Tennessee: New BCBS contract shocks providers

Sunday, September 26, 2010

NASHVILLE, Tenn. - Tennessee is the latest state where BlueCross BlueShield (BCBS) is wreaking havoc on HME providers.

To cut costs, Volunteer State Health Plan, a subsidiary of BlueCross BlueShield of Tennessee and one of three managed care organizations to administer benefits for TennCare, the state's Medicaid program, recently signed a contract with CareCentrix to handle DME claims. In turn, CareCentrix wants to pay DME providers, on average, 15% less than they're currently getting paid, according to news reports.

"I'll frame it to you this way," said David Bowman, owner of A&D Healthcare in Memphis. "There are a significant number of high-volume DME items where they set reimbursement at or below our acquisition costs. We're not trying to get rich, but this isn't sustainable."

CareCentrix has sent new contracts to DME providers and plans to put the new fee schedule in place Nov. 1.

Provider Scott Perkins says he won't sign the contract. Not when, for example, reimbursement will go from about 57 cents to 37 cents for briefs and about $175 to $110 for oxygen concentrators.

"I'll probably have to let one person, if not two, go," said Perkins, director of Bradley Medical Equipment in Cleveland, which relies on BCBS of Tennessee for about 12% of its annual revenues.

Providers continue to reach out to BCBS of Tennessee, in the hopes that they can strike up some sort of compromise.

"BCBS of Tennessee has been good to DME providers, and we're sympathetic that there are budget issues for them and the state," said Bowman, who also chairs the DME advisory group for the Tennessee Association for Home Care. "But what they're trying to do has to be fair. They can't run all the DME providers out of business."

In BCBS's eyes, however, working with a smaller pool of DME providers isn't necessarily a bad thing, because it saves money. In Florida, for example, it has shrunk its network down to 15 providers.

"The major impact has been slow service," said Carl Wallman, president of Galaxy Medical in Fort Lauderdale, Fla., who was shut out of the BCBS network, costing him $600,000 in annual revenues. "Providers in the network are getting referrals that are less than good, like driving 500 miles for a patient lift. It's not the sort of thing anyone wants to do."

BCBS's moves continue to baffle Perkins.

"In the '90s in Tennessee, they switched to one provider for DME and that provider went out of business in a year and a half," he said. "Now they're looking to go from TennCare to Blue Cross to CareCentrix. I'm not an actuary, but it would seem like the more people you involve, the costlier it gets. Its bureaucracy at its finest."