Consumer Power Has Definite Advantages, But It’s Not for the Faint of Heart
Jim Noland is the founder of Presque Isle Medical Technologies, an Erie, Pa., complex rehab technology providership also specializing in orthotics, prosthetics, accessibility and pediatrics.
Asked whether a complex rehab provider could benefit from selling consumer power vehicles to Medicare beneficiaries, Noland says, “There are definitely advantages of putting power mobility into your product mix. It’s basically been reduced to a commodity.”
Whether or not a provider has that perspective could depend on his or her tenure in the industry, Noland added.
“The interesting thing is that we’re used to making more money on it, and so a person coming into it now will look at the margins and say, ‘Okay, I can take that,’” Noland says. He adds that this reality is due to some manufacturers having reduced their costs “and changed their models so that a person could put out eight or 10 or 15 of these during the year and be able to make money on them. There is some money there, it’s just not what it used to be.”
The Other Side of the Equation
But there is a flip side to working with consumer power mobility, Noland says.
“It’s not for the faint of heart, because you’re really at risk for a lot of things,” he explains.
On a related note, Noland points out that a historically good payor — one serving members of the U.S. armed forces — recently began paying for Group 3 complex rehab chairs on a rental basis.
“And then the client, it was a kid, destroyed a portion of his chair — like, a $400 part,” Noland says. “And now that client, unbeknownst to them, is financially responsible for this part of their chair, which normally would have been covered under their insurance. Because it’s in rental, it’s not covered anymore. And we don’t have to pay for it because it wasn’t something that was routinely worn out, it was something that was damaged by the customer.”
Imagine a similar scenario for a consumer renting a consumer power chair.
“The risk for Group 2 power in any type of power rental is the parts are so expensive that you’re on the hook for replacing them unless the client damaged them,” Noland says. “So if the client damaged them, their out-of-pocket costs are going to be way beyond. If a client gets a wheelchair wet in a rainstorm and blows out their controller, then we’re not responsible for fixing that. The client is now responsible for a $2,000 controller.
“It’s passing on the costs for repairs to the consumer in this type of scenario. It’s terrible.”
Consumers with Nowhere to Go
Another possible problem: “Before, you’d send (a power mobility claim) out for approval; if you got approval you could deliver, then get paid. Now they have these post-delivery reviews where they can take the money back. So when chairs fall into that category, but they have to be repaired, what does the consumer do?”
In those cases, where appeals go up to perhaps the Administrative Law Judge (ALJ) level and can take a year and a half or more to resolve, what is that power mobility device’s status in the mean time?
“There is no remedy for the customer,” Noland says. “So if the chair hasn’t been technically approved at the ALJ hearing and the consumer needs (a repair) approved in the meantime, Medicare won’t approve any repairs for that chair because (the chair) hasn’t technically been approved in the first place.”
Those are definitely situations to think about if a complex rehab provider is looking to work in the consumer mobility segment, Noland says.
“If you’re not a really sophisticated rehab dealer that can think these things through, then you’re going to get your lunch eaten. Because you’re going to put out chairs on a rental basis, and if you don’t have an effective and efficient way to repair them in a well-defined service area, with rules of when you fix it and what isn’t fixed, you’re going to end up losing all your profits by consumers wearing out their chairs.
“If you don’t have a stock of inexpensive chairs that you can rotate out and fix up and keep your costs low that way, you’re going to end up having to buy parts, and if you’re having to buy parts for chairs, you’re just going to lose your entire margin.”
As he points out in the current Medicare environment: “Your margin goes away with just one defective part that happens after the oneyear warranty period.”
This article originally appeared in the October 2013 issue of Mobility Management.