Funding Series

Justify It: K0108

CRT's Miscellaneous Code Can Be a Huge Funding Challenge

• By Laurie Watanabe
• May 01, 2016

What do battery wiring harnesses, front shroud assemblies and manual wheelchair crossbraces have in common?

That’s an easy question for a complex rehab technology (CRT) funding specialist: Those components are (or can be) coded K0108, the miscellaneous HCPCS code for CRT.

HCPCS codes are supposed to include products that are strictly defined and therefore similar in nature. The K0108 code, though, is anything but specific. It’s the default code for products that don’t fit into any of the others, and as a result, the code encompasses an array of components and systems that otherwise have little in common, besides being designed for wheelchair use.

Therein lies the challenge. Getting K0108 components funded in a timely manner can be an enormous task for ATPs and funding specialists, which can cause ripple effects for the rest of the complex rehab team, including clinicians, caregivers, and seating & mobility clients.

K0108: A “Black Hole of Sorts”

For all the infamy surrounding K0108, its actual definition is brief and simple.

Rita Stanley, VP of government relations for Sunrise Medical, said the official definition for K0108 is “Wheelchair component or accessory, not otherwise specified.”

But that seems to be the only simple and straightforward thing about the code.

Stanley continued, “You just stepped on one of the biggest landmines in the area of complex rehab. What is officially coded — and remains valid — by the Medicare contractor (PDAC) as K0108 is a minuscule list of items; a list of wheelchair accessories or replacement components that do not match an existing HCPCS code is quite extensive. The reason this code has generated so much attention is that it is a
black hole of sorts. Manufacturers and suppliers often are at odds with Medicare and other payors regarding whether an item fits an existing code or not. There are numerous examples where a payor insists that the supplier use a specific code for billing, yet the descriptor for the code and the reimbursement for the code are incongruent with the item being provided. Stakeholders have tried numerous times to resolve these coding conflicts with little progress.”

From the perspective of a CRT provider’s funding department, an astonishing number of components, both commonly used and rarely used, can fall into the K0108 code.

Paul Komishock, general manager, Pride Mobility Products, said of the code, “From a practical standpoint, it refers to any part or product that doesn’t fit into an existing code. From a CRT standpoint, it could be anything from a replacement straw in a sip ’n’ puff to a combination head array/sip ’n’ puff alternate drive device.”

Jim Stephenson, rehab reimbursement & coding manager for Invacare Corp., offered real-world examples of K0108 products, noting that many spring from repair and replacement situations.

“For a standard elevating legrest, if you get those as a pair, it’s an E1010,” he said. “But if you have to replace one of them — one of them is a K0108. A joystick with an integrated controller, meaning the controller or the brains of the power chair are also in the joystick box, that box is a K0108. A display is K0108. If you’re replacing a van seat, it’s K0108. Shrouds are K0108; switches are K0108. So are axles, footboards, cylinders, hub locks. If somebody needs to replace the framework of an adjustable height arm, but the armpad is still usable, that arm assembly becomes K0108 because it’s not a complete code without the armpad.

“If you’re providing pieces and parts of a complete component, a lot of times if you’re just doing a partial piece of that component, that’s going to be a K0108.”

Common K0108 Problems

Stephenson added that another common K0108 situation arises when a seating & mobility team creates a hybrid system to meet the needs of a particular client. It’s not an unusual situation with alternative driving controls for power chairs: The ATP and the clinician will piece together a hybrid system by using components taken from two or more systems.

When the systems are taken apart and built into a new system, that’s a K0108 situation.

By definition, CRT clients have positioning and mobility needs that are so complex that straight-out-of-the-box products may not be fully suitable. So the K0108 code is a commonly used one, and often it’s used multiple times per client.

Dan Fedor, compliance director for The VGM group, acknowledged that a claim for a complex wheelchair often includes multiple K0108 items. The biggest funding K0108 problem he hears from providers, Fedor said, is that the reimbursement rate for K0108 is terribly inconsistent. While the Centers for Medicare & Medicaid Services (CMS) is supposedly using gap-fill methodology to determine K0108 payment, gap filling itself is highly controversial due to the old age of the data being used, and the fact that much of today’s new technology can’t be accurately compared to the technology of decades ago.

“I’m starting to hear more and more about the pricing as far as what they’re allowing,” Fedor said of Medicare K0108 payments to providers. “Since it is a miscellaneous code, that’s one of the challenges for a provider. You’re putting out, let’s say, a $1,000 item. Based on history, [Medicare has] paid between 60 and 70 percent of the Manufacturer’s Suggested Retail Price (MSRP); they set the allowable at 60 to 70 percent of the MSRP. But that’s not a guarantee.”

Fedor related the ongoing case of a provider who received far less than that for a costly K0108 item he’d delivered to his client.

“A VGM member I was working with submitted [a claim for a product that cost] $1,197 MSRP, a miscellaneous K0108.
Medicare came back with an allowable of $8.31. We know that’s an error; they probably thought [the MSRP] was $11 instead of $1,197. But this is the challenge. The provider and I called Medicare directly to see if they would just readjust it, and they said it has to go to redetermination. That takes 60 days for something that is an obvious error.”

Fedor added that providers’ options in that situation are limited.

“I’ve had providers ask me: ‘I’m getting paid 50 or 60 percent of MSRP, can I appeal that?’ You can, but I’ve never seen anyone win that.”

And even if a provider decides to appeal, the burden of work falls on the providership’s staff. Not to mention that the clock continues to run: Equipment has been delivered, but no reasonable payment has been received.

“We obviously know that $8 on a $1,000 item was a miscalculation,” Fedor said. “But they wouldn’t fix it right then and there, wouldn’t let it go through a reopening because it wasn’t an error on modifiers or something like that. So they said it has to go to redetermination.

“They deliver the product, they file the claim assuming they can get 60 to 70 percent of MSRP off this $1,000 item, and they got the $8. And that was the allowed amount: [Medicare] paid 80 percent of the $8. It’s 60 days, probably, before they get this fixed; they deserve another $700 on this. So $700 out for 60 days on one line item, and then their time to have to do that.”

While Fedor acknowledged this had happened to one provider, he’s heard from enough of them to detect a K0108 payment trend.

“We’ve noticed over the past two years that the allowed amount on K0108 has been decreasing,” he said. “It used to be about 80 percent of MSRP, and now on average we’re seeing 60 percent of MSRP.”

The uncertainty of not knowing how much they’ll be paid — combined with how frequently K0108 codes are included on claims — makes it very difficult for providers to efficiently run their businesses.

“You’re rolling the dice; you don’t know how much you’re going to get,” Fedor said.

What’s a K0108 Alternative?

Since the current K0108 payment rate is unpredictable — and, according to conversations Fedor has had with providers, also dropping as a whole — what would be a good alternative?

Creating more codes to at least reduce the number of K0108 items might seem like a good idea. Practically speaking, though, it’s another story.

“With CRT there are a wide variety of items that do not have a code assigned to them that still provide important clinical benefits,” Komishock said. “K0108s also cover any item that doesn’t have a code that’s used on a wheelchair. So while a K0108 might be used for a combination sip ’n’ puff/head array, it can also be used for a replacement screw.

“From a payor standpoint, a miscellaneous code is difficult to automate for payment, since it can apply to so many different items. At the same time it allows the payors to accurately assess what an item is and what it does. The existence of an actual code is by no means a guarantee that it will be an accurate representation of what is actually being provided. Any code description that contains the words ‘any type’ can sometimes too broadly define an item, and limit any real variations that may actually exist among products in a particular code.”

Stephenson affirmed that just adding codes isn’t a solution.

“There’s just such a vast amount of different things that generating or publishing a code specifically for every single item out there is impossible,” he explained. “It’s fairly common stuff a lot of times, but you can’t build a code for these 5/8" screws and this bag of 1" bolts. You would have such a ridiculous number of codes, and I think it would just be too much to police. Anything that’s custom is almost always K0108.”

Fedor pointed out the problems offered by another type of CMS-related payment referred to as “cost-plus.”

“Medicare might come up next with what Medicaid’s doing, and say, ‘Miscellaneous codes are cost-plus. Show me your acquisition costs, and we’ll give you a percentage above that.’ I don’t think the industry would want that. When you do cost-plus, it depends on the plus. Some of the Medicaids are cost plus 10 percent, which isn’t good.”

One of the many questions about a cost-plus system would be whether Medicare would calculate a “plus” amount that would accurately take into account all the work that went into the product listed on the claim form. What about systems or components that had to be altered to meet a particular client’s needs? Or created from scratch because of the complexity of a client’s posture or limited ability to reach and control a switch?

On the positive side, Fedor said, with a cost-plus system, providers would at least know what they would be getting paid.

“Let’s say Medicare comes out with a cost-plus 30 [percent],” he said. “Then as a provider, you could plan. You could say, ‘My cost is $1,000, so I know exactly what I’m getting.’ You can make an educated decision and say, ‘It’s cost-plus 30, and I can do this job.’ Just like the fee schedule: You know what the fee schedule is, so you can decide: ‘Can I put a headrest on the chair or not?’ Can I accept this miscellaneous code knowing I’m going to make 30 percent?”

Clearly, the current system — in which payments are so inconsistent that providers are being paid different amounts for supplying exactly the same K0108 item — is flawed. But so is the idea of adding dozens of new codes, or opting for a “cost-plus” model. Is there any other choice?

“Miscellaneous and otherwise not specified codes are necessary for items with very small utilization, which often is the case for CRT items,” Stanley said. “However, the issues and challenges associated with this type of code are significant for all stakeholders, including payors.

“I support a transparent and predictable process for obtaining defined codes for items to reflect technological difference, and differences in clinical application. This allows appropriate pricing and coverage policies to be developed. When utilization is too small to justify unique HCPCS codes, I support segmenting the miscellaneous codes into smaller buckets to allow better tracking of utilization. The angst at this point regarding obtaining new HCPCS codes is problems associated with capped rental and the gap-filling process used to develop payment. Inadequate reimbursement for items is creating real barriers to access generally, but is nearly eliminating innovation and the ability to introduce new products that improve the lives of people living with disabilities.”

K0108 Best Practices

Current K0108 payment practices are clearly not ideal, but there are still ways to improve your chances in the miscellaneous code environment.

“When billing with K0108, it’s important to tell the funding source exactly what the item is,” Komishock said. “For Medicare,
any time a K0108 is billed, it should include the manufacturer name, the model/part number (if one exists), and the MSRP, if it exists. In cases where it does not, that should be indicated. Many denials are due to either missing information about what the item is, or clinical documentation on how the item is benefiting a particular beneficiary. Remember that when a payor sees this code, it could be an almost infinite number of items. The more they know about what it is and what it does, the better the informed decision they can make about it.”

Stephenson said the current claims structure makes it challenging to document as thoroughly as providers should.

“There are a lot of things that fall under K0108, so it’s possible to have five or six K0108s on one chair,” he said. “When [providers] go to bill it, they get 80 characters to summarize five or six K0108s. And you have to provide manufacturer and model number, justification. Eighty characters doesn’t go very far. In fact, 80 characters very rarely covers one.

“K0108 in my opinion should be able to be filed on paper just because filing electronically is unfair. They just don’t provide enough space to input all the information that’s necessary in order to bill a K0108.”

Stephenson suggests that providers abbreviate judiciously on claims.

“If you’re billing multiple miscellaneous accessories, each should be billed on a separate claim line,” he said. “If you have five items that are K0108, you can’t just do one line of K0108 with a quantity of five. Each one has to be its own separate line item. They allow you to use abbreviations; the only thing is you can’t abbreviate model numbers. Brand names can be abbreviated using the first five letters.”

There is additional information involved when the K0108 is part of a repair. “Not only do you have to identify what the K0108 is, but you have to describe the piece of equipment that’s being repaired, what the HCPCS code is for the item that’s being repaired, the date that the piece of equipment was originally purchased on top of the K0108,” Stephenson said. “You can abbreviate: If you’re replacing an armpad, you can do RPL K0019 BBR, which stands for Broken Beyond Repair. RPL stands for replace, and K0019 is the code for HCPCS. So you can abbreviate it down to a pretty small amount, but still — 80 characters doesn’t go very far.”

Since providers frequently are asked to provide additional documentation for K0108s — in part because of the small amount of space on the claim form — Stephenson recommends using a bullet-point format.

“When providers document for K0108, they should make sure to document by bullet points and reference it back to the claim,” he said. “Let’s say they have a claim and it’s five lines of K0108s. In their documentation, they may want to say, ‘Claim line 1: what it is, model number and the reason why it needed to be repaired.’ Then next bullet, ‘Claim line number 2 is K0108 for…’ and keep it separated so that it’s easy to follow and understand as opposed to just providing one big narrative. Bite-sized chunks are a lot easier to digest for a review staff.

“There’s a lot of times where people get denied, and they go back and review their documentation and they say, ‘I don’t say how they missed this; it’s right here at the bottom of this paragraph!’ [Reviewing claims] is a production-based job; they have to review so many claims an hour. So they’ll get into speed-reader mode where they’ll read the first sentence of every paragraph all the way through the document and say, ‘Okay, I got the general idea of what they’re saying.’ But if you said anything of great importance at the bottom of a paragraph at the end of the report, you’ve just increased the likelihood that it’s going to get overlooked. You want to make their jobs as easy as possible.”

“There are two very important aspects of documentation regarding K0108,” Stanley said. “The first, and maybe the most challenging, is to explain clearly why the item does not fit a defined HCPCS code. The second step is the medical justification. If the product is needed for a repair or replacement, it is important to explain why it is necessary. If it is a new item, clinicians need to follow best practice in terms of the clinical justification. It is important to include information such as Has the person used this item successfully in the past? Or is it needed because what was used in the past no longer meets the person’s needs? And why?

“Documentation is a lot like showing your work regarding an answer to a mathematical equation. Claim reviewers are not allowed to use inference. They must only use the information provided to reach a decision. So it is important to write complete sentences that paint the strongest picture of the person and their medical needs.”

The Future of Miscellaneous Codes

Stephenson’s final word on K0108 claims concerns the very understandable temptation to write them off if Medicare denies them or asks for more documentation.

“My advice is don’t ever just give in,” he said. “When you give in, it kind of sets a precedent for Medicare: ‘Well, everybody is walking away from this $5.51 item.’ Next thing you know, it’s not going to be covered. In your next chair you’re going to have about 10 of those $5.51 parts to where it adds up, and it’s now $55 instead of $5. How many of those are you going to let slide?”

That said, he understands that providers need to make daily decisions about which claims are worth investing more time in.

“If you fight to the end of the earth for a $5.51 item, you’re probably going to spend $100 in human resources and supplies and paper,” he admitted. “By the time you print out 10 copies of something, you’re pretty close to $5. You have to weigh it out. The dollars and cents to chase that money is going to cost you more than what you’re going to get back, so that’s a good business decision to say, ‘It’s not worth my time and effort. With my $15-an-hour billing person, I’m going to chase something that’s worth $500 instead of something that’s $5.’ You chase the big-ticket items first.”

But pursuing what’s owed you on a K0108 has one up side: More of the work rests with the provider rather than, for example, the prescribing physician. “There are no face-to-face rules,” Stephenson said. “Providers can document the reasons for these things. There’s no prescription required for replacement items. It’s an easier process for K0108 from that perspective, just because providers can do most of the work themselves. You have a little more control.”

This article originally appeared in the May 2016 issue of Mobility Management.