What Happened to CMS's Proposed K0108 Changes?

K0108 ChangesJanuary 2016 was supposed to be the start of a new way for the Centers for Medicare & Medicaid Services (CMS) to handle miscellaneous complex rehab technology (CRT) and durable medical equipment (DME) codes.

K0108 (CRT) and E1399 (DME) miscellaneous HCPCS codes would be replaced by six new codes. Existing K0108 or E1399 items would be sorted into a new code based on whether they cost more or less than $150, and whether or not they were part of a repair situation.

That announcement came in the summer of 2015. Then in October, CMS issued an update: “We appreciate the comments received on the proposed coding changes… and will continue to consider the issue further. The changes described… will not take effect on Jan. 1, 2016. Additional information will be provided on the status of these coding changes in the future.”

What Happened & Why

The CMS statement was very brief and offered no details into what appeared to be an abrupt about-face in plans. Behind the scenes, industry organizations and at least several CRT manufacturers took a deeper look at what the new six codes could mean based on their own K0108 product lists. They then presented that information to CMS.

In essence, said Jim Stephenson, rehab reimbursement & coding manager for Invacare Corp., CMS’s proposal of six new codes was an attempt to streamline the reimbursement and processing workflow for a very large, disparate group of products.

“Instead of having to manually review and manually price K0108, now they would have a specific code with a specific fee schedule to where if this particular product falls within this price range, this is how much it’s getting paid, regardless [of what the product was],” Stephenson said.

So a previously coded K0108 product that cost less than $150 would be reimbursed at a set amount, and a K0108 item that cost more than $150 would be reimbursed at a second set amount. But what sounded like a cut-and-dried formula proved more complicated when actual products were plugged in.

Stephenson pointed out that K0108 items varied widely not only in cost, but also in how often the items were used. Some K0108 items were routinely included in mobility system claims, while other K0108 items were only rarely used by ATPs.

“Once [CMS] started getting feedback from the industry, they came to realize they were going to be paying more money for most things because there weren’t as many high-end K0108 items as what they had thought,” Stephenson said. CMS had expected to save money on highcost K0108 items by plugging them into a formula that would require CMS to pay far less than the agency previously had. In reality, though, CRT manufacturers pointed out that those high-priced items were not used very often.

And those less expensive K0108 items? Under the new formula, CMS would have paid much more than it had before — and doing so frequently, since those lesser-cost items were frequently used.

“Up to $150 was getting paid one way, over $150 would get paid another way,” Stephenson said. “So if you sent in a claim for a [K0108-coded] bag of screws that cost a dollar, the allowable for that particular code was going to be [approximately] $86.

[Providers] were going to make out like a bandit.

“There were going to very few times where those items over $150 were going to be billed. When they were, there weren’t going to be so many of them that providers would lose enough to offset the amounts they were being paid for the lower-end items.”

Stephenson said Invacare analyzed its list of K0108 components and concluded that CMS’s proposal would inadvertently end up being very expensive to the agency and its beneficiaries. Only a handful of Invacare’s many hundreds of items would have fallen under the more expensive new code, and the few items that did were relatively rarely used. The vast majority of K0108 items would shift into the new under-$150 code, and thus be reimbursed at a much higher rate than what Medicare was currently paying.

Was there any thought of letting CMS go ahead with the policy anyway? Apparently, industry organizations and manufacturers who crunched the numbers thought of beneficiaries and the industry’s ongoing relationship with CMS when deciding to take the high road.

“We have to be good stewards on our end if we expect them to give us anything in the future,” Stephenson said.

As far as what’s next for the 2015 proposal, Stephenson said he hadn’t heard any news at press time.

Paul Komishock, general manager of government affairs for Quantum Rehab, said he hasn’t heard further conversation on last year’s proposal, or a replacement one.

“There has not been any further discussion on revising the miscellaneous codes,” he said. “One of the issues with these proposed codes was that there would be a standard fee set for a miscellaneous wheelchair accessory. As the industry correctly pointed out, this would have inflated payments for very inexpensive items and reduced payments for very expensive items. When such a broad range of items are covered in a miscellaneous code, it’s very difficult to standardize pricing.”

That suggests that though the processes surrounding it are imperfect, K0108 will remain in the CMS funding equation…for now.

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

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