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Stagnant Medicare rates strain home care equipment industry

Supplies like ventilators necessary for people wanting to remain at home
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(stock photo)

Elizabeth Smith requires two ventilators, three suction machines and a cough assist machine due to her medical condition, which she is able to use at home.

Smith, a 48-year-old Loveland resident, was diagnosed with Lou Gehrig’s disease, also known as amyotrophic lateral sclerosis or ALS, in 2005. The disease weakens muscles and impacts physical function, requiring a high level of care.

“With the level of care that I need, I would not last two seconds in a facility or rehabilitation,” she said.

Instead, Smith has caretakers and home medical equipment that make her day to day possible. But homecare providers — the businesses that equip the 4.5 million people like Smith who receive health care at home — are struggling to stay afloat.

Roxanne Venard and her son-in-law Joshua Thompson are the president and vice president of operations at Ascent Respiratory Care, a homecare company specializing in mechanical ventilation serving people across Colorado. Pandemic-induced supply chain issues, inflation and outdated Medicare reimbursement rates have challenged theirs and several home care businesses.

Medicare rates started being set by a competitive bidding process in 2011, though Medicare paused the program in 2018 due to the inaccurate rates and loss of patient access to equipment. Reimbursement rates have not been significantly adjusted in more than six years.

“The rates are set, and those rates haven’t kept up,” Thompson said. “The benefits have been underfunded for several years. They haven’t adjusted rates to keep up with inflation and the supply chain issues that we have. The costs continue to go up, and it’s harder to get equipment.”

Thompson explained that manufacturers are struggling more and more to get their hands on raw materials as shipping costs go up. Eventually, those costs are passed on to distributors like Ascent.

“We can’t pass that along to insurance because we’re contractually obligated to only get what the insurance companies will pay,” Thompson said. “Medicare basically sets the rates and everybody goes from there.”

That’s if the companies can get the equipment at all. While Ascent’s patient wait list for home care equipment has been about a month to six weeks out, larger companies might have lists extending out six or more months.

A 2020 survey for the American Association for Homecare found that 500 home care providers were reporting price increases of more than 30% with almost every company experiencing equipment delays. The survey also said since competitive bidding began in 2011, there has been a 36% reduction in suppliers.

Without a reimbursement rate that makes carrying products feasible for companies, some have stopped carrying certain equipment. Rural areas might not have any access to home medical equipment at all.

“There’s companies I’ve heard of that have certain product lines they just don’t carry and won’t carry anymore because the reimbursement just isn’t there,” Thompson said. “So that becomes an access issue for the patients.”

If something doesn’t change, Venard and Thompson said the issues could mean a longer wait list for their business and more barriers to access for people wanting to receive their medical care at home.

“If they don’t have access to that, they’re going to have to have another point of care,” Venard said. “Instead of the home, they would have to maybe be admitted to a skilled nursing facility or what we call a hospital backup unit, or maybe they get so sick because they’re not using those types of devices that they end up in a hospital.”

One piece of legislation that could help providers like Venard and Thompson was introduced this year, H.R. 6641, could provide a 10% increase in rates if passed.

“That would just basically take care of the inflationary pressures that we have,” Thompson said. “In order to service patients and in order to keep in business to serve those patients, that’s the biggest thing that needs to be done is to fix the rates that have been so badly cut over the last decade.”

Thompson added that home care saves taxpayers money, as it can cost significantly less than nursing homes. Along with that, AARP has consistently found that more than three quarters of adults over 50 want to remain in their homes for the long term.

For Smith, home care is the only way she wants to live, making companies like Ascent an indispensable part of her day to day life.

“Having access to home medical equipment makes life in my own home possible,” Smith said. “I would not want to exist otherwise.”