Monday, March 31, 2003

WASHINGTON - As lawmakers and state officials across the country negotiate ways to accommodate some of the largest budget deficits in decades, dealers of seating and mobility equipment are preparing for the worst as deep cuts to Medicaid are to come.

Medicaid accounts for about 20 percent of state budgets, and like other health care services, its costs are growing each year. With some states facing budget deficits for the next fiscal year hovering around $500 million dollars while other projections go above and beyond billions of dollars, cuts are aimed at Medicaid.

As a result, rehab providers could feel the tightest squeeze due to the fact that their main revenue is generated primarily through reimbursements from Medicaid. A dilemma that may force providers to drastically cut services.

“We’re preparing for it. We’re expecting it. The cuts are on the table,” said Bob Guoy, president of United Seating and Mobility. “It’s going to change the whole dynamic of how we do business. Customers are not going to get the service that they’re used to getting. We’ve never had cuts like this.”

Most states are currently in the early phases of budget restructuring and most anticipated cuts for 2004 have yet to be announced. The budget process typically goes through at least one revision before recommendations are submitted to a legislative body.

Gloria Peterson, assistant executive director of the California Association of Medical Suppliers, said the governor has already issued recommended cuts in January, calling for drastic cuts to medical equipment supplies. In May, she said, a revision will be submitted to the Legislature, where it is reviewed before any proposed reductions are made.

“Right now it’s pretty grim,” Peterson said. “The governor is calling for the elimination of all optional services, meaning DME and medical supplies. I don’t anticipate it’s going to happen. It’s unrealistic to do something that drastic. The deficit is so large, its not going to balance on just those cuts alone.”

Kam Yuricich, executive director for Ohio Association of Medical Equipment Services, said Ohio is in a similar scenario. “We’re holding our breath,” She said. “We haven’t seen anything specific. We’ve been reminding (state legislators) that we believe we are the answer to the problem, not the problem itself. Education is what we need to do; express the importance of Medicaid.”

But Guoy said, the ramifications can already be felt. “There’s going to be a reduction in home medical equipment, rehab products, a reduction in reimbursements,” he said. “I’ve noticed (Medicaid) has slowed down the process. The state’s approvals (for reimbursement) are very slow. They’re extending the dollars.”

Doug Westerdahl, owner of Monroe Wheelchair in Rochester, N.Y., agrees. “The pinch we’ve seen is in the difficulty getting things approved. (Medicaid) is just flat out denying (claims) now,” he said.

Because of such complications, Westerdahl said, Monroe Wheelchair, which he estimates to bring in $8 to 9 million this year, has reduced Medicaid business from 30 percent two years ago to 16 percent currently.

Guoy said he expects the reductions to effect the door-to-door service United Seating and Mobility offers to its clients, stating that the rehab company will also have to be more selective in the types of products sold.

“We are going to have to offer a lower-end product to our clients,” Guoy said. “It’ll save money in the short-term, but we’ll pay for it in the service costs. But (the state) doesn’t care about that, they have a budget that they have to balance this year.”

However, Simon Margolis, vice president of National Seating and Mobility, said he isn’t panicking just yet and that the rehab industry has always had its highs and lows.

“It’ll flush itself out over the next few months,” Margolis said. “We always knew funding through public services was a bit of a gamble. They’re not a business. There are always issues from reimbursements with the state.”

Margolis said when the cuts come, National Seating and Mobility will make adjustments then. “We’ll have to make some decisions,” he said. “We provide a service. It’s no good if there is no money and the patients can’t get any service. Everybody loses.”

If a reasonable solution is not developed, Yuricich said, Ohio will have to explore such options as competitive bidding, across the board or selective cuts, or changing payment schedules to a monthly or quarterly schedule.

Peterson said she is hoping a grassroots campaign aimed to educate officials about Medicaid this May helps reduce possible reductions by negotiating reasonable cuts, and suggesting a new reimbursement methodology with the Department of Health and Human Services.

“No way are the cuts going to be to the scope that has been suggested,” she said. “The ramifications are inconceivable. By eliminating the DME, patients would have to be hospitalized or institutionalized, which is much more expensive.”

In the meantime, providers can only wait and anticipate how the seating and mobility industry will absorb such a hit.

“The economy is weak. It’s a difficult time. We are in a recession,” said Guoy. “Until it improves, it’s going to be difficult. The consumers are going to get the short end of the deal for a while.” HME