Providers try to balance quality, cost

Lower reimbursement rates force tough decisions
Friday, October 25, 2013

YARMOUTH, Maine – As CMS’s competitive bidding program drives reimbursement rates down, providers are debating the value of quality versus cost. 

Half of the 109 respondents to a recent HME Newspoll said quality trumps cost. They said providing a poor-quality product is more expensive in the long run.

But the other half of respondents said they can’t justify providing costlier, higher-quality products under competitive bidding.

“Obviously, with changes in reimbursement, one cannot provide the best quality products, while being paid the lowest possible price,” said Ben Hertz of Elmora Healthcare. “It’s simple economics.”

On Oct. 1, CMS announced that reimbursement rates for certain HME would be, on average, 37% lower as part of the Round 1 re-compete. Rates for Round 2, which went into effect July 1, were, on average, 45% lower.

Attempting to provide a quality product and still maintain a profit margin is a challenge, but it’s essential, said Ronald Reed of Care Point Medical. A company that loses money can’t stay in business for long, he said.

Sixty percent of respondents said manufacturers are pitching in by offering products at lower price points than in the past. Alicia Morris of Respitec Medical Care & Supply said some manufacturers are also helping by bundling prices and offering discounts.

Working with manufacturers who offer quality at reasonable prices is key, said Jerry Hall of Hall-Moore Medical Supplies.

“Quality should always trump cost,” he said. “Not only will you end up spending more in the long run with cheap products, it makes your company look bad.”

Patients whose equipment lasts and needs few repairs will return to the same provider, said Steve Rogers of Padgett’s Medical. Steve Saellem of EME Medical Equipment agreed.

“Keeping quality high retains loyal customers,” he said.


My Company always provided the best quality merchandise available. At some point in time however, the industry needs to realize reimbursement formulas do take into consideration the reported overpayments received from CMS Auditors. Until the industry challenges these audits to dispute there findings the hole being dug by them with reduced reimbursements for the industry will continue to deepen!! Without access to the Federal Courts to adjudicate these challenges the direction the industry can and will only continue to go is one way the current way.