WASHINGTON—The American Association for Homecare (AAHomecare) released a comprehensive survey report detailing the impact of Medicare reimbursement cuts for home medical equipment (HME) suppliers that took effect on Jan. 1, 2024. The survey, conducted in July 2024, gathered insights from more than 100 HME suppliers across non-bid, non-rural areas who have a first-hand look at the impact of these cuts revealing widespread financial strain, service reductions and potential closures that threaten access to care for millions of Americans.
“After six months of living with significant reimbursement cuts, many home medical equipment suppliers are nearing a breaking point,” said Tom Ryan, president & CEO of AAHomecare. “Lower reimbursements even as operational and product costs continue to rise are leading many to limit their offerings, reduce service areas, lay off staff, close locations or even consider going out of business altogether. Those decisions are difficult for suppliers to make because they know the effects they will have on seniors and people with disabilities or chronic conditions who depend on HME every day.”
Findings from the survey detail the changes companies are making or considering in the wake of the January 2024 rate cuts:
- Business closures and contractions: The survey reports that 46% of respondents have reduced their service area, while 17% have closed or are planning to close locations. Alarmingly, over one in 10 suppliers are considering shutting down entirely due to unsustainable reimbursement rates.
- Workforce reduction: More than half (53%) of the respondents have had to lay off staff or reduce their workforce, compromising their ability to provide essential services.
- Restricted access: More than 25% of suppliers report changes to if/how they will provide HME and services to a Medicare beneficiary, of which 14% no longer serve Medicare beneficiaries for at least some product categories.
- Product and service limitations: 65% of respondents have cut back on the types and quantities of products available to Medicare FFS beneficiaries, while 12% have reduced patient services.
- Financial strain: Over a third of companies are relying on personal savings from owners to stay afloat, with 35% of respondents reporting that they are personally financing operations.
In Their Own Words
Here’s a sampling of comments from suppliers who shared open-ended responses on the impact of the cuts (more quotes available in full report):
- "I have been in business 31 years, and we love our community and to serve our Medicare population, but sadly it has come to a breaking point."
- "As the owner, I have taken out personal loans to keep things going. The business has borrowed $30,000 from me, and I see no immediate way to pay myself back. I have also cut my salary to mitigate the losses. I will have to consider closing. I am only one of two DME companies in our entire county. This area would be devastated."
- "We have had to turn people away because the equipment/supplies their doctor orders cost our company more than our reimbursements."
- “Devastating. My costs have escalated, and reimbursement decreased. This is not sustainable… It is becoming impossible to stay in business. Margins are not there.”
Ripple Effects
The survey is focused on the impact of Medicare cuts for suppliers serving patients in non-competitive bidding (non-CB)/non-rural areas, but also cites the effects on other payers that are directly tied to or influenced by the non-CB/non-rural rates. Seventy-nine percent of respondents reported cuts to rates for Medicare Advantage beneficiaries they serve, 51% have seen cuts for commercial payers and 34% are experiencing cuts for Medicaid. This cascading effect threatens the stability of the entire HME infrastructure, potentially leaving millions without access to essential medical equipment and services.
Call to Action
The findings underscore the urgent need for policymakers to restore the relief provided by Congress for HME suppliers in non-bid/non-rural areas in 2020. AAHomecare urges Congress and the Centers for Medicare and Medicaid Services (CMS) to act this year to prevent further damage to the home medical equipment sector and the millions of Americans who depend on high-quality, home-based care.
Find the survey report and related materials at aahomecare.org/impact.
