Providers hold back on products, services

YARMOUTH, Maine - January brought with it the cold, hard reality of reduced Medicare pricing nationwide and providers are bracing themselves for storms ahead.

“We have reduced our footprint and we have reduced what we are offering in certain areas,” said Mike Calcaterra, northern zone vice president for Boise, Idaho-based Norco, which has locations in in Montana, northern Idaho, and central and eastern Washington state. “Liquid oxygen is something we are holding back on. Under the new rates, it is almost impossible to provide.”

CMS plans to phase-in its new pricing for regional and rural areas over six months. Starting Jan. 1, pricing was based on a 50/50 blend of the current and adjusted rates. On July 1, it will be based only on the adjusted rates.

Provider Glenn Steinke, made the hard decision to drop nebulizers, which in his area saw a reimbursement drop from  $17.87 to $14.49—a loss he can't absorb.

“We are a DME that focuses on respiratory and we can no longer do nebulizers,” said the owner of Bishop, Calif.-based Airway Medical. “Before, we were breaking even, but I've got to watch every penny.”

So far, Steinke has resisted cutting his service area—he's the only provider covering about 10,000 square miles—but he will cut back on nursing visits to seniors from 45 days to 60 or 90 days, he says.

“The patients are the losers in this whole thing,” he said.

Cutting his service area is also a last resort for Clark McInroy, who instead is assessing the number of oxygen cylinders his company delivers.

“In the past we were pretty lenient and some patients would take advantage of that,” said McInroy, owner of COPD Respiratory Services in Cheyenne, Wyo. “We are trying to be smarter, but we realize it's going to get even tougher.”

McInroy plans to reassess his budget in three months, and again in six months, when the second phase of cuts is implemented in July.

“If it gets bad, we'll have to do something,” he said.

Unfortunately, things will have to get bad, especially for beneficiaries, if the industry is to make headway in its fight against competitive bidding pricing, says Karyn Estrella, executive director of the Home Medical Equipment and Services Association of New England.

“My concern is that CMS is just going to believe that they were right all along and that providers have been overpaid,” she said.