Private-pay contracts: A good, but not sure-fire, bet

YARMOUTH, Maine - HME providers struggling with decreased Medicare reimbursement are hunting for private-pay contracts, but they're not always quick to pull the trigger.

There are providers like John Teevan, whose company, New Berlin, Wis.-based Home Care Medical inked a deal in October with Network Health to become an in-network provider of HME, respiratory, rehab and home infusion equipment. Network Health offers a range of health insurance plans to more than 135,000 plan members in northeast Wisconsin.

“We're definitely looking for them,” said Teevan, president. “We approach networks we are not already part of or, as we go into new territories, we look for what's there and line those up with acquisitions or expansions.”

Teevan says he's found that, while private-pay insurers have an expectation of better discounts, they're not “off-the-wall” compared to the Round 2 single payment amounts.

“They are more about looking for providers that can do it all,” he said.

Then there are providers like Cliff Woolard. His company, Concord, Calif.-based Home Med-Equip, has numerous major insurance contracts but recently turned down a new Medicare Advantage plan.

“They wanted me to provide service for 50% of the Medicare rates,” said Woolard, president. “I've never heard of anyone trying to pay that low. They didn't even blink.”

Unfortunately, that's a trend that's likely to continue as more providers seek alternative payers, says Stephen Hodges, president of HME Solution, a consulting firm.

“There's a frenzy in the marketplace to get these contracts,” he said. “There's so much downward pressure on pricing that the payers are reluctant to negotiate price.”

Regardless, there are still plenty of benefits to working with private payers, in particular more straightforward billing procedures, say providers.

“You send the prescription information to the authorization department and they say yes or no,” said Woolard. “There's never a guarantee, but you get some sense of authorization before you dispense a product. And they pay sooner.”