Tougher times ahead: Impact of rate cuts pile up

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Friday, April 21, 2017

YARMOUTH, Maine – A whopping 65% of respondents to a recent HME Newspoll say they can sustain their businesses for less than a year, if they don’t get reimbursement relief.

Thirty-six percent of respondents say they can sustain their businesses for up to six months, and 29% say they can sustain their businesses for six to 12 months.

“I have laid off long-time employees and cut benefits like health care, but there is no way to make up for 50%-plus cuts in Medicare,” wrote Don Chrysler of National Home Health Care in Amarillo, Texas.

CMS’s decision to apply competitive bidding reimbursement rates to non-bid areas in two waves in 2016 has sent ripples throughout the HME industry, forcing many providers to make drastic changes to their businesses.

The largest number of respondents—37%— says the biggest impact of the cuts on their businesses has been dropping certain products and services. It’s a tough decision that has made some providers more financially viable but has put patients in a bind.

“The biggest impact for us has been to drop certain categories, i.e. nebulizers, hospital beds, walkers, and only bill them unassigned for Medicare beneficiaries,” wrote Jim Lehan of Lehan’s Medical Equipment in Rockford, Ill. “We do enough cash business and non-Medicare business to most likely stay in business, but the patients have suffered as no one will take assignment on a lot of Medicare business.”

Twenty-eight percent of respondents say the biggest impact of the cuts has been going into debt, both professionally and personally, to keep their businesses afloat.

“We have debt now of $100,000, when we were debt free before the price reduction,” wrote Diane Friend of Valley Home Health Care in Roanoke, Va. “I have not received a salary for more than 11 months as an owner. We still cannot pay for our equipment and have to continue to finance. With rent, utilities, payroll, insurances, bonds, we still cannot pay the bills.”

Sixteen percent of respondents say the biggest impact has been cutting staff, 11% say closing locations, and 8% say putting growth plans on hold.

For many respondents, the impact spreads across their businesses.

“We have laid employees off, and we have had to borrow money to say open,” wrote Lana Cochrane of Personal Medical Equipment in Anna, Ill. “If things keep going as they are we will not be able to provide equipment to our customers much longer, and we service a very rural, impoverished area.”

For some providers, diversity has been a lifeline, whether it’s an accompanying retail business or other homecare-related business.

“We have survived by the skin of our teeth due to the fact that we also provide pharmacy services and state bid contract medications,” wrote Melissa Hammett of Professional Care Pharmacy in Monroe, La. “Had it not been for these private contracts, we would certainly be in a much different situation.”

But even after making changes to their businesses and leveraging diversity, it’s not enough for some providers. For them, the sense of despair is palpable.

“It’s been a slow, painful death, but they’ve gotten what they wanted: the shutdown of an industry of small, service-oriented businesses,” wrote Kathleen Weir Vale of HOPE Medical in San Antonio. “Another fiendish arrow in their quiver has been the bureaucratic documentation requirements. Those alone made our services marginally profitable, without even considering the first fee cuts, not to mention the auction. They’ve won. We all need to face it, close up shop and get a life.”

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