Medicaid Multiplies Provider Woes; Bringing Back the Ice Cream Social

ATLANTA — HME providers in several states are working to
fend off threats to Medicaid reimbursement, and one state
association, while it hasn’t abandoned the tried-and-true visits
and phone calls to legislators, has hit on a cool way to sweeten
the deal.

The Midwest Association of Medical Equipment Services, in
conjunction with Waterloo, Iowa-based VGM Group, will hold an ice
cream social Feb. 3 at the Iowa state capitol in Des Moines. The
point: to convince members of the Iowa legislature that state competitive bidding for
HME is not desirable or workable.

In mid-December, Iowa Gov. Chet Culver released his budget
proposal outlining sweeping reforms and cost-saving measures to
pare state expenditures. One of those measures was competitive
bidding for medical supplies. Culver’s proposal says the state
could save $500,000 the first year and $4.1 million over five
years. The issue is expected to be a point of discussion sometime
after the second session of the 83rd Iowa General Assembly convenes
today.

Rose Schafhauser, executive director of MAMES, said that since
Culver’s proposal, “We’ve had our members out talking to their
state [legislators], and the senators and representatives are not
aware that that was included. The legislators don’t think anything
is wrong with competitive bidding, so we are explaining how we work
with our patients and why this is just not good policy.”

While the meetings have been “very positive,” Schafhauser said,
the ice cream social seemed a good way to further press the point
and will allow HME stakeholders more “face time” with their
legislators.

The state’s Medicaid providers have already absorbed a 5 percent
reimbursement cut as of December, she said.

In other states:

Florida

Even as two private payers in Florida — Blue Cross Blue
Shield and Physicians United Plan — have dropped all HME
contractors except one each, providers in the state find themselves
facing another threat, this time from Medicaid. The state is
considering instituting competitive bidding for incontinence
products.

“We have been working feverishly for the last several months to
create a new incontinence fee schedule. It has yet to be
implemented,” said Sean Schwinghammer, executive director of the
Florida Alliance of Home Care Services.

Schwinghammer said legislators may find competitive bidding for
incontinence products — and indeed, Medicaid consolidation
through competitive bidding or a closed bid — very
attractive, given that they are mandated to produce a balanced
state budget and there is no stimulus money this year.

“They believe they can save money by reducing the amount of
providers they need to monitor,” Schwinghammer said, “and also,
they can likely negotiate a cheaper price because they increase
someone’s volume.

“That theory seems very sound on paper. They believe it is
simply a delivery service — you drop off equipment and walk
away. They don’t understand how the fundamentals of this business
work.”

Schwinghammer said FAHCS has a task force that is trying to
educate legislators about HME whose members are pleading for the
state at least to try the new fee schedule.

“Our argument is to allow this [new fee schedule] to work before
you make a change,” he said.

Massachusetts

The state Division of Health Care Finance and Policy is poised
to slash MassHealth (Medicaid) reimbursement for HME in an effort
to save $2.84 million a year. That has generated the ire of such
providers as Charm Medical Supply, a Pembroke, Mass.-based company
with 6,000 patients. Charm joined more than 100 other HME providers
and patients at a rally in mid-December to oppose the proposed
cuts.

Charm President Peter Tallas told NECN TV the cuts could destroy
his 10-year old business and throw 43 people out of work. His
company, he said, gets 65 to 70 percent of its revenue from
Medicaid.

If the cuts go through, he would have to cut customer service
“in half, probably more,” Tallas said. And his clients throughout
the state would likely see a significant drop in the quality of
their products. “We’d ultimately have to substitute some product of
lower cost, which potentially leads to negative health outcomes for
customers, as well.”

All in all, the proposed cuts could cost him up to $600,000 a
year, which is “far more than we earn annually,” Tallas told the
Boston Herald.

Nebraska

Iowa may have the ice cream social, but Nebraska got the
sweetheart deal — at least, so it seems. In return for his
favorable vote for the Democrats’ health care reform bill, Sen. Ben
Nelson, a Nebraska Democrat, won an exemption for his state from
having to foot the bill for Medicaid expansion. Other states would
still have to pony up their own funds.

In a comment on the deal, California Gov. Arnold Schwarznegger
said, Nebraska “got the corn; [California] got the husk.”

The backlash from other states’ senators, both Republicans and
Democrats, has prompted Nelson to lobby for the federal government
to pick up the tab for Medicaid expansion for all the
states. In a statement Jan. 7, Nelson called the deal a
“placeholder” and said “at the end of the day, whatever Nebraska
gets will apply to all states.”