ATLANTA--Even as HME providers are gearing up for a 9.5 percent
reimbursement reduction in 10 product categories Jan. 1, complex
rehab stakeholders are racing against the clock to get the segment
exempted from the cut.
The problem is, it will take an act of Congress to do it--and
Congress is in recess until September.
“Congress is really in session for only another four weeks
[after lawmakers return],” said Seth Johnson, vice president
for government relations for Exeter, Pa.-based Pride Mobility
Products and a member of the American Association for
Homecare’s Rehab and Technology Council.
When the nation’s federal legislators return to Washington
after their August break, they will work on appropriation bills and
perhaps another economic stimulus package; then, because it is an
election year, “they are going to be gone for the remainder
of the year,” Johnson said. “There’s going to be
legislation that moves through very quickly. That’s why time
is of the essence for us to communicate this with
legislators.”
At issue is the effect a 9.5 percent cut will have on the complex
rehab industry. The cut, which was mandated by H.R. 6331, delayed
competitive bidding for
at least 18 months and also exempted complex rehab from any future
competitive bidding project. But the 9.5 percent cut includes the
project category, which is known for its slim profit margins, a
fact documented by the recent study produced by the University of
Rochester’s Simon Business School.
According to the study, which surveyed companies ranging in annual
revenue from $250,000 to $21 million, those in the small sector
(less than $5 million) had a pretax profit of 3.44 percent;
companies in the medium category ($5 million to $10 million)
averaged 6.87 percent in profit; and large companies ($10 million
and above) had profits averaging 4.83 percent.
The study, which garnered a 20 percent response rate, reported that
53 percent of the complex rehab providers fell into the
“small” category; 42 percent were in the
“medium” category; and five percent were large
companies.
“When the average net profit is between 2 and 4 percent, and
you take 9.5 percent out of that, it’s simple math. We simply
cannot afford to provide all the products and services we offer if
the 9.5 percent reduction goes into effect,” said Gary
Gilberti, president of the National Coalition for Assistive and
Rehab Technology and owner of Chesapeake Rehab in Baltimore,
Md.
And it’s getting worse. Fuel and payroll costs are increasing
and so are shipping costs, which manufacturers tack on to their
charges, stakeholders point out. As well, there is the
customization of a complex rehab product.
“There is a service component to what we provide,” said
Gilberti. “You can go to Wal-Mart and buy a walker, you can
go online and buy a piece of equipment, but it doesn’t get
delivered, set up, all those added-on services … A custom
wheelchair has to be custom fitted, put together, the electronics
adjusted.”
The 9.5 percent reduction doesn’t take any of that into
consideration.
“At the end of the day,” Gilberti said, “it is
going to be about access. Some people might say this is a
reimbursement issue, but if companies cannot afford to provide
those products, they aren’t going to provide them and then it
will become an access issue.”
Johnson agreed, noting, “The 9.5 percent cut is going to
create the same impact as competitive bidding, because [complex
rehab providers] don’t have the 9.5 percent to
give.”
That message has to get to Congress, he maintained. Toward that
end, members of RATC, NCART, the Rehabilitation and Engineering
Assistive Technology Society of North America and other
stakeholders have been meeting to develop a strategy and
“ensure we are carrying a common message when we talk with
legislators, consumer groups and other clinicians,” Johnson
said. “It is very important how it is carried to legislators
on the Hill.”
“We do run the risk of Congress looking at us as looking a
gift horse in the mouth,” said Jim Greatorex of Black Bear
Medical in Portland, Maine. “I do feel that people in DC feel
they have done quite a lot for us [in delaying competitive bidding]
and for us to be coming back and asking for more--it’s going
to take some tact.
“But I do think we have something we can point out to them
nicely,” he continued. “We’ve already had our
prices and codes adjusted in 2006. The Simon report …
certainly shows that ‘lucrative’ and ‘complex
rehab’ are not words you use in the same
sentence.”
Whether or not the Simon report will play a large role in
presenting the message is a point of discussion.
“The Simon study is one of the data pieces that is really a
critical component to this advocacy effort because it provides very
recent data--2007 data,” Johnson said. “It clearly
shows that the pre-tax profits are way below 9.5
percent.”
“It’s simply one of the tools we are going to have to
use,” said Gilberti. “At face value, it shows the
everyday challenges we have as providers.”
Sharon Hildebrandt, executive director of NCART, said she sees the
study as being useful in communicating with clinicians and
consumers. “It demonstrated the percentage of the expense
that goes into the evaluation and the assembly and delivery,”
she said. “We have always maintained that [rehab providers]
have specialized staff and must do evaluations and put the products
together; those are not product expenses.”
The Simon study, she said, is “another tool we can use in
explaining to them how a complex rehab company operates and what
their constraints are.”
For his part, Mark Schmeler, Ph.D, OTR/L, ATP, professor and
researcher in the University of Pittsburgh Health &
Rehabilitation Sciences department, and new president of RESNA,
said he valued the study, and its findings support his opinion that
“9.5 percent is a pretty drastic cut given that there was a
cut a few years ago.
“But I think we need to be cautious how we present it,”
he said, noting that it’s “a good pilot study, but not
very scientific,” and there is much left open to
interpretation. He doesn’t, he said, want to open the
industry up to potshots from CMS, a possible outcome of attempting
to use the Simon study to change the industry’s
status.
Schmeler said the Simon study is a “snapshot” of where
the industry is today; another independently funded, more in-depth
survey is under way by researchers at the University of Buffalo and
Georgia Tech, and it should provide a “more systematic look
at the time and resources it takes to provide complex
rehab.”
The problem is, Schmeler said, it will be two or three years before
it comes out. So the Simon study is the most current available.
Still, while he champions the fight to get complex rehab exempted
from the 9.5 percent cut, the Simon study might not be the ticket
to achieve that, Schmeler said.
“This is not the proof in the pudding we think we
have,” he said. “We need to take what we have and be
cautious about how we present it.”
Whatever the strategy--and Greatorex believes one could be settled
on as early as this week--there is some concern that the time
limitations might be too tight to get anything done this year.
Johnson and others, however, think it is critical that the industry
tries. There may be opportunities this session for a bill to pass
exempting complex rehab and the cost of the exemption is unlikely
to be a stumbling block, Johnson said.
“The cost to eliminate this 9.5 percent reduction is between
$7 million and $9 million a year,” he said, noting that if
Congress did a technical correction, the industry would not have to
find a way to make up the difference. “It’s basically
budget dust. There’s not much of a concern right now about
the cost in eliminating that because it’s so
small.”
So rather than waiting for a new Congress to undo the reduction,
now is the time for the industry to move, he said. “We have
no choice. We really have an obligation to communicate with
Congress in a clear manner what the impacts will be of this
reduction before they happen.”
Greatorex
agreed. “I do feel like there is an opportunity. If we all
work together and find the best way to approach it, I think
we’ve got a good chance,” he said.
