Reimbursement doesn't cover costs, study says

WASHINGTON - Medicare reimbursement rates cover, on average, only 88% of overall costs for companies providing HME products and services, according to a new study released yesterday by AAHomecare.

The study, “Analysis of the Cost of Providing Durable Medical Equipment to the Medicare Population: Measuring the Impact of Competitive Bidding,” was conducted by Dobson DaVanzo & Associates and raises serious concerns about the current Medicare payment model, researchers say.

“The data are remarkably consistent in showing that the reimbursement-to-cost ratio is significantly less than 100%,” said Allen Dobson, one of the study's authors, in a release. “No matter how the data is sliced, by organization size and/or product category, the current reimbursement model does not cover provider costs. That is likely unsustainable over the long term.”

The study comes on the heels of a recently released report from the Government Accountability Office that found the number of Medicare beneficiaries receiving DMEPOS in Round 2 areas decreased 17% from 2012, the year before bid pricing went into effect, to 2014, the year after. The number of beneficiaries in non-bid areas decreased 6% during the same time period.

Together, the study and report make a strong case that competitive bidding is a flawed program, says Tom Ryan, president and CEO of AAHomecare.

“It's no surprise that many companies are responding to competitive bidding by not accepting new Medicare patients or closing their doors for good,” he said. “As this trend continues, seniors, people with disabilities and individuals with chronic conditions who depend on home medical equipment are going to have a much more difficult time finding a provider to serve them.”