The road to recovery begins with a single step. For the seating segment of rehab, the road has been a long one, starting in the mid-1990s when work began on a new policy and code set. The most recent stop occurred in November 2004, the effective date of an interim structure for dividing adjustable and non-adjustable codes. Now, nearly two years later, a further step came with the introduction of a new code set for adjustable cushions on July 1.
The New Codes in Town
For all practical purposes, the seating codes remain the same. The difference is that the four classifications for adjustable codes, previously outlined under miscellaneous code K0108, now bear unique temporary codes: K0734, K0735, K0736 and K0737.
“It seems odd that the government will shell out huge amounts of money to pay for the surgical repair of a pressure sore, but will not pay 1/20 of that cost to prevent the sore.” —Steve Kohlman, president, Aquila Corp.
The Centers for Medicare & Medicaid Services (CMS) “actually set up specific allowables for the four distinct K0108 claims that may be coming in,” says David McCausland, vice president of planning and government affairs, The ROHO Group, Belleville, Ill. “The coverage criteria were already set up. To some extent, this is a formality. It’s saying, ‘All right, we’ve got everything set up, but now let’s take them out of K0108 and assign them to four distinct codes.’ “
“July’s change did not change policy, just codes and reimbursement,” says Tom Whelan, global vice president, seating business unit, Sunrise Medical, Longmont, Colo. “The policy provides a clear difference between codes ranging from basic to adjustable, which is unchanged by the new code set.”
While the transition sounds simple enough, moving the codes significantly impacts the lives of providers, DMERCs/DMACs and ultimately clients. Because adjustable cushions were grouped in a miscellaneous code for wheelchair accessories, claims processing was a bit of a headache.
“Even though every rule was set up, every issue was considered and addressed in documentation to file the claims (for) the adjustable cushions under K0108, the problem that providers were still having is that K0108 was already being used for other things,” says McCausland. “So, the problem for people filing claims and for the (DMERCs/DMACs) is that there was now no longer this black-and-white (rule) of how to handle a K0108.”
LINK UP: Take a look at the new allowables: www.cms.hhs.gov/MLNMattersArticles/downloads/MM5017.pdf or www.cignamedicare.com/articles/May06/cope4243.html
“K0108 really requires a good bit of documentation when you bill electronically,” says Paul Komishock, reimbursement department manager, Pride Mobility Products, Exeter, Pa., “and providers already have been limited by the amount of information they can put on an electronic claim. Any time you can eliminate a K0108 from any kind of claim where you can actually assign a product to a specific code, that code is a known commodity. You know what the description is, you know what the allowable is and you don?t need to provide all that information that you normally would’ve with K0108 cushions.”
McCausland says using a miscellaneous code “made claims processing by the providers and by the (DMERCs/DMACs) much more cumbersome. It led to an inordinate amount of additional confusion. I certainly believe it increased the amount of denials of these claims by a significant amount.”
Komishock agrees. “Any time you take the human element out of having to process a claim and you can automate it, it does cut down on your chance of denial,” he says.
Now that the codes are separated from K0108, McCausland predicts a large majority of the confusion should be resolved, making filing and claims processing for adjustable cushions easier.
One thing the new codes do establish is an additional description for adjustable cushions. Komishock points out, “If you look at the new temporary K codes, it says skin protection wheelchair seat cushion adjustable. So all it does is add that extra word but that changes the type of cushion it is. It doesn’t change the nature of the cushion, at least as far as Medicare is concerned. Even though it’s adjustable, it’s still a skin protection cushion. They’re still going to hold those cushions to the same coverage guidelines as they would for any of the other (non-adjustable) cushions. So, E2603, which is a basic skin protection cushion, has the same coverage criteria as the K0734, which is the new code.”
Allowables Take a Toll
As part of the package, CMS also reduced allowables — for both adjustable and non-adjustable cushions.
“I use the analogy that CMS quite often … is in a game of Texas Hold ‘Em, where they’re being dealt a hand, but the problem is they can’t pass on the hand, they can’t throw the hand in, they always have to play it.” —David McCausland, vice president of planning and government affairs, The ROHO Group
Mike Wright, Invacare’s product manager for seating and positioning, Elyria, Ohio, says, “The only real difference that I saw (in the new codes) was that they lowered the allowables by around 11 percent.”
The reduction in allowables is a significant one. “The one that’s hugely significant is the (adjustable) skin protection and positioning (allowable),” says Dan Eilerman, PT, clinical education specialist, Varilite, Seattle. “The allowable was $389.54. It went down to $334.19.” The $55 cut has left suppliers and manufacturers scrambling to turn a profit.
CMS also slashed allowables for non-adjustable cushions, a change that many in the industry were not expecting. When the codes were introduced in 2004, “We probably lost around 30 percent of the market as a result,” says Wright. “So, then for them to come back and cut the allowables again on July 1 was kind of a surprise.”
Jim Acker, vice president of sales and marketing, Blue Chip Medical, Suffern, N.Y., also did not expect the cuts. “We were told over the last six months from everybody on the ‘inside’ that they were going to stay the same or be adjusted slightly higher,” he says.
In terms of non-adjustable allowables, Acker says, “They chose in their infinite wisdom to cut a fee schedule that was actually somewhat fair from the onset. People could make reasonable product, reasonable quality (and) reasonable outcomes. And then within a year, (they) slash it by 30 percent.”
Whelan calls the cuts “the biggest shift of reimbursement I’ve seen in this industry to date.”
Komishock notes that percentage wise, one of the biggest cuts was in the general-purpose cushion allowables. “Some of us were designing products so that even without having the fluids or the high-end materials, it would still offer some protection and still be in the general-use category,” agrees Quantum Rehab’s Dave Leverett, seating product development manager, Exeter, Pa. “It’s going to be very difficult to help those people out now.”
While moving the cushions to a temporary code set may result in reduced paperwork and a guaranteed allowable for clients who qualify, the significant reduction in allowables means additional hardships for suppliers and manufacturers.
“There are some cushions out there now that are on the market where the allowable is actually less than dealer cost,” says Komishock.
“It’s difficult for (suppliers) because they want to try to maintain their relationships and the service level they have with the rehab facilities and the clinicians they work with, but they also need to stay in business,” says Wright.
“On the other side, unlike the pharmaceutical industry, the wheelchair seating and mobility industry has done a good job containing costs and keeping prices down and competitive,” says Tom Hetzel, PT, ATP and owner of Aspen Seating & Ride Designs, Sheridan, Colo. “Unfortunately the mechanism (gap fill) by which they established the new allowables basically provided no reward for those efforts, and in fact, cut reimbursement levels on these products to the point that many providers and manufacturers have to ask the question: Can we afford to provide or develop and manufacture these levels of products?”
McCausland argues that wheelchair seating had already been gap filled in 2004 when the policy was first implemented. “You would’ve assumed in 2004, you should’ve seen a normal bell curve where once they took this one code and exploded it into numerous codes that some of those allowables would fall below what had been the E0192 (original seating code) allowable and some of them would’ve fallen above. But in reality, because of gap fill, it ended up they all fell below (except for bariatrics),” says McCausland. “So now, let’s … fast forward to 2006, and ultimately they recalculated the allowables for all wheelchair seating, and we just ended up having the problem exacerbated.”
The skin protection and positioning adjustable cushion allowable did increase, however — by a mere $3, not enough to make up for manufacturing costs. “From a manufacturer’s standpoint, it’s more expensive to manufacture a skin protection and positioning cushion because Medicare sets certain criteria to make it a skin protection and positioning cushion,” says Eilerman. “There are more criteria for a skin protection and positioning cushion vs. a skin protection-only cushion.”
Though the new codes seek to differentiate adjustable from non-adjustable cushions, the codes do not provide a clear-cut match of client to cushion to satisfy some in the industry. “There is something that says if you have this ICD-9 code and these other criteria, you qualify for a skin protection cushion or you qualify for a positioning cushion,” says Eilerman. However, “there’s nothing that says you have these criteria and this diagnosis so you get an adjustable cushion. They have the exact same requirements for a skin protection adjustable cushion as they do for a skin protection non-adjustable cushion.” The omission could potentially cause problems for reimbursement. Eilerman worries that a payor might downcode an adjustable cushion because no criteria exist to distinguish it from a non-adjustable counterpart.
Wright agrees. “I have heard from funding sources that they will push a client toward the least costly alternative,” he says.
Leverett sees the same possibility happening in reverse. “When you look at a dealer’s perspective, if they have an opportunity to put out a product that’s going to pay them $421 as opposed to a product that only pays them $295, that the diagnostics codes are identical, they’re going to try to push for the higher reimbursement product,” he says. “Sometimes it’s not necessarily going to be the most appropriate for the client in the chair, and that’s the real downside to this whole thing. (Adjustability) does not necessarily make a better product. It just simply means it’s adjustable.”
Some manufacturers argue that the delineation between adjustable and non-adjustable still needs work. “At this point, there’s no clear differentiation between adjustable and non-adjustable,” says Hetzel, “and until we’re able to start reviewing that next step … as far as a proposal from the SADMERC regarding the definition and testing, the jury is still out.”
Some manufacturers argue that the delineation between adjustable and non-adjustable still needs work. “At this point, the final language and testing on differentiation between adjustable and non-adjustable has not been made public, so the jury is still out,” says Hetzel.
As the industry awaits final codes for seating, manufacturers hope to see some of these issues worked out. “There’s speculation that eventually there will be further criteria to qualify for an adjustable cushion,” muses Eilerman.
Finding a Balance
“Sometimes it’s not necessarily going to be the most appropriate for the client in the chair, and that’s the real downside to this whole thing. (Adjustability) does not necessarily make a better product. It just simply means it’s adjustable.” —Dave Leverett, seating product development manager, Quantum Rehab
For manufacturers, helping providers deal with reimbursement cuts and keeping their businesses afloat means taking a serious look at costs. For some, that means gearing products toward codes with the greatest possibility of reimbursement.
“Last year we (Invacare) decided to take a proactive stance and create a new line of products specifically as a result of those coding changes,” says Wright. “Our message (is) that they’re products that are not only clinically effective, but also funding friendly.”
Unfortunately, lower costs can take a manufacturer only so far. “We’re working on our manufacturing costs to keep them low,” agrees Acker, “but you can only make a cushion for so inexpensively, so cheap, before you actually affect the quality of the product and its outcomes.
“The problem is as the reimbursement codes go down (with) these high-end cushions, the costs don’t go down,” says Acker. “So, you have these rehab providers that are hesitant to support quality product because they’re losing money.”
Judy Rowley, vice president, seating, Motion Concepts, Tonawanda, N.Y., says the industry is “being squeezed at the manufacturer level even more than at the dealer level. Because you still need to be able to provide dealers with competitive discounts and so forth. So, our margins are becoming tighter and tighter. If that continues to happen, you can’t be profitable with product, and either the quality of the product is going to suffer or you just won’t be able to continue offering certain high-end products possibly.”
Wright asserts that the continued reimbursement cuts hamper manufacturers’ abilities to improve products, which is detrimental to the client. “I liken a cushion to a tire on your car: it’s really where the rubber meets the road,” he says. “And you wouldn’t put the cheapest tires possible on your car if your life depended on it.”
Leverett says decreasing allowables forces manufacturers to make costs a higher priority in the manufacturing process because, “It doesn’t do you any good to make a product that’s the best in the world if nobody gets to use it because the allowables are lower than what it costs to put it on the market.”
Even so, gearing products toward the new codes could be potentially dangerous for the industry, warns McCausland. When added to a category under gap fill, new products, which bear no pricing history, will ultimately cause allowables to drop, he explains. Since 2004, “we’ve had numerous new products that have been developed that have now been code verified and now have been added to the list of products that are eligible for claims filing under the seating policy,” says McCausland. “None of those new products that have been developed since 2004 had any pricing history, so they have the most substantial negative impact on what happens to the fee schedule when you recalculate using gap fill. Ultimately, I can guarantee you that what happens whenever there’s a new product that’s added to a list of products in gap fill, the allowable will go down.”
Fortunately, there is some good news with regard to gap fill. A provision in the competitive acquisition proposal released in May showed a revision to this method of calculating allowables. “I think the evidence that everybody really recognizes that gap fill needs to be fixed is in the fact that CMS actually included a revision to gap fill as a part of the proposed rule for competitive bidding,” says McCausland. “I mean if you really think about it … fixing gap fill does not necessarily correlate in any way, shape or form with what they needed to do for competitive bidding.”
Others are hopeful that Medicare will revaluate its stance on the allowables. NCART is petitioning CMS to reconsider the fee schedule, but a resolution has not been negotiated, Eilerman says.
McCausland says the industry is pushing CMS to return to the fee schedule established in 2004, when seating was originally gap filled. “I’m very sympathetic to CMS’s issues,” says McCausland. “I use the analogy that CMS quite often … is in a game of Texas Hold ‘Em, where they’re being dealt a hand, but the problem is they can’t pass on the hand, they can’t throw the hand in, they always have to play it. What I’ve tried to do — and I know what a lot of people tried to do — we tried very hard, unsuccessfully, we begged, we implored, we did everything we could to ask CMS not to implement the revision. We made the argument that ultimately wheelchair seating had already been gap filled in late 2004.”
In the long term, a revision to gap fill should cause allowables to rebound, says McCausland. He also predicts seating will not be up for competitive bidding.
In the meantime, the new allowables mean that some suppliers will be forced to stop selling and manufacturers will be forced to stop making some cushions altogether. “Unfortunately what we’re seeing is that there’s been e-mails already going through, especially some of the corporations and some of the buying groups, where literally they’re providing people information to say, go through and figure what your cost is and determine whether you can afford to deliver this product at all anymore,” says McCausland.
For niche manufacturers like Ride Design, the effect on sales is immediate. Hetzel says research and development has also been hit. “I will tell you personally at Ride Design, we had one very unique and innovative product that we were actively developing,” he says. “And with the lack of definition testing and the extremely low allowable with respect to adjustable products, we have actually stopped development on that project.”
For niche manufacturers like Ride Design, the effect on sales is immediate. Hetzel says research and development has also been hit. “I will tell you personally that Ride Designs, we had one very unique and innovative product that we were actively developing,” he says. “But in the absence of a clear definition and testing of adjustable cushions, and the presence of extremely low reimbursement, we have actually stopped development on that project.”
Aquila Corp.’s primary product was also shut out by the new codes. “Our primary cushion is both adjustable and powered, but the (DMERCs/DMACs) assigned us the code describing a powered cushion with no allowable,” says Steve Kohlman, president, Aquila Corp., Albert Lea, Minn. “If we were assigned a different code for adjustable, there would be a tiny allowable, but even a small dollar amount is better than zero.
“It seems odd that the government will shell out huge amounts of money to pay for the surgical repair of a pressure sore, but will not pay 1/20 of that cost to prevent the sore,” says Kohlman.
“Ultimately there’s going to be … pain for a lot of people to share between providers, manufacturers and unfortunately, clinicians and clients, depending on if access issues arise,” says McCausland. “Hopefully, especially for adjustables, part of that is offset with the fact that claims processing is easier. So, even though the fee schedules have dropped for some of the adjustables, if it in fact reduces your denials and reduces your lag on cash, maybe some of that will be compensated for.”
K Codes for Adjustable Wheelchair Cushions
Effective July 1, 2006
K0734 … Skin protection wheelchair seat cushion, adjustable, width less than 22 inches, any depth
K0735 … Skin protection wheelchair seat cushion, adjustable, width 22 inches or greater, any depth
K0736 … Skin protection and positioning wheelchair seat cushion, adjustable, width less than 22 inches, any depth
K0737 … Skin protection and positioning wheelchair seat cushion, adjustable, width 22 inches or greater, any depth