Providers running out of ways to make biz work

Friday, June 24, 2016

YARMOUTH, Maine – If a second round of Medicare reimbursement cuts goes into effect as planned, a number of HME providers plan to stop taking assignment on certain products.

“There’s a high likelihood that we’ll go unassigned on a lot of things,” said Amy Schmidt, a partner at Midwest Medical in Watertown, S.D. “We can’t afford to do a lot of what we do at these decreased rates.”

Medicare already reduced reimbursement by about 25% in non-bid areas on Jan. 1. It plans to cut reimbursement by at least the same amount again on July 1.

Schmidt says her company was able to “accommodate” the first round of cuts by limiting employee perks, eliminating advertising, adjusting insurance and making other changes. But she predicts the second round of cuts will push her company and a flood of others to stop taking assignment.

“So many providers are going to do this that the beneficiary is going to have to find a way to pay, or choose not to take the equipment and end up in the hospital,” she said.

Providers don’t take such a drastic move lightly, but they’re running out of ways to make their businesses work with such steep reimbursement cuts, says Rose Schafhauser, the executive director of the Midwest Association of Medical Equipment Services, which represents a number of states heavy in non-bid areas.

“We’ve surveyed our members and this is the first route they’re going to take (on July 1),” she said. “They’re saying, ‘We have no choice if we want to stay around.’”

Some providers even plan to make “blanket” changes, Schafhauser says.

“Inexpensive or other routinely purchased DME like canes and crutches—they’re not going to take assignment on those across the board,” she said.

What’s more: It’s possible that the second round of cuts will be even greater than 25%, if CMS, as some suspect, factors in the new pricing from the Round 2 re-compete that went into effect Jan. 1, which was 15% to 20% lower than the previous Round 2.

“We’re planning on the total cut being 50%,” Schmidt said. “If it’s more than that, I don’t know what we’ll do. There are companies going out of business left and right, even companies in metropolitan areas.”

If providers stop taking assignment en masse, it might get Medicare’s attention. The agency in May released data comparing the rate of assignment of claims for DMEPOS for the first four months of 2015, which were paid at the unadjusted fee schedule rates, and the first four months of 2016, which were paid at the new partially adjusted rates, and found providers in all areas continued to accept assignment.

The key to determining the true impact of providers deciding to stop taking assignment will be keeping track of how many beneficiaries, as a result, refuse equipment, Schafhauser says.

“That’s not going to show up in CMS’s numbers,” she said.