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Sole Source or Preferred Provider Contracts Aren’t the Solution for Our Medically Complex Kids.

Ohio Medicaid managed care organizations (MCOs) can currently enter into sole source or preferred provider arrangements in an attempt to manage enrollee medical needs.

In this practice, a contract is established between the MCO and a durable/home medical equipment provider, designating the company as the sole provider of products and services prescribed to a patient and eliminating their right to choose.

These contracts have a negative impact on patients, physicians, and payers – which is why we’re advocating for a bill in the state legislature that would prohibit MCOs from entering into these arrangements.

What are the negative impacts?

The practice of sole sourcing or preferred provider contracts eliminate or significantly reduce patient choice, thwarting the ability for prescribers and consumers to choose the best-suited provider and products to meet the patients’ needs. HME is not one-size-fits-all.

Permitting fragmented and isolated contracts by product or service lines for this homecare benefit is disruptive, inefficient and severs relationships between providers, prescribers and patients. These contracts make no sense as they diminish, rather than strengthen, effective care coordination in the patient’s home.

Patients requiring HME products often find themselves needing an item at a moment’s notice. Being forced to buy that product from a company hundreds of miles away, rather than the provider around the corner, can cause delays which may lead to complications to the patient’s health and unnecessary stress on caregivers.

Not having access to the proper HME product can result in emergency situations for that individual. Reducing personalized patient services in the home risks decreased quality of care resulting in avoidable medical care, ER visits or hospital readmissions, especially for those with complex needs.  Cost shifting from the home to acute care settings ultimately increases healthcare costs.

Some sole source contracts that have been put in place require Ohioans to use providers located in other states, restricting revenues and profits of Ohio providers; a statistic particularly problematic for a state program funded by tax dollars.

Myths vs. Reality: Sole Source Arrangements

Myth: Saves Money
Reality: Without full transparency, this claim is unproven. HME represents just over 1% of the Medicaid budget spend in the most cost-effective care setting.  “Savings” may be eliminated due to use of inadequate products or eventual greater costs in acute care.
Myth: Improves Patient Satisfaction
Reality: Given patient satisfaction was not measured prior to these contracts being used in Ohio, there is no basis to claim that patient satisfaction has improved.
Myth: Eliminates Fraud & Abuse
Reality: Rules in the HME section of the Ohio Administrative Code Medicaid chapter explicitly address fraud and abuse through utilization management and procedures for proper dispensation of products.
Myth: Reduces Innovation
Reality: MCOs would retain the ability to direct care delivery to their members through quality initiatives and innovative care management, however, they would be prohibited from using a single provider for patients’ prescribed HME products.

Want to get More Involved?

  1. Call your representative. Not sure who your representative is? Look it up by entering your address under ‘Who Represents Me?’ here. We have created a script for your call under the download section on the left-hand side of this webpage.
  2. Contact Nick Kalogeras, Director of Payer & Government Relations for COHSC, A PHS Company. He can be reached directly at and would be more than happy to connect on more ways to get involved in this effort.