Reimbursement has always posed challenges for HME providers. Now with mounting paperwork and continual changes in Medicare regulations, today’s providers are finding reimbursement to be a labor-intensive function that is taking a bite out of their business. Dealer/Provider spoke with Pat Stalek and Ann Greer, co-owners of Rehab Dimensions of West Virginia, a custom rehabilitation business founded in 1997, to get their insights on the subject.

Q What is the reimbursement climate for pediatric mobility equipment?
Stalek: Medicare changed reimbursement codes in January 2003. So, presently, for pediatric mobility equipment, we get 80% of Medicare allowables on the codes. But before, there were no codes under pediatrics. Instead, the equipment was under the miscellaneous category. Typically, we would call and negotiate pricing, and usually get cost plus 40%, which is more profitable than the new allowables. But here’s the really frustrating part; every time Medicare comes out with a new code, it changes our reimbursement. On July 1, the codes are supposed to change yet again and we don’t know how it will affect our bottom line.

Greer: I recently did a cost analysis. Under the new codes, we’re experiencing approximately a 20% cut on pediatric chairs. The problem is that this is a very labor-intensive business. We need to conduct evaluations, develop specs, get authorizations, order the product, fit it, and follow up.

Q If you had only 2 minutes with the leader of the Centers for Medicare and Medicaid Services (CMS), what would you tell him?
Stalek and Greer: First, most providers are not “wheeler-dealers,” who have taken advantage of the system with inflated or fraudulent claims. On the contrary, most of us got into this business for the right reasons and just want to make an honest living. Second, one product does not fit all. In other words, there is a great deal of modification within each diagnosis. Cerebral palsy is one example. That’s why equipment must be customized. Finally, we are experts, not just business people. Our time and expertise should be valued. In fact, we would invite the leader of CMS to come along with us on a few appointments to see what goes into the whole process!

Q Have you had problems with CMS rejecting claims because of “a duplication of service?” If so, what was the problem and how have you handled it?
Stalek: Yes, absolutely. We had a paraplegic client with a chair that was at least 5 or 6 years old. To obtain a new one for him, we sent in to get prior authorization as a medical necessity. Medicare authorized it. Later, when we forwarded the claim, they wouldn’t reimburse it, saying it was a “duplication.”

Greer: We’re handling it the best way we know how—through the system. Essentially, the claim goes to Medicare review and hopefully we’ll be reimbursed at that point. If not, it goes to a hearing, which can take upward of 6 months. Obviously, this sort of problem is terrible for cash flow.

Q What type of mobility hardware and/or modifications are encountering reimbursement problems?
Stalek: That is a new challenge that’s still a bit unclear. Some of the mobility hardware that is used to attach a seat and back to the frame of a chair may no longer be reimbursed. It seems that Medicare is saying the hardware is included in the cost of the chair. However, we use different hardware for different seating systems—and some are more costly than others.

Greer: There is no reimbursement on attendant controls on power chairs because under Medicare guidelines these are “not medically necessary.” The same goes for dual-mode chargers. The allowables on certain high-end electronics have changed. For example, a mini proportional joystick retails for about $2,800, and Medicare is reimbursing $998. Specialty controls on power chairs are priced at $3,200, but the Medicare allowable is just $1,700. Of course, all of this impacts our bottom line, but what we worry about even more is denying access of products and services to our clients.

Q Have you ever thought about including oxygen equipment in your business? If not, why?
Greer: We’re in the custom rehab business and that’s what we do very well. We should not have to do extraneous stuff just to survive. Furthermore, it is expensive to get into the oxygen niche. We’d have to buy the equipment, hire a respiratory therapist, learn the business, and probably add more billing people. It’s quite an investment. And a year from now Medicare could cut the reimbursement on oxygen equipment! We realize some HME providers have added this niche, and some of the profit on oxygen is making up for losses in rehab. If it works for your business, that’s great. But we know it’s just not for us.

Q If you could wave a magic wand and change both government and private insurance reimbursement policies, what would you change?
Stalek: I would make decision makers understand that what we do is not “off the shelf.” The products are customized to the lifestyles of the patients and their physical needs. With this knowledge, I would then encourage them to make much more reasonable assessments of equipment reimbursements.

Greer: One of the key things I would change is what we get reimbursed for. We should be reimbursed not just for equipment, but also for our time and service. Presently, we are not reimbursed for this at all.

Q What gives you optimism?
Stalek: Our clients give us optimism. Seeing the difference our work makes in their lives keeps you going even when the reimbursement system disappoints you. And the 80% of Medicare allowables on pediatric equipment is not written in stone. Maybe they’ll look closer at it and there will be more flexibility in the future. Also, industry associations are trying to help by talking with Medicare. That gives me hope.

Greer: I think the thing that would give me most optimism is to see more industry people going into government and helping to shape policy. It may take HME providers—who become consultants or actually go to work for Medicare—to change policy for the better.

Q Any advice for fellow HME dealer/providers?
Stalek: Carefully assess your market and always stay on top of your accounts receivable.

Greer: Talk to the policy makers on both the local and federal level. Build a rapport and try to educate them. As providers, we are all in a tough position with reimbursement. We don’t want to get to the point where we have to deny services to our clients.

Marianne Matthews is a contributing writer for Dealer/Provider.