KNOXVILLE, Tenn. — Tennessee home medical equipment providers have a message for the newest company to administer the state's Medicaid benefits: "It ain't going to work."
Providers in the state who work with BlueCross BlueShield got a firsthand look at the proposed fee schedule under CareCentrix, the Connecticut-based company taking over the administration of TennCare benefits for the Blues' subsidiary and current administrator, Volunteer State Health Plan.
"The first thing you look at is the fee schedule. It ain't going to work," said one longtime provider who asked not to be named.
"There are some payments that are half what competitive bidding rates are, let's put it that way," confirmed Randy Wolfe of Lambert's Health Care in Knoxville, referring to 32 percent lower Medicare rates resulting from the Round 1 rebid. "I think they are going to have a hard time finding providers."
Providers were notified three months ago that BlueCross BlueShield, in an effort to staunch a hemorrhage of red ink in Tennessee, was looking to cut costs by contracting with CareCentrix to handle HME benefits for TennCare beneficiaries. TennCare is the state's expanded Medicaid program, covering 1.2 million Tennesseans through three managed-care organizations.
Under the contract, CareCentrix must establish a network of providers across the state. But that could be hard to do, stakeholders said. While BCBS reported average reimbursement cuts of 15 percent, providers said some cuts are quite a bit higher depending on product lines.
Eddie Jenkins, durable equipment manager for Access Family Pharmacy, a full-line respiratory and HME company in Chattanooga, said his company would see some significant cuts. "The majority are 15 to 25 percent cuts, which makes doing business almost undoable," he said.
Contracts, if they are accepted, must be returned to CareCentrix by Sept. 17; the new fee schedule will be implemented Nov. 1. Jenkins said he is losing sleep about whether or not to accept.
"Today, I would say we are not going to participate," he said Wednesday. "But you've got a lot of things to weigh out."
Wolfe said he has diversified greatly in recent years and would not be too affected by the cuts, but he has heard many other providers say they will reject the proposed contracts. Providers, he said, no longer have the luxury of taking on lowball insurers.
"I think the problem is that for many years, suppliers have been able to roll the dice and take some of the low-pay agreements in exchange for market share," Wolfe said. "These types of programs existed five or six years ago and there was an environment for them to work.
"Other plans with better margins subsidized the low margins," he said.
But times have changed, Wolfe pointed out. Companies are dealing with more pressures, more documentation, slimmer margins. "What is happening today is that everybody wants a discount … so there is no longer the opportunity to subsidize an aggressively priced plan."
In a recent study by the Center of Business and Economic Research at the University of Tennessee, 94 percent of TennCare recipients said they were satisfied with the program, a 2 percent increase over last year. It's a strong endorsement, but it may not hold up if providers' predictions prove out.
"Under the new fee schedule, Jenkins said, "you're going to have a bunch of mass-produced, sub-prime equipment. You can forget any kind of deliveries or [respiratory therapists] to the home — you just can't do it."
Wolfe agreed. By carving sizeable chunks out of reimbursement, state and federal agencies are chipping away at the pool of providers. And that will have a severe impact on the accessibility and quality of HME, he said.
"I think it's going to be a bloodbath in the industry for awhile. I think insurance companies will continue to go for the bottom. And providers, as they fall to the bottom, look like they are alive until they are dead.
"When you take away competitors," Wolfe continued, "you lose the ability to negotiate prices as easily. As long as there are a lot of us in the market, it should help insurers, it should help Medicare and Medicaid."
That is not the way the industry is going, however, he said. "The service goes down, the prices go up, the delivery slows down. That's the way we are headed," Wolfe said. "Once we start to lose providers across the board, everybody loses."
And in the end, said Jenkins, it's the beneficiaries who lose the most. "People aren't on Medicaid by choice, and they are going to be the ones who suffer," he said. He dreads having to tell a customer who comes in with a prescription for albuterol and a nebulizer that he can supply the albuterol, but not the nebulizer, Jenkins said, "because your insurance pays less than it costs me."
To keep that from happening, the providers said they are hoping to negotiate more reasonable rates.
"They've got some top people," Wolfe said about CareCentrix's executive force. "They're smart enough to understand."
Concluded another, "If they don't, well, peace be with them. Because it just isn't going to work."
