Citing reductions in Medicare reimbursements and changes in Medicare policy, the New Braunfels-based Scooter Store announced it would lay off 220 workers.
Spokesman Tim Zipp said virtually all of the layoffs are at the company’s headquarters in New Braunfels, which employed 1,600 people before the cuts.
Zipp said Medicare reimbursements for power mobility devices had dropped by roughly 40 percent over the past several years, and the government also changed its pay schedule, requiring patients to rent the scooters rather than pay for them outright.
Those changes, coupled with a new program that requires prior authorization for patients to get coverage for a scooter forced the company to reassess its business model, Zipp said.
“While we regret what had to happen today, we are looking forward to that this will position the company to be stable right now and to allow us to take advantage of some opportunities we believe are coming in the future,” said Zipp.
The changes to the way Medicare handles scooter claims came after an audit by the Office of the Inspector General, which found rampant fraud in seven states, including Texas, involving power mobility devices. The report states Medicare patients were charged four times as much as non-Medicare patients for power scooters, and also cited hundreds of claims that should not have been paid due to improper documentation.
Workers who have been laid off will receive a severance package, depending on their service time with the company.
Zipp said the company has no plans to move its headquarters out of New Braunfels.