Nowhere to hide: Reimbursement cuts multiply

YARMOUTH, Maine - Third-party payers have wasted no time applying recently reduced Medicare pricing, respondents to the latest HME Newspoll say.

Eighty-one percent of respondents say new Medicare pricing that went into effect this year—in rural areas on Jan. 1 and July 1, and in Round 2 re-compete areas on July 1—has already impacted pricing from payers like United Healthcare, Humana and Blue Cross Blue Shield.

“Once Medicare drops pricing, everyone else wants to follow suit,” wrote Janet Brown of Anderson Drugs & Home Care in Etowah, Tenn. “They figure if we can do it with Medicare, we will accept it across the board. We cannot survive.”

Forty-seven percent of respondents say the new pricing has also impacted Medicaid pricing in their state. Thirty-five percent say Medicaid hasn't applied the pricing yet, but it will eventually.

Like with Medicaid, the reimbursement that HME providers receive from third-party payers is often based on a percentage of Medicare reimbursement. That means reimbursement from third-party payers can actually be below reimbursement from Medicare.

“It has decimated our reimbursement from Humana, Wellcare, Prospect Medical and other payers,” wrote Rene Correa of Bexar Care Home Medical in San Antonio. “We are being reimbursed less than the Medicare competitive bid rates and are contemplating picking up equipment and focusing on retail sales.”

A number of respondents said the pricing changes have forced them to drop contracts with third-party payers. Others are scrambling to try and renegotiate their contracts, with little luck.

“In July, we saw reductions in allowables from our two biggest third-party payers,” wrote Beau Barrett of Access Respiratory Homecare in New Orleans. “In the worst case, most CPAP supplies and some RADs are below acquisition cost at 35% below the current Medicare SPAs. Payers do not seem willing to entertain any discussion about this.”

John Wood wrote that he's in the same boat.

“We have a contract that is based on 80% of the Medicare allowable,” said Wood of Capital Medical in Tallahassee, Fla. “When the Medicare rate dropped below our cost of products for TENS, we stopped accepting assignment on these codes. Our commercial contract immediately dropped their payment for these codes, as well. We are trying to negotiate with them to carve out these codes to something where we can make money, but nothing yet. We have suspended providing these products to commercial members.”

If providers are fortunate enough to be working with third-party payers that haven't yet adopted the new Medicare pricing, 16% of respondents say their luck won't last.

“Anthem immediately applied the new allowables in California, so that a contracted supplier will lose money on every cushion or back on manual wheelchairs and also on all scooters or Group 2 PMDs,” wrote Stan Arledge of Access Medical in Anaheim, Calif. “Soon all of them will do so.”