Reimbursement: Last year was tough, this year looks no better

Saturday, April 30, 2005

ALBANY, N.Y. -- Landauer Metropolitan's recent exit from the Medicare and New York Medicaid custom rehab business points dramatically to the reimbursement challenges faced by providers of this expensive high-end equipment.
"It could be a turning point," said one provider who asked that his name not be used. "Other folks will look at Landauer and say, 'If they can't do it, can I?'"
Landauer generates about $45 million in revenue annually. About $7 million of that comes from custom rehab, and the company derived about half that from Medicaid and Medicare. Low reimbursement and lengthy, confusing documentation requirements drove the company from the Medicare and Medicaid custom rehab business. The company will continue to provide custom rehab to its HMO clients, said President Alan Landauer.
Because New York is such a big, high-profile state, its Medicaid woes are likely to attract national attention. However, if Landauer's departure from the business signals an industry turning point, it has yet to materialize.
Thus far, none of the 45 provider members who belong to the National Coalition for Assistive and Rehab Technology have withdrawn from their state Medicaid programs. A number of the members, however, do no Medicare business, said Executive Director Sharon Hildebrandt.
NCART members have been asked to lobby Washington lawmakers against making further cuts to Medicaid.
"Last year was tough and probably this year will be tough too," Hilderbrandt said. "The states are trying on their own to control costs, and if any more cuts come from the federal government, it will snowball and be worse."
While custom rehab is just a small percentage of overall federal and state healthcare spending, it isn't powerless in its fight to preserve reimbursement, said Matthew Burke, chairman of AAHomecare's Rehab and Assistive Technology Council (RATC).
"Once the consumers start feeling the pain and start getting worked up, we are going to see stories on the nightly news about a baby in some state that couldn't get a piece of equipment because Medicaid didn't have money," he said. "Once stuff like that starts happening, lawmakers in Washington will start to wake up to this."