Providers 'hang their hats' on new products, new payers

YARMOUTH, Maine - Halloween may serve as a stark reminder that fall is well underway, but providers who bid in Round 2 aren't waiting around for those single payment amounts.

Instead, they are already looking at ways to take the sting out of both low payment amounts and/or loss of Medicare business.

"I bid and I plan to win, but even if you win (you are looking at) 30% less," said Jim Leedom, owner of Home Health Depot in Lomita, Calif., part of the Los Angeles competitive bidding area (CBA). "So, I just quadrupled my retail space. If you win for beds, you are not going to survive on the bed, but it gives you the opportunity to take that client and add on sales: the bath bars, the walker, the bath bench."

CMS has said it would announce the single payment amounts for Round 2 sometime this fall, and it would announce the contract winners next spring.

Round 2 amounts are widely expected to fall somewhere in the ballpark of an average cut of 30%—slightly less than the average cut of 32% in Round 1.

"I am not so concerned about the exact number," said Jack Hogan, vice president of Watertown, Conn.-based Health Complex Medical. "I am anxious to see how effective our (bid strategy) was. But we're not waiting for the amount—we are trying to get outside the box and have hired several specialty sales staff."

Provider Carl Mulberry says he'll put more focus on product lines that aren't included in bidding if he doesn't win a contract for wheelchairs in the Columbus, Ohio, CBA.

"I'll still do complex rehab and K5, but the Group 2s and the others will go to other companies, and I give up more business starting next year," said Mulberry, president of Columbus Medical Equipment in Columbus, Ohio.

In addition to focusing on non-bid products, providers like Daryl Bowman say they have increased the amount of business they do with other payers, like CareAdvantage, a Medi-Cal HME plan.

"It's a saving grace right now, giving us a revenue stream that now we have increased so it's greater than Medicare," said Bowman, owner of Bowman Medical in San Carlos, Calif. "We are hanging our hat on that until we know what happens in July of 2013."