Most providers in the industry are aware of the significant recent decision by CMS to reclassify 78 of 79 reimbursed HCPCS codes currently in the “inexpensive and routinely purchased “ category, and move them to the “capped rental” category. Many of these items are custom wheelchair accessories for permanently disabled patients, which will put providers in a precarious position, as items will be paid over 13 months.
The reasons CMS gave in their recent decision started with a survey that was initiated as a result of the 1987 OBRA legislation. CMS used 1986-1987 data to classify the HCPCS codes into capped rental and routinely purchased items. Those items that were purchased 75 percent of the time or more were placed in the inexpensive and routinely purchased category. CMS stated that of the 79 items evaluated which cost more than $150, the average usage was eight months and CMS could save money spreading out payments. CMS stated that if the items were not part of the 1986-1987 survey — as many items did not exist due to technology advances since that time — they would be placed in the capped rental category.
A Surprising Sole Survivor
What many HME providers may not be aware is that only one item, an ultrasonic osteogenenisis bone growth stimulator, HCPCS code E0760, was allowed to stay in the routinely purchased category, rather than be moved to the capped rental category.
Bone growth stimulators are similar to a TENS unit. They are a unique item where only four orthopedic manufacturers are also the primary providers billing to Medicare. The ultrasonic stimulator, E0760, which was the only product allowed to stay as a routinely purchased item, has an allowed amount of $3,514 and tops the entire list of items evaluated, with $21,370,310 allowed in 2012.
This product was submitted to the FDA in 1990, and notice of approval given in November 1994 as a “Sonic Accelerated Fracture Healing System.” The product went through various CMS approval stages and placed in the capped rental category in a Program Memorandum on Nov. 22, 2000 written by Angie Costello at HCFA.
This placed the ultrasonic stimulator at a competitive disadvantage to the other electrical stimulators on the market. Consequently, lawyers and big corporate influence appealed and met with CMS. In less than one month, Joel Kaiser, policy director at CMS, issued another memorandum allowing E0760 to be billed as a routinely purchased item effective January 2001.
CMS stated the items evaluated included all the codes from 1989 that were in the routinely purchased category were to be evaluated. The “fundamental purpose of the capped rental category” was to” avoid paying the full price of costly equipment used only a short period of time.”
CMS mysteriously did not include HCPCS code E0748, an electronic bone growth stimulator for long bones, which was added in 1995, to the list of 80 codes to be evaluated. This code is allowed $4,179 and $91,054,546 in claims was processed in 2011 as purchase, no claims processed as a rental, even though patients should be given the choice.
Even worse, an article in the Journal of Bone and Joint Surgery, dated November, 2008 discusses the outcomes from the use of this device:
“Conclusions: While our pooled analysis does not show a significant impact of electromagnetic stimulation on delayed unions or ununited long-bone fractures, methodological limitations and high between-study heterogeneity leave the impact of electromagnetic stimulation on fracture-healing uncertain.”
The average duration of medical need is less than six months for all bone growth stimulators and often used only a few weeks, and then you can find them on EBay — some advertised they were only used once! Both the electrical and ultrasonic bone growth stimulators are advertised to heal the patient in three to six months, less than the eight month average CMS used to justify placing the other more custom less expensive products for permanently disabled patients.
Questionable Efficacy
A recent article in JAMA states there is no clear benefit from using electrical stimulation as it is used with other modalities of care. Patient outcomes prove this fact. The manufacturers claim their bone stimulators are not reusable. This can justify billing as a purchase every time, which is not true, as other dealers are now cleaning and renting them back to patients as many insurances stopped paying as a purchase. But Medicare keeps paying more than $120 million per year for these devices as a purchase, as no patients are ever offered the rental option.
Upon inquiring directly to Joel Kaiser, he writes:
“The supplier standards require the supplier to inform the beneficiary that certain items are paid for on either a purchase or rental basis, but the supplier is not mandated to furnish both the purchase or rental option. The statute mandates payment for some items on a purchase or rental basis but does not mandate that suppliers make both options available. The supplier standard ensures that beneficiaries are informed that they can seek out another supplier if they want to obtain the item on a purchase ore rental basis and the supplier only offers the option they do not prefer. Of course, there is no guarantee that they will find a supplier that provides the item on either a purchase or rental basis if the industry as a whole does not furnish the item one way or the other.”
His reply is in direct conflict with the paper manual and current DME MAC manuals which state:
2100. DURABLE MEDICAL EQUIPMENT – GENERAL
Expenses incurred by a beneficiary for the rental or purchase of durable medical equipment (DME) is reimbursable if the following three requirements are met. The decision whether to rent or purchase an item of equipment resides with the beneficiary.
Does this mean CMS will allow an industry to determine their own payment policies? The manufacturers of bone stimulators are making the decision for the beneficiary if they do not offer the rental option, in direct violation of the statute. These products are reimbursed more than all the other 78 items on the list put together, and are not custom, but reusable. Bone stimulators are allowed to be billed for longer than their duration of medical necessity and have questionable outcomes.
This decision demonstrates selective rulemaking, which is unfair and costly in a time of austerity. Meanwhile, the four manufacturers of bone growth stimulators are happy and merry. How do you feel?