Carl Cramer

Once upon a time, there lived a gentle payor called Medicare that cheerfully helped HME providers complete required paperwork (of which there was relatively little) and often cut reimbursement checks within 2 weeks of receiving a correctly filled-out claim. The person who ran the neighborhood Medicare office where claims went was on a first-name basis with providers and frequently had time enough to answer the phone himself.

These things actually happened back in the late 1960s, in the early years of Medicare, the capstone of the so-called “Great Society” programs from President Lyndon Johnson. Yes, those were the good old days and Carl Cramer remembers them well—because he was there. “In the beginning, and for maybe about a decade after Medicare started, it was much easier to work with—you might even go so far as to say it was pretty much hassle-free,” says Cramer, president and CEO of Farrell’s Home Health in Bremerton, Wash. “There were no rigid guidelines to follow. We did not deal with a faceless bureaucracy.”

From Medicare’s debut in 1965 until the introduction of the DMERC system in the 1980s, just about every interaction a provider had with the big new payor was handled through a locally based intermediary organization. These intermediaries were often set up by private insurance companies, but physician groups could do so too. In Bremerton, the Medicare intermediary was operated by a physicians’ bureau, which resulted in the entity having an unusually strong community-service focus.

Simplicity
Medicare rolled out amid enormous fanfare and media coverage. Still, it took a while for patients to catch on to what this entitlement was all about—let alone how it worked. “People would come in and say they were told by their doctor that this or that item might be covered under Medicare, and could we explain this,” says Cramer, who confesses that he was initially as much in the dark about the provisions of Medicare coverage as they were. “Fortunately, our Medicare intermediary was two blocks away. If we had a question, we could give them a call and they would talk us through, or we could walk over and show them a picture of the product at issue.”

The Bremerton intermediary had considerable latitude in deciding whether and why an HME product qualified for coverage, Cramer recalls. “They based their decisions on discussions with the patient’s physician and with us as the HME provider,” he says. “Together, we would all come to an agreement on what was in the patient’s best interest.”

To an extent, the local Medicare intermediary acted as a member of the patient’s care team. However, that did not mean clinicians got everything they asked for. But Medicare in those days certainly bent over backward to ensure that patients were well served, Cramer tells.

Another remarkable aspect of dealing with Medicare was the comparative simplicity of claims submission. “You would just fill out the form, walk it over to the intermediary’s office, drop it off, turn around, and leave. Nothing to it,” says Cramer.

Also, claims were prepared by hand with either a typewriter or, more commonly, a ballpoint pen—both perfectly acceptable to the folks at Medicare. And get this: the collection cycle averaged a mere 14 or 15 calendar days. “Our local intermediary wrote the checks every 2 weeks,” says Cramer. “As long as there wasn’t a hang-up with the claims paperwork, we could expect to be paid right away. I would love to go back to that way of doing things again.”

Winds of Change
Cramer is quick to point out that the cordial, collaborative relationship he and other Bremerton providers enjoyed with Medicare in the beginning may have been an anomaly. “Our local intermediary had an easy and friendly style that was fairly unique in Washington state because our market was so small and isolated, and because the intermediary had been organized by providers rather than payors,” he offers. “If you were dealing with an intermediary in a large urban area, things were probably a lot more formal and impersonal, a lot less community oriented.”

That certainly proved to be the case when the Bremerton intermediary was absorbed in the early 1980s by the Blue Cross-initiated Medicare intermediary out of Seattle. “With the Bremerton intermediary, if we did not cross every t and dot every i, they would call us and say, hey, you need to correct this, and here is how to make the claim a clean one,” Cramer says. “With the Seattle intermediary, we did not see much of that.”

Cramer also discovered that the Seattle intermediary had an appreciably different way of interpreting coverage guidelines. “Seattle went strictly by the book. There was no flexibility. If a patient did not qualify for coverage, then the patient did not qualify. No negotiation. It took a while for us to get used to those differences. But we did, and we adapted accordingly.”

Moreover, claim days-in-receivable jumped to an average of 45. Fortunately, Cramer anticipated this would be the case when the Bremerton intermediary closed, so beforehand he built up sufficient cash reserves to tide him over. As a result, “we barely felt the effects of the change in the collections cycle,” he says.

Competition is Here
Government-subsidized health insurance for the elderly would have been beyond the imagination of most people at the time of Farrell’s founding in 1939, at the tail end of the Great Depression. Then, and for nearly three decades after, family-owned Farrell’s was an apothecary operating under the banner of Farrell’s Pharmacy. During that period, the venture opened two more locations in the Bremerton area and a second pair in Tacoma, Wash.

Cramer joined Farrell’s in 1968 as its general manager, which, given the small size of the enterprise, meant he wore many hats—chief accountant, sales and marketing director, head clerk, cleaning crew leader, the works. Four years later, he and his wife purchased the three Bremerton shops. “We did not want to go off and start a pharmacy of our own,” says Cramer, explaining that Bremerton was a small market and Farrell’s was already a well-known, well-respected name.

A few years before Cramer hired on at Farrell’s, the pharmacy began dabbling in HME. When Cramer bought the business, the HME component consisted of exactly five hospital beds and a half dozen manual wheelchairs. Even so, there was not enough room in the main Bremerton shop to house it all. “We only had a total of 800 square feet,” says Cramer. “What we could not keep in the pharmacy, we stored in the basement of a clinic next door.”

Demand for Farrell’s HME products increased as patients and physicians became better acquainted with and increasingly dependent on Medicare. The surge in orders for basic items gave Cramer confidence to gradually add others, including power wheelchairs, scooters, walkers, walking aids, bath safety equipment, braces and supports, incontinence supplies, diagnostic equipment, lift chairs, and wound care supplies. As time passed, Cramer found it necessary to move the HME section into a building of its own (while pharmacy services remained in place at their original locations).

Focus On Respiratory
Soon, Farrell’s began transforming. “Our main focus today is respiratory,” says Cramer. “We offer oxygen and respiratory equipment, nebulizers, inhalation equipment, and sleep therapy equipment. Additionally, we have one or two respiratory therapists on staff at all times.”

Looking back, Cramer marvels sparked by technology. “Thirty years ago, everything we sold was big and clunky,” he muses. “Now, everything is sleek and lightweight—yet just as durable, Previously, walkers were made of stainless steel and weighed about 15 pounds—a lot for an elderly person to have to work with. Today, that same product is made of aluminum, and weighs a fraction as much.”

For Cramer, the most significant technological advance has been liquid oxygen. “It made a huge change in our respiratory business,” he says. “Liquid oxygen allowed us to focus on respiratory by making it more cost-efficient to serve the oxygen patient, something we could not really do prior to that—and so had to leave to other companies.”

Cramer recounts his first encounter with liquid oxygen: “The original liquid oxygen portable system was called a Lindy Walker. I thought it was a walker, like the name implied. So I finally went to the patient’s physician and asked him where he had seen this product. He showed me a picture of it. And when he did, a light bulb clicked on above my head. Soon we became an official distributor of the system.”

At the time, most Bremerton-area oxygen patients received deliveries of e- and k-cylinders in quantities of eight to 10 at a time. Patients did not much care for that because the bulky, unattractive tanks ate up space in the home. “With our liquid oxygen modality, we gave patients the ability to unclutter their homes and gain freedom of movement,” Cramer says. “All they needed was a single tank and a refillable portable.”

Running an HME operation since the start of Medicare has not been easy. Even so, he has always managed to remain optimistic.

Still, Cramer can not help fretting that the worst may be yet to come. “National competitive bidding will by far prove to be the greatest negative development we have ever faced,” he predicts. “It benefits nobody. There won’t be any cost savings, and there certainly won’t be any gain in quality of products or service. Patient satisfaction will suffer most of all.”

Cramer wonders how his enterprise will fare under national competitive bidding, but he is determined to abide. “I could take the route a number of other small, independent outfits have taken, which is to cash out by selling to a major national or regional chain,” he says, assuring that he won’t. “For me, selling the business is not an option. DP

Rich Smith is a contributing writer for Dealer/Provider.