For the past 5 Medtrade shows, Sun Capital HealthCare (SCH) has made a strong presence for themselves amongst the DME/HME community. This year will be no exception.
A recent article in HME News highlighted the need for cost reductions from manufacturers of home medical equipment. It pointed out that in the "good" old days, a viable provider strategy to cut costs was to pressure manufacturers. However, in these economic times, that is not likely to be successful since manufacturers are already under intense financial pressure and often working on thin margins. The current era of "competitive bidding" further intensifies that overall cost pressures for HME and DME providers.
A tool that providers can use to cut their costs is to use a Medical Accounts Receivable [MAR] funding program that allows them to take advantage of cash discounts many manufacturers offer in return for fast payment. Reimbursement delays affect the cash flow of providers and consequently providers want to delay payment to manufacturers, all of which combine to put cost and price pressures throughout the system. However, a MAR funding program accelerates the provider's cash flow without adding debt. And by doing so, it can minimize the pressures for cost reductions on the part of the manufacturers. Furthermore, the manufacturer can use an accounts receivable funding program to accelerate their own cash flow from their customers. In either case, given the increasing cost pressures on medical equipment, both customer and supplier could benefit by adding an accounts receivable funding program to their financial strateies.
In an effort to deter fraud and abuse, the Senate has proposed a bill that if enacted would impose a $500,000 surety bond requirement on DME/HME providers.
"It's really out of proportion, because your everyday provider doesn't pose that big a risk to the Medicare program," said industry attorney Asela Cuervo.
In recent years, Congress has passed a law requiring a $50,000 surety bond, but it was never implemented. The industry has argued that even a $50,000 surety bond rule would put some legitimate HME providers out of business, let alone $500,000.
To meet this latest requirement, a provider would have to come up with $10,000 to $20,000 to post a bond and then put up collateral to back it up, according to estimates.
In response to the overwhelming outcry from the industry, government officials have decided to reconsider the measure.
