Ready or not, providers chart life under Round 2

YARMOUTH, Maine - With the arrival of July and, along with it, Round 2 of competitive bidding, providers in 91 cities have set Plan B in motion.

For many, that means looking at new markets.

“We're moving into home sleep testing and partnering with a lab,” said John Eberhart, president of San Clemente, Calif.-based Eberhart Home Health, which was not offered any contracts.

On July 1, Round 2 of competitive bidding went into effect, cutting Medicare reimbursement to providers in 91 cities by, on average, 45%.

For those providers who did accept contracts, they stand ready to serve patients, but they say all the streamlining and operational efficiencies in the world won't make up for the income lost due to sharply reduced reimbursements.

“We're not going to make up that cut,” said Rick Adamich, president of Waukesha, Wis.-based Oxygen One, which accepted a contract for oxygen in the Milwaukee CBA, but lost out on CPAP.

Adamich says he will also ramp up sales efforts in home sleep testing and sleep services for commercial trucking and other firms.

Provider Laikha Aziz will subcontract for oxygen, but she says the low reimbursement will mean changes for patients.

“We're not going to send a driver specifically to (work with subcontracted oxygen patients),” said Aziz, president of South Daytona, Fla.-based Volusia Medical Supply. “They'll include them when the driver's already on that route. We're only making $40 for each delivery.”

Aziz said she subcontracted mainly out of concern for her longtime customers.

Not everyone was ready for Round 2 to hit: Provider Craig Yager said a competitor of his shut down for the last week in June to train its employees. For his part, Yager plans to grandfather as many of his existing patients as possible, and branch out into orthotics, e-commerce, retail and home modifications.

“Medicare has been a big payer for us,” said Yager, owner of InterMED Medical Supply and Mobility in Dickinson, Texas. “We'll definitely feel the effects.”

Despite all of these efforts to weather financial losses, some providers say their companies may not survive if changes to the program are not made. Provider Leroy Lewin expects his company to “hang on for a while” on income from grandfathering.

“I don't know what happens after that,” said Lewin, owner of Riverhead, N.Y.-based Lewin Medical Supply, which will grandfather its patients. “This has become a very tough business.”