medical in Bishop.

Further squeezing providers: The cut would be retroactive to Jan. 1, 2019. That’s on top of a 10% claw-back on Medi-Cal payments to 2011.

“The state wants to retro things and it burns us to the point where we don’t want to deal with the state anymore,” said Kirk Duckel, owner of Remedy Medical in Visalia. “When we found out what they planned to do, we stopped taking Medi-Cal.”

Providers say DHCS didn’t do its homework before proposing the rate cuts, making assumptions about the number of providers available, as well as the number of beneficiaries, and using outdated information. For example, it lists 104 providers for San Diego County, but it includes providers who don’t do DME, says provider Terry Racciato.

“We called everyone on the list and only 11 are able to actually provide that care—for Medi-Cal it’s even less,” said Racciato, president of Together We Grow in San Diego. “The Scooter Store (which closed in 2013) is on the list.”

Stakeholders have their fingers crossed their message will be heard. CMS has sent a request for additional information to DHCS before it will approve the rate reduction, said Racciato.

“DHCS is now looking at ways that they can administratively act to mitigate some of the rate reduction,” she said. “I have faith that they will work with us.”