Study: re/hab margins thin

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Thursday, February 28, 2002

ALEXANDRIA, Va. - Re/hab providers say a recently completed analysis of wheelchair repair costs paints a dismal picture: On average, they lose about $150 per transaction thanks to low reimbursement.

"For over a decade, providers have offered repair services at a loss, but they got an OK profit from selling the chair," said W.B. Mick, director of The MED Group's National Re/hab Network. "Now, they're not even getting an OK profit off the chair, so the repair losses are really hitting below the belt."

The analysis, as well as a white paper, will be presented to CMS Administrator Tom Scully this month, Mick said. The National Re/hab Network, AAHomecare's Re/hab and Assistive Technology Council (RATC), and the New England Medical Equipment Dealers Association (NEMED) have all had a hand in putting the analysis together. It was based on more than 50 different repair transactions from each of the four DMERC regions.

Just a few months ago, the group won a battle (but not the war) when CMS corrected the nearly 40% slash it had made last summer to already low repair reimbursements rates. In six states in Region A, reimbursement had dipped from $18.99 per 15 minutes of work to $11.29.

But current rates still aren't enough, re/hab providers say, and they'd welcome most any relief.

"I cringe when we get a work order in for a repair because I know we're not even going to break even," said Jim Poteet, owner of the Germantown, Wis.-based Metrocare Home Medical Center. "The rates don't take into consideration that my technician's probably going to have to make two trips to the patient's home to get the job done."

That CMS only reimburses for wrench-turning time has long been a gripe of re/hab providers. Mick said the analysis breaks down the cost of doing a repair into 10 areas: intake; initial funding review; required documentation; initial appointment requirements; research/ itemize repair parts and labor; purchasing/ processing parts order; receiving parts; performing repairs; delivery/ completion of repair; and billing and collections.

"This has definitely been our biggest, most detailed effort," Mick said.

On average, the analysis shows re/hab providers spend more than six hours on a transaction for a total cost of about $217, Mick said. When you deduct the E1340 labor per quarter hour (about $63), providers are left to pocket about $150 of their own expenses. HME

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