Audits take toll on contract supplier

FLETCHER, N.C. - All-States Medical Supply (ASM) in February laid off eight employees and company execs placed the blame squarely on audits.

“We've got more than 15% of our cash flow held up in audits,” said Marcus Suess, CEO. “That's more than a 200% increase from what we've ever experienced.”

The timing couldn't have been worse: The audits surged in November—about 800 requests for documentation in three weeks—several months after the July 1 implementation of the national mail-order program for diabetes supplies. ASM is one of 19 companies to hold a mail-order contract.

After getting the contract, ASM hired 50 employees to meet the projected increase in volume—which so far, has eluded the company and other mail-order contractors, Suess said.

“Initially, we got a heavy volume of calls,” he said. “We talk to people throughout the industry and they are all saying, 'Where are the patients?'”

With an average reimbursement cut of 72% for diabetes supplies, and 15% of its total cash flow held up in audits, ASM's hands were tied.

“We've always had this duty to serve our patients, and we feel a responsibility to our employees,” said President Jason De Los Santos. “It's hard here right now.”

ASM is turning its attention toward diversification. The owners of ASM have separately acquired a local retail HME and the provider plans to offer therapeutic shoes and a mail-order pharmacy service. About 14 employees have been transferred to the new entities, said Suess.

With nationwide competitive bidding set to go nationwide in 2016, it's anybody's guess what happens next, he said.

“We are clueless about the future, which makes planning very challenging,” said Suess. “Patient care has diminished, but there's no drive for anybody to make a change.”