What is grandfathering?
Medical equipment providers who were not awarded contracts under the Medicare Competitive Bidding program may choose to keep their existing patients. The term given to this arrangement is “grandfathering”. A provider grandfathers their patients by continuing to provide the rental equipment and service to a patient who starts service before the new Medicare program begins (on 1/1/2011).
Wouldn’t all companies keep their patients?
Not necessarily. You see, when the program goes active in January there is an average 32% cut to reimbursement for the rented items. This applies to both Medicare contracted companies and those who are grandfathering patients as non-contract suppliers. This steep of a cut, coupled with the inability to take in new patients will devastate non-contract suppliers. Therefore, companies may opt to exit the Medicare business before the program begins and not grandfather their Medicare patients.
Providers Option
It is the current equipment provider’s option whether to grandfather their patients. According to Medicare’s rules the provider must choose to grandfather all or none of their patients. Providers may not select some patients to grandfather while refusing the same arrangement to others.
The provider must give notice to their patients as to their decision to grandfather.
Patients Choice
Ultimately, it is the patient’s choice as to what company provides their home care equipment. A patient may choose to accept the grandfathering arrangement, or may opt to change to a contracted provider when the program begins (or before).
Applies to Rental Items Only
Only patients who have rental items, such as oxygen and hospital beds, qualify for grandfathering. Supply items that are purchased must be provided by a contracted supplier once the program begins. Supply items consist of CPAP masks, enteral nutrition products, and mail order diabetic testing supplies.
Oxygen Patients
Oxygen patients will be particularly problematic in a grandfathering arrangement. Since these patients require frequent visits it’s unlikely that non-contract suppliers will be able to maintain their existing service level. When you factor in a 32% cut coupled with the inability to accept new business it has to affect service. Therefore, we are advising prescribers to follow our suggested best practices and refer all new patients to Medicare Contracted Suppliers beginning now.
Power Chair Repairs
Power chair repairs will be affected by this program, even though it is not a directly bid item. You see, the original supplier is responsible for warranty repairs to power chairs within the first year. After that, Medicare covers maintenance and repairs.
Most replacement parts were included in the bidding program. Therefore, should a patient’s power chair require Medicare covered repairs; it must be taken to a contracted supplier.
Diamond maintains a full powerchair and scooter repair center with factory trained technicians for all major brands.
Outlook for Grandfathering
We expect that most companies will opt to grandfather their Medicare patients. However, we’re not sure if this will be the best scenario for the patient. As mentioned above, a non-contracted Medicare supplier will face a 32% cut to their reimbursement. That will be compounded by not being able to accept new patients.
Further, the existing patient base will not remain static. Patients will come off of service for various reasons (hospital admission, improved condition, expiration, rental caps, etc). Therefore, the base of patients will continually decrease.
As this scenario plays out, we expect services to patients to be affected (oxygen deliveries for example).
Therefore, we encourage all prescribers to begin referring their patients to contracted suppliers now to avoid any potential issues.
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