Providers on grandfathering: Keep serving, keep collecting

WASHINGTON - Grandfathering may help keep non-contract suppliers in Round 2 afloat, but it's only a temporary fix for them and their patients, they say.

Non-contract suppliers must provide written notification of their decision whether or not to be a grandfathered supplier to all of their Medicare beneficiaries in a competitive bid area at least 30 business days prior to implementation of the program, or May 20.

“My family has served this community since 1946,” said Jene Sego, president of Titusville, Fla.-based Sego's Home Medical Equipment. “I'm going to take care of my patients for as long as I can.”

Medicare allows providers to continue serving patients for the duration of a rental period for power and manual wheelchairs, hospital beds, CPAP devices, negative pressure wound therapy pumps, respiratory assistive devices, support surfaces and walkers. Providers can also grandfather oxygen and oxygen equipment.

Grandfathering keeps money coming in on equipment that would be hard to resell, providers say. Equipment already out in the field is dated and often not in perfect condition.

“Within a few months, patients destroy it,” said Jim Horn, owner of Athens, Texas-based Horn Medical Supply, who grandfathered equipment in Round 1. “I decided to cut my losses and keep some money coming in.”

Another reason grandfathering is a good idea, providers say: It's a way to keep costs down. Paying employees to run out and pick up used equipment while coordinating with another provider to deliver the equipment the same day just doesn't make sense, says Jim Fallon, who expects to grandfather around 600 patients.

“It would cost me too much money to get all that equipment, and then what would I do with it?” said Fallon, president of Birmingham, Ala.-based Medirest. “Put it in my warehouse?”

Still, just because a provider wants to grandfather, there's no guarantee the patients will agree to stay on board.

“If they have worn out power chair, they'd be crazy not to get a new one from a contract supplier,” said Horn.

Grandfathering is also a temporary solution. If competitive bidding can't be repealed or replaced, provider Lana Derrick expects to close her doors once grandfathering is over.

“We're going to phase (our company) down to what is necessary until we can no longer continue taking care of our patients,” said Derrick, acing CEO of Plainview, N.Y.-based Atlanticair. “Even if we had been offered a contract, no one has a 45% bottom line.” HME