CMS Strategy to Reduce Provider Numbers Works Too Well

ATLANTA — CMS might want to reduce the number of home medical equipment providers, but its relentless actions combined with those of Congress could also have dire consequences for Medicare beneficiaries, according to HME stakeholders.

"Demand is exceeding supply," said Wayne Stanfield, president and CEO of the National Association of Independent Medical Equipment Suppliers. "The existing providers cannot absorb the number of patients from providers who have thrown up their hands and said, 'I give up.'"

Since the beginning of the year, HME providers have been slammed with a 36-month oxygen rental cap, a 9.5 percent across-the-board DME cut, mandatory surety bonds and accreditation, the resurfacing of competitive bidding and the requirement that ordering physicians be registered in Medicare's PECOS (Provider Enrollment, Chain and Ownership System).

Payment audits have also been stepped up, and numerous reimbursement threats to such HME staples as oxygen, sleep and mobility products continue. The House health reform bill (passed Saturday night) includes 25 sections involving DME, 24 of which would adversely affect providers.

"Medicare clearly wants to do business with fewer providers," said consultant Wallace Weeks of Weeks Group in Melbourne, Fla. "They are putting barriers to entry and to sustainability in the industry. Bonding, accreditation, competitive bidding — all are designed to reduce the number of providers we have."

The actions are working. Hundreds of providers are collapsing under the load and either pulling out of Medicare or out of the industry altogether, according to information compiled by the Accredited Medical Equipment Suppliers of America. AMEPA has reported that in Miami, the number of oxygen providers dropped from 401 in April 2008 to 205 in October 2009. Similarly, the number of oxygen providers in Los Angeles fell from 258 to 120 during the same period, and in California's Riverside County, only 21 oxygen providers were left out of 48 to service patients in a 7,200 square-mile radius.

A recent HomeCare Web poll shows that within a year, a full third (33 percent) of respondents plan to get out of the HME business, and another 13 percent plan to exit Medicare.

While CMS may be dealing with fewer providers, it could also be grappling with more headaches. Already, even before the implementation of competitive bidding in January 2011, access issues are surfacing according to CMS itself.