What’s behind pattern of low bid rates?

Friday, November 1, 2013

WASHINGTON – HME providers say fear of being excluded from the Medicare program prompted the low reimbursement rates for the Round 1 re-compete.

“It’s the old bullet to the head or slow death question, and nobody wants a bullet to the head,” said Frank Trammell, president and CEO of Charlotte, N.C.-based Carolina’s Home Medical, which was awarded contracts for respiratory, mobility and NPWT. “It’s about staying in the game and hoping to make it up in volume.”

CMS on Oct. 1 announced reimbursement rates for the Round 1 re-compete that are, on average, 37% below the fee schedule. In Round 1, rates were, on average, 32% below the fee schedule.

Providers say Round 1 forced some of their colleagues out of business and patient care suffered, and they don’t have high hopes for what steeper cuts, combined with an expanded list of affected products, will mean.

“It’s going to be worse,” said Jim Horn, owner of Horn's Medical Supply in Athens, Texas. “On top of that, CMS has stepped up its audits.”

Horn was awarded contracts for standard mobility equipment in Round 1 and again in the re-compete. 

“We had to either take the contracts or go out of business,” he said. “I’m not looking forward to it.”

To survive another go-around, providers say they’ll have to make big changes.

Ron Jenkins was not awarded contracts for nearby Orlando, but he was awarded contracts in nearly every product category in Miami, which is more than 200 miles away. While he plans to open a location in Miami, he has also had to lay off employees and close a location in preparation to absorb the rate cuts. And he’s not done yet.

“I’m going to continue to look at ways of cutting costs,” said Jenkins, CEO of Longwood, Fla.-based Respitec Medical. “Service will suffer, but the patient will be taken care of.”