Deep Cuts for Medicare Reimbursement Rates Threaten Rural America

Congress Needs to Pass Legislation to Pause the Latest Rate Reductions for More Study

Seniors and people with disabilities who depend on home medical equipment in rural communities and other less densely populated areas are at risk because of deep Medicare reimbursement cuts of 50% or more for many commonly used items such as wheelchairs, oxygen, nebulizers, CPAP machines, walkers, enteral nutrition, specialized beds, diabetic testing supplies, and more.  You can see examples of these cuts by region here.

These are the products that allow people to remain at home and lessen the need for more-costly emergency room visits, nursing/rehab stays, and other clinical interventions.

Competitive Bidding Pricing – Without the Chance to Actually "Compete" – Now Forced on Rural & Non-bid Area Home Medical Equipment Providers

The cuts come from the Centers for Medicare & Medicaid Services’ (CMS) decision to take prices derived from their badly-designed bidding program for home medical equipment designed for use in urban areas and apply them to rural areas and other areas around the country.  However, home medical equipment providers in rural areas:

  • Have no input in setting these prices, unlike companies in bidding areas
  • Cannot gain any market share by winning bids, unlike their urban counterparts
  • Face higher delivery costs, in terms of fuel costs and staff time, delivering and servicing home medical equipment to patients spread over a larger geographical area

Congress Has Come Close to Fixing the Issue, But Needs to Finish the Job

Both the Senate and House have passed legislation that would roll back about half of these 50-60% reimbursement cuts so that policymakers have more time to study the effect of these cuts on patients and communities in rural and less-densely populated areas.  However, S. 2736 and H.R. 5210 contained differing provisions, including the length of the study period and the legislative pay-fors.

Congress needs to finish the job before recessing for elections, and pass legislation through both chambers to send to the President.  You can find more detailed information here.

What’s at Stake?

Seniors and people with disabilities are already feeling the impacts as the home medical equipment infrastructure that is a lifeline to rural America faces these unprecedented issues.  Here’s a couple recent examples from the media:

MassachusettsMedicare Cuts Affect Nantucket Oxygen Supply

Illinois170 Year Danville Business Closing

… and here's a sampling of what home medical equipment providers themselves are telling us:

Alaska – We only have 29 miles of highway from north to south, but when we cover the outlining area, we must take the ferry which is $382.00 round trip plus you must stay overnight in order to get back. In the past, we had been going over to Prince of Wales Island once a month to provide service, but that is now out of the question.

At this time, we are not taking on new patients unless they pay up front for services. And we are in the process of eliminating some of our patients we have had for years. I now bill non-assigned only and I am considering closing the doors for good as we can no longer continue with all the cuts we have already received. 

Florida –  Today we had to let go of the very first employee that we hired in March of 2002. It was truly a sad day for us. Next month we will be reducing our contribution to employees’ health insurance, it was 100%. We will also be cutting pay and/or hours if the January prices are not reinstated in a timely way. Finally, we will be eliminating our retirement plan at the end of this year…. this is only the beginning of our cuts to our employees.

Florida – We are no longer taking any new Medicare oxygen patients.  This is because the reimbursement is so low and we have such a hard time to collect money from Medicare for oxygen patients we will no longer be taking Medicare oxygen patients. We as a company are struggling to survive.  I am not sure how long we will be able to operate at these rates. 

My company takes care of over 4,000 patients; about 350 oxygen patients.  If I went out of business most of the oxygen patients would be on their own.  No other company would pick them up because of the way Medicare pays for oxygen 

What our government is doing trying to save money like this is like saving money by not changing the oil in your car. Yes, you’re saving money at the moment but down the road you will pay significantly more because you choose to save money that way.

Georgia – Through the series of cuts over the last years/months we have reduced our service area from 27 counties to 4, office locations from two into one and most drastically our staff from 34 full time employees to 3 full time 1 part time.  Over the last 18 months, we have taken in patients from two other local rural providers that have closed their doors under abandonment. While this might be seen as a positive, keep in mind that our reimbursement on these patients was cut in half. We are working twice as hard for the same amount of money.  One doesn't have to think long or hard to see the end result of these egregious cuts. Once the patient has no access to home care, the costs will spiral out of control. Spend an easy nickel with me, or spend a hard dollar with the hospital. 

Idaho – I am trying to figure out how to stay in business. My plan is to at least make it until September and see what is done to fix this mess.    

A 50% pay reduction on oxygen and %58 pay reduction on CPAP and supplies means I have to work to provide good customer service while working smarter to do it.  It is really hard.

I am going to work at 5 or 6 in the morning and working till 6 or 7 at night.  I am being paid 40 percent of what I was paid a year ago and now I have to work even harder to keep the money I made earlier.  I am fighting so hard to stay in business and on days like today I wonder if it is worth it.  

Kansas – Being in a rural area, the distance to travel is just not feasible with the new pricing. We have cut our home visits in half and we are considering closing our second location which will force us to check equipment even less and drastically reduce what we deliver.

Kentucky – if Medicare wants to cut providers with Oxygen Reimbursements rates this ridiculously low, then I would like for them to consider not capping.

Our staff is working very hard to obtain less than what we were obtaining in last year’s reimbursements. Our company has taken over 300 more oxygen patients than years prior, but considering the cost of the equipment, maintaining, clinical and billing staff we will be struggling to provide at this rate.

I know Medicare is comparing with competitive bids when making these cuts. I also know that some providers gave ridiculously low bids in hopes to increase revenue somewhere else.  

Kentucky – I am working at least 80 hours a week already and with the cuts to Medicare I am facing having to reduce my employees’ hours so that we can stay in business and that will add more hours to me. 

I am in rural Kentucky and the majority of the customers I serve do not have any money to pay for the equipment they need.  They are scared and worried.

I have cried and worried since the new cuts hit in July 1st.  I have owned my business almost 9 years and it is a real struggle to stay afloat.  We have started petitions in our areas and the beneficiaries are really scared.  I had one woman in particular when we told her what was going on she cried because she didn't know what she is going to do.

I had another customer that is on 5 liters of oxygen that I provided a motorized wheelchair too.  He was asking me who he could get to bring him oxygen as the local DME company had told him they were no longer providing oxygen in his area.  Our beneficiaries need us! 

Louisiana – We have quit putting out any wheelchairs manual or power.  We are not doing straight canes on Medicare anymore so we have old people using broom sticks as canes—how safe is that? I guess Medicare can pay for a broken hip.

We have already lost two employees that have families and will now draw unemployment on our government.  We used to be a big supporter to schools and civic organizations financially, but not anymore.  We started this business in 1998 to help the people in this area. We know almost everyone that we go to church with and see them in Walmart or the grocery stores.

New York – The reimbursement cuts have forced us to look at our whole business model and diversify our business in a way that will enable us to still maintain a home medical equipment division.  The changes have forced us to evaluate all product lines and services and outline what products/services can still be provided on an assigned basis and which ones cannot. 

Quality products and services are necessary for positive outcomes.  Substandard products that don't hold up will not only cost businesses more in the long run, but will also lead to a poor reputation.  Ultimately this will also cost customers more out of pocket expenses when a warranty is exhausted and the policy doesn't allow for a replacement for "x" more years.

Oklahoma – We live in a rural area in southern Oklahoma where the average town has a population of less than 800 people and in some of our counties only have 3,500 people with most of them having low income, and depend on Medicare and Medicaid.  Three weeks ago we delivered oxygen to a gentleman that was 72 miles one way to his house at 9 PM.  The home was in these southern Oklahoma hills with no streetlights, dirt roads and poor conditions. Our delivery tech almost fell through the porch floor when he stepped upon the patient's porch. 

What is our government thinking?  Why are they wanting to cut their lives short by refusing to pay for their services after providing so many years into their Medicare system.  These rural reimbursement rates are so low, that you cannot deliver more than 20 miles in any direction from your store locations.  In the past, we have delivered 120 miles one way and knowing that we were not making that much, but we did it because of our compassion for our elderly and the need to take care of them, we cannot do that anymore.  Washington DC has forgotten the compassion of these elders who lived and served this great country through many wars, depressions and economic downturns, but they did not give up on this country.

Now I am forced to take non-assignment on walkers, beds, bedside commode's and ask patients to pay the difference, when many of them cannot afford to pay their electric bill.  We are seeking out cheaper products because transportation, labor and billing cost consumes our reimbursement rates.  How can CMS sit there in Washington DC and say they have no complaints to speak of, and these cuts are not hurting our elderly.  CMS needs get out of Washington DC and come visit our people!  No CMS, they're not going to call you, for most of them do not have cell phones or computer and if they did, they would not have the Internet service in these back woods of southern Oklahoma.   

Tennessee – We're moving on to other payors and just dropping Medicare almost across the board.  No more dealing with beds, manual wheelchairs, or walkers for us anymore, thank the Lord.

Texas – July 5, 2016 marked my 20th year serving the needs of Home Medical Equipment and supply customers. Due to the competitive bidding debacle, I’ll pack up 20-years’ worth of memories into a box and see what is next. The 20 people that hold full time jobs with me will have to be terminated. They won’t be alone, as all private HME companies serving rural areas will go out of business and lay off their employees. There will be thousands of them across the State of Texas.

That won’t be all! Texas has some of the best independent wholesalers of HME medical equipment in the nation. Those folks will be losing their jobs as well. I will land on my feet at some point. My prayer is that my employees have gained skills here at my company that they can use to serve their community and earn a living for their families elsewhere.

 I’ve served hundreds of thousands throughout my career and I can hold my head high knowing I made a difference in their lives. I know when we initiated Oxygen Therapy we saved CMS money while saving the patient’s life. I’ve seen wounds as big as pie plates and if we hadn’t been able to initiate a Wound Vac and a Pressure Mattress those patients would have died or lived out their days in an institution costing CMS tons of money and costing the patient their life.

Like I’ve said a thousand times—we could set up a hospital in the home for a fraction of what it costs to be hospitalized. We can provide years’ worth of Oxygen Therapy for what it costs for a couple days of being in the hospital. Not anymore. 

The saddest part of this is that these patients and customers we serve are losing the most formidable and economical rural safety net we have as a country. Metropolitan areas won’t be hit as hard. Those Metropolitan areas have massive populations that make the math work in their favor. As usual, It’s rural Americans that are about to be taken to the woodshed, so to speak.

Texas – We serve the entire east Texas area.  Many of those clients reside in rural areas and fall at or below the poverty line.  The vast majority of them subsist on fixed incomes in the mid three figure range.  In the past, we have been profitable enough to provide hardship alternatives to those truly in need.  In today’s Medicare environment, there is simply no money available to underwrite these folks, so clearly in need. 

West Virginia – We are giving them information to contact their congressmen and senators and also telling them to contact Medicare and Medicaid as they were the ones saying that these new prices would cause no problem.

We are no longer taking assignment for walking aids such as rollators, and walkers/wheeled walkers. The problem in our area is that most people are on Medicaid or Medicare Medicaid. With these patients we are making a $12 gross margin which makes it impossible to bill and cover costs much less make a profit. We are instituting not taking assignment on semi-electric hospital beds for that same reason.

We have been forced to close 2 stores, and we were the last company in one of those areas, so now people are left with driving 45 minutes to an hour to obtain medical equipment and supplies.

CMS said they had no complaints to speak of. The problem that we have found in our area is that if these seniors cannot get needed equipment they just do without and go back into the hospital sicker and quicker. They are not as sophisticated as CMS thinks they are. Anyone who has called the Medicare hotline can attest that it is easier to give up than fight in their weakened state.

Wisconsin – With a loss of 15 jobs and the closure 4 out of our nine medical equipment showrooms here in Wisconsin, you would think it is the result of an economic downturn or a slowdown in our industry.  It’s neither, however, the reality for our seniors on Medicare is less access to care, reduced quality of care and higher out-of-pocket costs.

We have closed showrooms in Johnson Creek, Portage, Platteville and Madison, a significant inconvenience for countless seniors who now have to drive farther.  Seniors in rural areas tend to be much older in age than beneficiaries in urban areas, which makes longer travel times that much more significant.  Further, as a result of the cut backs our business has made to remain sustainable, our stores have limited product offerings, which means seniors who are able to get to a store have fewer choices.

Without access to quality products and quality service in rural communities, many patients will be required to stay in hospitals longer, costing the government more. 

Home medical equipment is not where Congress should focus its efforts to save Medicare dollars.  This flawed process finds savings on the backs of rural seniors who need these medical services.