States move to single-source more and more DME

‘They’re commoditizing this portion of health care, and it’s scary to think about how far they’ll take it’
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Friday, July 21, 2017

YARMOUTH, Maine – Distributors have been picking up Medicaid contracts for incontinence supplies in a number of states for years. Now the stakes have been raised.

In Indiana, for example, Medline has won a single-source contract to provide all DME and supplies to Medicaid patients under Managed Health Systems, a managed care company that’s administering part of the state’s program. Medline plans to drop ship aides, soft goods and supplies, and has set up a network that includes Apria Healthcare to provide “hard DME,” says George Kucka, president and CEO of Fairmeadows Home Health Center in Schererville, Ind.

“This is completely changing the paradigm,” said Kucka, who is also the HME/Respiratory Therapy Council Chair for AAHomecare. “It’s starting to spread, and it’s not good. This points to the fact that no one respects that there’s a service aspect to this.”

Kucka got word of the contract via a letter in February. His contract with MHS will be terminated—he serves about 150 patients under the plan—and the new contract with Medline will start on Sept. 1.

Down in Texas, Medline has won a single-source contract to provide supplies—the list includes 244 codes—to Medicaid patients under Superior HealthPlan, a managed care company that’s administering part of that state’s program. That contract also starts Sept. 1.

“How is Medline going to know what to dispense to the patient?” said Victoria Peterson, an administrator for Respiratory & Medical Homecare in El Paso, Texas, which serves about 125 patients under Superior HealthPlan, representing about $75,000 in revenues per month. “When they get a script that says PediaSure, what kind are they going to provide, because there are 25 different kinds. The doc doesn’t know—we go back to the nutritionist to find the best fit. Same thing with trachs—there are six different types of tubes.”

Respiratory & Medical Homecare has filed four complaints with three different offices of the Texas Health and Human Services Commission, as well as Superior HealthPlan. Another provider, Alliance Medical Supply, enlisted the legal team at Brown & Fortunato to also file a complaint.

“All the DME providers that have been providing services in a fabulous way for decades—now all of a sudden, they would be eviscerated,” said Pam Colbert, a member of the firm’s Health Care Group.

In a response to a request for an interview, a media relations specialist at Medline said no one was available at the moment.

“It’s a very new deal,” she said, referring to the contract in Texas. “But we may have more details to share in the coming months.”

Providers like Ben Hertz don’t begrudge Medline and other distributors like TwinMed for earning a living, but this trend is another major shift in the HME industry toward larger companies and less personal care.

“They’re all trying to maximize their own revenues, but it’s like, health care is so personal,” said Hertz, the store manager for Elmora Healthcare in Elizabeth, N.J., where the state has contracted with Medline to provide incontinence supplies to all Medicaid patients under Horizon N.J. Health. “You go to the doctor that your family has been going to for 50 years. You got to the hospital, and your nurse is your neighbor. They’re commoditizing this portion of health care, and it’s scary to think about how far they’ll take it.”

Kucka says he’s not going down without a fight, and depending on how the contract plays out, he’ll likely have Medicaid patients on his side.

“If there are service issues that creep up, the Medicaid population is more vociferous than the Medicare population,” he said. “They’re going to scream.”

Comments

Everyone wants to hate on Medline etc but the real problem is the managed care organizations and state Medicaid.  They are going to a strictly price oriented approach.  If you look at the bids, they place 80% of the value on price.  The patients and care givers complain non stop about the service issues but that doesn't change the fact that the MCO's and Medicaid go with the cheapest alternative most of the time.  I still encounter some that pay the premium for service but that won't last long. 

As a DME company, you can still find a way to get it done.  Just a matter of if you can stomach the slim margins.