Medical Equipment Suppliers Feel Squeeze in New Medicare Bidding Process

By Michael Hill

Jerry’s Drugs in Bayonne used to supply Medicare patients with a wide range of products. With changes to Medicare, in order to continue supplying Medicare patients, the company had to submit bids. It won its bid to supply Medicare recipients with walkers and rollators, and now that’s all Jerry’s Drugs supplies through Medicare.

“To win one small group and to lose the rest of the business has been devastating for us,” said owner Michael Bologh. “Business has been down. Revenues have been down. Cash flow drastically reduced and we won the bid.”

Before this new bidding process, Jerry’s Drugs charged Medicare $120 for a rollator. The store’s gross profit was about $40. With the new bidding process, Medicare only pays Jerry’s Drugs $70 for the item, dropping Jerry’s gross profit to $15 — if that — depending on delivery cost.

“Well we’ve lost a lot of customers, so customers that were coming home from the hospital, even the local medical center here and they needed a hospital bed and a pressure mattress and a rollator to get to the bathroom. They get the rollator from us, the pressure mattress from somebody out in Brooklyn and maybe the bed from somebody in South Jersey,” said Bologh.

When Congress and the second President Bush wanted to reign in Medicare spending, they looked at suppliers of medical equipment, demanding suppliers drop asking prices to win bids for a long list of durable medical equipment and beyond. Beyond as in throat cancer victim Bob Walsh’s cans and boxes of nutrition because he feeds through a tube in his stomach.

“I went for a week with no feeding supplies,” he said.

Walsh says when the new bid contracts began last July he got caught in the crack between the old supplier and finding a new one. He says he lived off water and Gatorade for a week until his old supplier Twin City in South Plainfield donated a box of cans.

“It took over a month before they started bringing more than that, maybe two months. I had to go buy it and pay cash for it,” Walsh said.

Eighty dollars, Walsh says, with no reimbursement.

And that’s what a lot of Medicare recipients have had to do if they needed supplies and had to get them from a store that no longer had a Medicare contract for those supplies.

Some stores have gone out of business. Others merged with a partner. For those still standing, like Jerry’s Drugs, the marketing director, Herb Paserman, has struggled with the realities of the government saving taxpayers money.

“It creates a general feeling of a depression,” Paserman said.