Dream a Little Dream

First the reality: There is a new administration in Washington that is still in the early days of its term. Moreover, there has been a major shake-up in both houses of Congress. Partisanship is as strong as ever in spite of the fact that we are working through a bad economic situation at home and abroad.

Now the dream: You arrive at your desk on Monday morning. Setting your coffee cup down beside the keyboard, you open your email and there is HomeCare Monday. The headline is “Stunning Reversals from CMS.” What?

“In a startling announcement from the White House briefing room on Saturday morning,” the dream story reads, “President Obama with HHS Secretary Sebelius at his side announced in a short statement that as a part of the administration’s health care reform agenda, they are ordering the suspension of competitive bidding for DMEPOS, temporarily reversing the cap on the rental of oxygen equipment, removing the requirement that providers of durable medical equipment be accredited and freezing the Medicare fee schedule indefinitely.

“The President went on to say that this represents the undoing of nearly five years of legislative and administrative actions that will hobble this administration’s vision for health care.”

Stunned, you suddenly realize how many changes and how much money your company has spent in response to these Medicare initiatives. Was it all a waste?

Probably the first thing that comes to mind is that you can stop worrying about whether or not the company can serve Medicare beneficiaries and thereby stay in business. Competitive bidding would have put a lot of providers out of business, so you enjoy that relief for a moment. Now, what next?

Should you throw the accreditation program out? Undo the shift in your payer mix that was implemented to dilute the percentage of Medicare business? Undo the shift in product mix that was implemented to sell items not covered by competitive bidding? Undo the process changes that were put in place so the company could be a more aggressive bidder? Sell the document imaging system and open a branch with the cash?

An abrupt end of the daydream rattles you back into the moment as you realize the phone is ringing. But those questions about the changes in your business remain. Should we have this product mix, be accredited, and so on?

The fact is many DME companies have made these changes since December 2003 when the Medicare Modernization Act was signed. If the industry succeeds in the derailment of competitive bidding, would the companies that made the changes undo them? Were they a good idea?

It is changes like those listed that have allowed companies in this industry the ability to withstand the negative impact of other edicts from Washington. For example, there are the five years without an inflation adjustment to the Medicare fee schedule (called the “program update”) that caused providers to endure increased operating costs of 14 percent without an offsetting annual adjustment to the fee schedule.

There was the adjustment to Federal Employee Health Benefit Plans that reduced reimbursement for 16 products by 13 percent. These 16 items were the most widely distributed items covered under Medicare Part B.

Reimbursement for inhalation drugs was shifted from a formula based on AWP to ASP and resulted in cuts up to 90 percent. What was a nice business line for some providers was obliterated.

In spite of these big blows, we have seen industry profits holding steady until the last few months. So, all of those changes that providers have made since 2003 have paid off very nicely. And the questions from the daydream are answered: Don’t undo what is working.

The facts confirm that shifting product and payer mixes, process changes and the adoption of technology have not only kept our industry afloat but that providers can and will adjust to a changing environment.

The facts confirm that making companies more efficient, as it has been in the past, is the best defense that can be mounted against future reimbursement cuts.

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Wallace Weeks is founder and president of Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. You can reach him at 321/752-4514 or [email protected].