Medicare change is fatal to local business
Debbie McRackan was devastated when she heard that Pat Grimes Inc. would close its showroom today due partly to reductions in Medicare reimbursement.
The physical therapist for the Spotsylvania County school system has relied on the small, family-owned business at 2303 Jefferson Davis Highway for medical supplies, equipment and service for students for a decade.
“There are other people who will supply our kids with equipment, but to think that they’ll give the same service as Pat Grimes is ludicrous,” she said.
The company has been supplying the Fredericksburg area with such things as wheelchairs, walkers and oxygen tanks since 1983, when the late Pat Grimes, a respiratory therapist, noticed a need and began selling supplies and delivering them in her station wagon. Last year alone the company serviced approximately 2,000 customers and completed 18,746 transactions.
Over the years, the business, which grew to include her son-in-law and grandson, developed a reputation for both selling and servicing medical supplies and equipment. But as health care costs have risen, reimbursements to suppliers have gone down to the point where small companies such as theirs are struggling to survive.
It didn’t help matters when increasing incidents of fraud in the industry, especially by scooter stores, caused Medicare to require suppliers to be accredited back in the 1990s. Insurance companies began requiring the expensive and time-consuming process, as well.
“Medicare thought that mandatory accreditation was a way to level the playing field, and people who were not serious about being in this industry would drop out,” said Robert Hornbaker, Pat Grimes’ director of patient services. “We thought that was the answer for fraud in Medicare.”
Then Medicare began requiring accredited suppliers to submit competitive bids for the amounts they would charge for durable medical equipment, prosthetics, orthotics and supplies as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
The goal was to replace the outdated prices Medicare has been paying with lower, more accurate prices, according to the Centers for Medicare and Medicaid Services website. But the bids were nonbinding and encouraged low-balling.
When Pat Grimes Inc. submitted a bid in the latest round, it was rejected, even though the bid was lower than what it had previously charged.
“When the bids shook out nationally, the reduction averaged 45 percent, which for our company wasn’t a sustainable number and for most small providers wasn’t sustainable,” Hornbaker said.
The American Association for Homecare—which represents health care providers, equipment manufacturers, and other home care organizations—has called the bidding program “unsustainable,” and said on its website that it “is having disastrous effects on both providers and their patients.”
According to the association, the program is forcing home care providers to lay off employees or, in some cases, close their business. This, in turn, “reduces access to care, patient choice and quality of care for seniors and people with disabilities,” an article on its website said.
Pat Grimes, for example, was on-call 24/7 for patients with chronic obstructive pulmonary disease who were being discharged from the hospital and needed an oxygen tank. Paul Humphreys, Grimes’ grandson and the company’s director of rehabilitation services, said that he knows of some businesses that are refusing to provide tanks if called after hours because the profit margin is so slim.
“They’ll say, ‘I’ll be there in the morning,’” he said. “The hospital has to make a decision: Do we let them stay for free until then? So they get sent home without life-sustaining equipment.”
Pat Grimes Inc. coped with the loss of Medicare reimbursements at first by downsizing and branching into other areas, such as selling wrist splints and masks for patients suffering from sleep apnea.
Then Anthem and Blue Cross followed Medicare’s lead and reduced their reimbursement rates. That meant that the company would receive less than expected, even on items with rental contracts that began prior to the reduction.
The company suffered an additional blow in May when Kirklyn Humphreys, Grimes’ daughter and the company president, died.
The 21-member staff, many of whom have worked for the company for years and several of whom are married to coworkers, were notified during a two-hour meeting several weeks ago that the company would close.
“Then we reached out to other suppliers and said, ‘Hey, can you help us with patients?’ We’re not going to take equipment away from anyone, the No. 1 is oxygen, until we can line up other suppliers,” said Carrie Humphreys, Paul’s wife and the company’s billing specialist.
McRackan said that she’s going to miss having Humphreys, a registered physical therapist, come to the seven schools where she works to help assess students’ needs and select such things as the correct wheelchair or walker, and later service the equipment.
Customers will now have to switch companies. including some in Richmond, Washington and Maryland, which will likely find it isn’t cost effective to send someone to the Fredericksburg area to provide the same service, she said.
Francine Porter of Spotsylvania County, who has been a customer for 14 years, said that’s she’s still in shock about Pat Grimes closing.
“I do not imagine it will be possible to find another company with such heart,” she said. “Paul Humphreys is the kind of guy that has worked on his own personal time, donated unused parts for my son’s wheelchair.”
Porter said Humphreys also helped create a special button-operated screwdriver so her son could help fix his wheelchair instead of being bored while the work was being done.
“What company does that?” she said.
Congressmen Pat Tiberi, R–Ohio, and John Larson, D–Conn., introduced a bipartisan bill on June 19 that would help reform the Medicare bidding program. It would require state licensure and a surety bond of at least $50,000 for each area in which the entity bids.
The American Association for Homecare is encouraging its members to ask their representatives to support the bill, but so far it has not passed the House.
Cathy Jett: 540/374-5407