Life without the first-month purchase option

YARMOUTH, Maine - Look for HME vendors to play an active role in helping providers maintain their cash-flow once Medicare eliminates the first-month purchase option for standard power wheelchairs on Jan. 1, 2011.

"As an industry, we're working to overturn this, but if that doesn't happen, we'll use existing programs and develop new programs consistent with some of our leasing programs available today," said Carl Will, senior vice president, Invacare Homecare.

The healthcare reform bill passed March 23 eliminated the purchase option, making all standard power wheelchairs 13-month cap rental items. For providers accustomed to receiving all of their reimbursement in the first month, spreading it over 13 months could create some major cash flow headaches.

To ease the pain, Invacare and VGM Financial Services, the HME industry's two largest lenders, have begun to develop programs that address the new reimbursement. Pride Mobility Products is also "analyzing what we need to do to keep our providers viable moving forward," said Ted Raquet, vice president of domestic sales for Exeter, Pa.-based Pride Mobility Products.

What's more, Raquet added, with the elimination of the first-month purchase option, providers can no longer bill Medicare for repairs until ownership passes to the beneficiary. That means product quality "is going to be more important than ever."

For companies that currently provide leasing programs for concentrators, CPAPs and other capped rental items, creating similar programs for standard power wheelchairs should be no big deal, say industry watchers.

It's important, they add, that providers line up financing as soon as possible: Don't sit still, waiting to see if the industry can restore the first-month purchase option. There's no guarantee that will happen.

"When you are getting money up front and that goes away, you are going to feel the pain for a little bit," said Kurt Schmitz, VGM Financial's vice president of sales for healthcare. "But if you get your lines set up, it can get you through that time when you are a little short on cash."