Thursday, June 25, 2009

HALIFAX, Va.—“It’s health-care-reform-crazy in Washington this week.” That’s how Wayne Stanfield described the Capitol Hill wrangling over reform proposals, which has risen to fever pitch as congressional committees with jurisdiction over health care issues scurry to figure out how to pay for the overhaul. 
 
The Senate Finance Committee is still working on its draft reform bill, which insiders have said will likely include further cuts to oxygen as one way to shave costs.
 
On Tuesday, said Stanfield, president and CEO of the National Association of Independent Medical Equipment Suppliers, providers got a jolting glimpse of just how deep those cuts might be in three Wall Street analysts’ reports. The reports, on Clearwater, Fla.-based Lincare, one of the nation’s largest oxygen providers, tossed out some Finance Committee behind-the-scenes scenarios.
 
A report from Deutsche Bank said Lincare might be the only respiratory service provider capable of surviving the more than 30 percent cut the Finance Committee is considering. Such a cut would reduce the monthly reimbursement for oxygen concentrators by about $80, increase the payment for portables by $20 and eliminate the 36-month cap. 
 
The remaining public companies would not be able to withstand the cut “without extreme duress,” the report continued, and “smaller mom/pop entities … would likely fare even worse.”
 
Another possibility reported by Soleil-Pomeroy Research would be to spread current oxygen cap payments over a longer time; in other words, taking the amount of money that Medicare currently pays for stationary concentrators and spreading it over 60 months instead of the current 36. According to the investment report, “this would in theory reduce monthly reimbursement from $176 currently to $105.”
 
However, the report continued, Congress is also said to be considering increasing the add-on payment for portable oxygen to $77 from $32, which should help to “partially offset the adverse impact of the near-term reduction to payment for the stationary equipment.”
 
A third report from SunTrust Robinson Humphrey noted the delay of competitive bidding until January 2011 could increase the risk of a cut in 2010. With many providers already struggling under the 36-month home oxygen cap, the report said, any additional cuts could lead to an exodus from the market, driving growth opportunities for Lincare.
 
The SunTrust analysis said “a staggering 60 percent” of respondents in a recent survey of oxygen providers would consider exiting the business if further cuts are implemented.
 
“We don’t know where these reports got their numbers,” said Stanfield, adding they could have come from leaks inside Congress or could be Wall Street sales pitches.
 
What is certain, according to a NAIMES message, is “that if these plans go forward, the 30 percent-plus cuts to reimbursement will forever change the provider landscape and eliminate most small oxygen providers, leaving Lincare to be the big winner in both the oxygen market and competitive bidding.”
 
Although it is unclear how serious any of the plans might be, Stanfield said, “the figures that are talked about in these reports are at the point where most providers couldn’t remain profitable. Now that these numbers are out in the public, we can’t take the risk of waiting to see what happens. We must respond,” he said.
 
NAIMES and other industry groups have urged all HME stakeholders to call their state’s senators and representatives about oxygen payments.
 
For federal legislators’ contact information, go to  www.congress.org or call the U.S. Capitol switchboard at 202/224-3121 for direct connection.