A Hard Look Ahead

Respiratory care providers and manufacturers are no strangers to the government's curve balls. Providers who participate in the Medicare program have made numerous changes to their business practices over the past two decades and, even with effects of such disastrous legislation as the Balanced Budget Act of 1997, have managed to remain solvent while keeping a focus on patient care and superior service.

However, some industry leaders say provisions in the new Medicare Modernization Act (MMA) could have the greatest impact thus far. Aside from provisions mandating competitive bidding and provider accreditation, additional components of the MMA hit the home respiratory care market head-on. These include a freeze on price increases; a reduction in payment for respiratory medication; a change in the payment model for respiratory meds under Part B benefits to the average sales price (ASP) plus 6 percent; and cuts in oxygen reimbursement to be implemented in 2005.

Although respiratory care providers have always found a way to accommodate patients' needs while meeting payer and physician demands, this time, say the experts, there is little room to absorb the cost — and still remain profitable.

As one provider put it, “It's like squeezing blood from a turnip. You squeeze it so much, and then there's nothing else left.”

SOLID PROFIT CENTER

An aging population that needs supplementary oxygen, health conditions and diseases that require continuing treatment and improved diagnostic practices have made the home respiratory market a solid profit center that continues to increase. But to serve the nation's growing respiratory care needs, providers must take a hard look at operations to adjust to the changes that will govern their business in the new legislative environment.

“You need to think about how you're going to change in order to survive those cuts,” states John Ledek, vice president and category manager for respiratory products, Invacare Corp., Elyria, Ohio.

“These pending cuts could be the tipping point that will push the service out of a lot of the product categories and could potentially eliminate access to [respiratory medications] completely,” says Joseph Lewarski, president of Hytech Homecare, Pharmacy & Medical Supply, Omnicare Companies, Mentor, Ohio.