No Delay on Elimination of First-Month Purchase Option

WASHINGTON — Standard power wheelchair providers were dealt a blow last week when Congress passed a bill to delay a double-digit reduction in Medicare physician reimbursement, but did not include a delay of the elimination of the first-month purchase option.

The option is set to be eliminated Jan. 1. Instead of being paid up front for the expensive wheelchairs, the products will be considered rental items and providers will receive payment over 13 months.

Passed Dec. 8 by the Senate and Dec. 9 by the House, the $19-billion Medicare and Medicaid Extenders Act of 2010 would delay a 25 percent cut in physician payments for 2011, giving Congress time to work on a permanent fix for figuring the docs’ pay. But mobility advocates, looking to the legislation as a vehicle that could also carry a delay of the purchase option elimination, weren’t so lucky.

“It’s a major disappointment that the doc fix passed and didn’t include the first-month purchase option delay,” said Seth Johnson, vice president of government affairs for Exeter, Pa.-based Pride Mobility Products.

Providers have long cautioned elimination of the option would create financial hardships, particularly for smaller suppliers who are caught in the current credit squeeze and can’t make the sizeable cash outlay up front that a power wheelchair demands.

“I think all providers are going to take a harder look at what they provide, how they provide it and if they provide it,” said Tim Pederson, president and CEO of WestMed Rehab in Rapid City, S.D. “I think utilization will drop because there’s a lot of providers who can’t get access to proper credit to do what they have been doing. The margins in their business just aren’t there for that.”

Since May, the industry has been fighting for a year-long delay of the option elimination to allow providers time to obtain additional financing and otherwise prepare for the transition, offering a pay-for through a 1 percent reduction in the CPI update.

“It wouldn’t add a penny to the deficit,” Johnson said. “At a minimum, it would preserve jobs, and I think you could make the argument that it would help the economy as well.”

Although many in Congress supported the delay — Reps. Jim Langevin, D-R.I., and Glenn Thompson, R-Pa., spearheaded a sign-on letter for the delay in September — “we heard that the only additions to the doc fix would be previous Medicare extenders that had been voted on earlier in the year,” Johnson said.

“The requirements for inclusion in the … bill were very stringent and were limited to [it] and extenders that had been addressed by the House and Senate earlier this year,” echoed Walt Gorski, vice president of government relations for the American Association for Homecare. “So there was a procedural hurdle.”

Still, Johnson said Friday, there is “limited opportunity” to address the issue this year. “We are actively engaged in identifying vehicles to attach the language to. There are still appropriations bills that [Congress has] to pass. We’re continuing to do everything we can to make sure all those opportunities are pursued.”

Even so, providers should prepare, stakeholders said.

Pederson said his company has already made the decision to “focus more on the complex side [of power wheelchairs] and less on the non-complex side.” As chairman of AAHomecare’s Complex Rehab and Mobility Council, Pederson has joined others in the sector in helping to push a campaign for a separate benefit for complex rehab. That movement is gaining some congressional support. “As we work through the separate benefit [issue], I think that bodes well for complex rehab,” Pederson said.

Ted Raquet, vice president of domestic sales for Pride, added that there are still reasons to be optimistic about the standard PWC market and there are actions providers can take to solidify their footing in the sector.

“First of all, there is tremendous opportunity in the future, whether this goes to rental or not,” he said. “With 78 million baby boomers, 8,640 people will be turning 65 every day beginning Jan. 1. The way of the baby boomers continues for the next 18 years, until 2029. So obviously there is going to be a large potential audience.” To capture their share of the market, Raquet said providers need to:

• Have best practices in place when the option is eliminated;
• Partner with a top-quality manufacturer to help manage cash flow; and
• Migrate to rental-ready products.

“They need to understand that the overall lifetime cost of a product is far different from the acquisition cost of a product,” Raquet cautioned. “One of the things I think a lot of providers are not aware of is that once they put the rental product out, they are responsible for that product for the next five years. The clock starts ticking the day you put it out.”

He also suggested that providers expand retail offerings to the general public. Baby boomers will have a large amount of disposable income and are likely spend some of it on add-ons that make them and/or their loved ones more comfortable.

“It’s going to be challenging, but there are going to be big opportunities [in the standard power wheelchair sector],” Raquet said.