Industry Responds to CRT Capped-Rental Proposed Rule

• By Laurie Watanabe
• Jul 30, 2013

The Centers for Medicare & Medicaid Services (CMS) have issued a proposed rule that would reassign some complex rehab technology (CRT) products to the Medicare capped-rental category - much to the concern of industry experts.

The proposed rule seeks to do several things, including clarifying a three-year minimum lifetime Medicare requirement for DME.

But the portion of the proposed rule that most concerns the CRT niche is the one that would reclassify some rehab products as capped-rental items. If that happens, the Medicare program would pay the equipment supplier for the affected items over time, in 13 monthly payments, rather than pay the full purchase price as a lump sum.

And that plan could have a huge impact on CRT providers' cashflows and business management plans.

Understanding the Proposed Rule

Under the proposed rule, Medicare would only purchase an item outright if its statistics show that the agency purchased the item 75 percent or more of the time during the period of July 1986 through June 1987.

The new rule would apply to DME and CRT with allowables of more than $150, but would not apply to complex rehab power wheelchairs - in fact, the new rule would add a first-month purchase option for those power chairs' accessories. Ultralightweight manual chairs (HCPCS code K0005) would also remain in the routinely purchased category, since during that utilization period of 1986/1987, the technology was almost always purchased.

But new technology that didn't exist 26 years ago and is therefore impossible for CMS to cross reference to 1986/1987 utilization and purchasing statistics will become capped-rental items if the proposed rule is implemented.

The CRT product categories caught in this DME reimbursement net include adult manual tilt-in-space wheelchairs (HCPCS code E1161); all pediatric wheelchair bases; speech-generating devices; and wheelchair options and accessories that are not provided along with a complex rehab power wheelchair base.

Rita Hostak, VP of government relations for Sunrise Medical, said in a Mobility Management interview that CRT devices are once again suffering from being lumped together with DME.

She notes, for instance, that CMS cites eight months as the average rental time for DME - which is why the agency believes it can save money on CRT by renting equipment for eight months rather than paying outright for it.

"But they're looking at standard equipment, and you can't compare that," Hostak points out. "You're talking about people who may be in hospice; you're talking about people that have had hip surgery and only need their wheelchairs until they've completed their rehab. You're talking about elderly Medicare beneficiaries who are either dealing with an acute illness or possibly end-of-life sorts of stuff when you start talking about hospital beds and things like that."

That's not an accurate assessment of the group of beneficiaries using CRT, Hostak says.

"But when you're talking about wheelchairs for people with permanent disabilities and pediatric wheelchairs, these people are not end of life. They're not even sick! They just have a disability and need the technology to allow them to be more functional and independent. So I think [CMS's] cost savings [predictions] are incredibly flawed."

Why the Methodology Won't Work for CRT

Hostak is one of the members of NCART working on comments to submit to CMS. She says NCART is asking providers for details on the primary diagnoses of beneficiaries who have received adult tilt-in-space or pediatric wheelchair bases in the past. In the past year, NCART has received several hundred responses.

"The number-one diagnosis for all the tilt-in-space products was CP [cerebral palsy]," Hostak says of the responses NCART has reviewed. "When you looked at adults, there was a lot of adult CP, there was a lot of TBI [traumatic brain injury]. There was a little bit of MS, a little bit of muscular dystrophy, mostly genetic [conditions]."

Among children, "you had varying degrees of cognitive disabilities that were showing up: Some were moderate, some were severe. Some were classified as mental retardation, some were developmental delays. But it was all in that cognitive area: That was the other big bucket for the kids. But cerebral palsy was by far the primary diagnosis."

Other relatively common diagnoses included congenital paraplegia and quadriplegia, present at birth and often very attributable to brain injury as well.

What most of these beneficiaries had in common, NCART discovered, was that they were not expected to recover or heal, but neither did they have drastically shortened life expectancies.

"These are not people who are going to have an improvement necessarily in their status," Hostak says. "They can improve their function with the equipment, but they're not going to get well to the point where they no longer need the equipment, and I don't think if you were to look through the notes from the physicians that there would be anything about death being something that's expected. Within any population, you could have accidental death, but [any other cause of impending death] is not the prognosis for this population of individuals."

So if Medicare is ultimately going to have to purchase the equipment for most CRT-using beneficiaries anyway, why stretch the process out over 13 months?

In its proposed rule, CMS predicts Medicare will save $20 million per year for 2014, 2015 and 2016, with savings increasing to $30 million for 2017 and $40 million for 2018. But those predictions assume that Medicare will only make eight monthly payments instead of 13.

"The decrease in expenditures is expected because the changes would eliminate the lump sum purchase method for certain items, and instead payment would be made under the monthly rental method resulting in lower aggregate payments because many beneficiaries do not rent items for as long as 13 months," the proposed rule says.

But Hostak disagrees, since NCART's data shows most of Medicare's beneficiaries who've qualified for the affected equipment in the past have diagnoses that won't improve.

"I don't see the savings," she says. "Maybe there's an advantage to the program to spread the payments out, but I can't imagine it being significant enough to justify the additional claims that have to get processed."

The Other Costs of the Proposed Rule

While CMS is obviously hoping to save money by making fewer payments overall, Hostak points out the agency will have a lot more paperwork on its hands, as - at least for CRT - Medicare will be processing 13 invoices for a piece of equipment instead of the single claim that would be involved if the item were purchased outright.

For providers, of course, the impact could be huge: Many more bills to send to Medicare, many more incoming payments to process. Cashflow would radically change, as providers pay a manufacturer up front for a wheelchair, but have to wait more than a year for Medicare to reimburse for it.

As complicated as that already sounds, Hostak says there are additional concerns.

For instance, using 1986/1987 as the comparison period is troubling because assistive technology has advanced so much in the last 26 years.

"You can take 2004 [manufacturer-suggested retail pricing] and deflate that back to '86 using inflation factors and reinflate them to today using [consumer price index] updates," Hostak explains. "There's nothing you can do for new technology. There's no deflation/inflation factor to use for utilization. So basically if [CMS] continues to use that, that essentially means that going forward, unless an item has a fee schedule reimbursement amount under $150, all new technology would be classified as capped rental. Because it would have no historical utilization data to look back to."

Billing for replacement components for previously capped-rental items is another potential headache.

"There's a whole section of wheelchair options and accessories proposed to move to capped rental, too," Hostak explains. "While the chair is being rented for the first 13 months, the supplier is responsible for maintaining the piece of equipment. So now the reimbursement has not changed - [CMS] ultimately pays more over 13 months, but I think it's by about 5 percent, it's not a lot - and [providers] are going to have to maintain it for 13 months at no additional reimbursement. But then in the 13th month, when title transfers to the beneficiary and now the supplier can bill for repairs: A lot of the parts [that would be reclassified as capped-rental items] are not for initial issue, and a lot of them even have in the descriptor 'replacement only.' So now I'm going to take a beneficiary-owned piece of equipment and to repair it, I have to rent them the parts."

Picture yourself billing for a pediatric wheelchair base for 13 months, then finally transferring the title over to the Medicare beneficiary. Then imagine that the chair - having been used daily for more than a year by an active youngster - needs repairs. Imagine having to begin the capped-rental billing process all over again, this time for the replacement part. And imagine having to start the process over again two months later, when a second repair is needed on that same chair.

"Can you imagine how complicated that is going to be?" Hostak asks. "What other industry can you think of where that would work?"

Another logic-defying example could be smaller-sized ultralightweight manual chairs, should the proposed rule be adopted as is.

"When you look at the K0005, it's not recommended to become capped rental, and that's because that technology was around," Hostak says. "Medicare was paying for it in '86 and'87, and it was routinely purchased. So that code is staying as routinely purchased, which is awesome.

"But those same products that are classified as K0005s, if they're less than 15 inches wide or 15 inches deep, then [providers] have to code it using a pediatric-sized wheelchair code. So now you're saying '15 inches wide or bigger or 15 deep or bigger, and you're good to go, it's a purchase. But as soon as you need that 14-inch seat width or depth, now I've got to rent it to you.'"

Hostak hopes CMS will consider that smaller-sized K0005 technology did indeed exist 26 years ago, albeit under a different HCPCS code: "I think we may have some ability on some of these chairs to say, 'That was paid for by Medicare in '86, and there's utilization data you could look to for that."

Making Use of the Comment Period

CMS is taking comments on the proposed rule until 5 p.m. Eastern time on Aug. 30.

Hostak says NCART is continuing to accept information on primary diagnoses in order to prove that most CRT consumers do need their equipment for the long term. Information can be sent to NCART. 

To send a comment to CMS, click HERE.

To read FAQs about how to make a comment, click HERE.

"The other thing is to contact their members of Congress," Hostak says. "We're hoping to get a letter from Congress to CMS, so if people would reach out to their members of Congress to say, 'This is going to really be a problem for suppliers as well as people with disabilities, and we'd like your support.' That would be helpful. And if people want to write their own comments, they can certainly do that too."

The proposed rule, Hostak points out, is also an opportunity to again mention the need for a separate CRT benefit category. Currently, there is such a bill in the U.S. House of Representatives, along with a companion bill in the U.S. Senate, but both bills need more co-sponsors.

"Medicare put out a rule that proposes making complex rehab technology capped rental, but it's also a very good example as to why complex rehab needs to be in a separate benefit category from DME," Hostak says. "Ask members to sign onto H.R. 942 and S. 948. I think that's got to be part of the ask. I think that message will resonate, and I would hate for us to lose the opportunity."

And for providers working through yet another CMS funding challenge, Hostak adds, "I would encourage people not to panic. We've got till the end of August, and then this isn't scheduled to implement until January 1. So I would encourage people, before they start trying to make any kinds of changes relative their systems or anything like that, to remember that this is just a proposed rule. Like anything else, this can change."