Gas Prices Rise, and So Do Providers’ Worries

ATLANTA–Competitive bidding and accreditation have dominated
the industry’s headlines in 2008, but HME’s newest concern might be
related to pressure at the pump.

Providers are worried about skyrocketing gas prices, and a
disturbing new trend that has surfaced with them.

Last week, a report from ABC’s Salt Lake City affiliate detailed
a robbery at Alpine Home Medical, where the provider was hit for
more than 100 gallons of gas.

The thieves wreaked havoc on the fleet at Alpine–owned by Jay
Broadbent, vice president of Utah’s state HME association–damaging
three trucks by drilling into their tanks and slashing fuel lines.
The results were delayed deliveries, many of which were made from
Alpine staff members’ personal vehicles as the company’s trucks
were no longer drivable, employees told ABC 4.

While the HME robbery remains an isolated incident for this
industry, similar cases in which the thieves drilled into vehicle
tanks have been reported in a number of the country’s major metro
areas.

So far, however, the nation’s providers seem more concerned
about their own fuel pinch.

One provider who has been forced to cut costs is Bob Sherman,
president of the Big Sky Association of Medical Equipment Suppliers
and a respiratory therapist at Valley Medical Supply in
Stevensville, Mont.

Sherman said Valley Medical, which sometimes has to drive up to
100 miles in one direction to provide for its patients, has already
had to modify operations because of rising fuel costs.

”We’ve cut down on unnecessary visits,” Sherman
said. “We’ve made a few changes like that. We’ve had to move
our concentrator checks to every six months, and we used to do them
monthly. We might have to [move them] to every year … You
can’t drive 100 miles one way for one person for $77 a
month.”

Predictions that gas prices could top $4 per gallon by summer is
more bad news, especially for providers who placed bids in round
one, according to Walt Gorski, vice president, government
relations, for the American Association for Homecare.

“When this [gas pricing] issue was raised, CMS said any
contingent for price increases would have to be included in the
CPI,” Gorski said, explaining that round one bidders were
expected to factor in gas prices to their bids. But he wondered how
a provider was supposed to account for the fluctuation in prices,
especially since the CMS contracts last for three years.

“It is virtually impossible for suppliers to have the
crystal ball that CMS wants them to have,” he said. Providers
who won bids based on gas prices in June 2007 are now facing a very
different cost environment.

While his area was not selected as a competitive bidding MSA,
Sherman said he would not bid even if it had been.

“We wouldn’t bid. Not under the current rules. There is
absolutely no way. And a lot of that comes down to gas,”
Sherman said. “I’m not going to be able to invest in my
business [for accreditation and other operating expenses] when gas
might go up to $7 in the next three years and I am locked in at
that bid price.”