Diversifying Your Company's Payer Portfolio

Now that the Medicare Modernization Act (MMA) is the law and you are apprehensively awaiting next year's cuts, you should be planning your company's next move.

For many home medical equipment providers, that means honing in on operational inefficiencies, such as refining the office flow. Others are speaking to their congressmen and providing data to AAHomecare in hopes that CMS will repeal the planned cuts. Still another group of providers is busily diversifying their market segment.

The businesses in this group are undoubtedly considering many questions: Should they expand geographically, keeping the same payer and product mix? Should they enlarge the product mix while maintaining their core referral base and payer mix?

It is natural to think about shifting away from Medicare in favor of other payer sources, but be aware that doing so does not always spell enhanced profitability — or fewer hassles. You could be trading one challenge for another. While exploring your options is worth the effort, do your homework thoroughly to determine whether diversification into any new market segment would prove profitable for your organization.

The first step is to examine the various payer choices you have. Some of the payer types HME providers often encounter include Medicaid, private insurance, managed care, commercial and private-pay customers.

Medicaid

A move to increase Medicaid business may require you to accept less money and rely upon Medicaid's prior/reauthorizations (not always electronic) before claims can be filed. Depending upon your state, Medicaid has had more difficulty lately with timely payments and balanced budgets than Medicare and other payer sources.

Further, Medicaid seems fickle in its approach to managed care, routinely switching contractors. Some states are still trying to launch competitive bid initiatives. But providers that work readily with Medicaid know it can be a great payer source if its billing idiosyncrasies are understood. And surprisingly, for select items in some states, Medicaid even pays more than Medicare.

Obviously, the amount of Medicaid business you receive correlates directly with the socio-economics of your environs. If you are considering taking more of this business, visit your state's Medicaid Web site to see what it takes to get paid. Seek assistance from your state HME associations. Carefully scrutinize the rules and requirements, and examine the allowables before engaging in this business.