Navigating the Medicare Coding Process

For seasoned O&P practitioners, the Medicare coding process is a daily responsibility. Coordinating all aspects of coding within the office is complicated and, often, it can be difficult to navigate.

“Coding and billing in our industry, like other medical industries, is a task,” said Jonathan Naft, CPO, prosthetist-orthotist at Geauga Rehab Engineering in Chardon, Ohio. “It is difficult and it takes a lot of experience and a lot of education to get on track with it.”

After practitioners provide services and devices to patients, the office then must bill the insurer – often Medicare – in order to be reimbursed. The L-code system, which was instituted in the 1970s, is an add-on system that uses multiple alphanumeric codes to describe a device. These codes are the legal standard by which practitioners submit for claims and reviews.

In order to be reimbursed, practitioners choose the code that best describes the device, and then include any additional codes that might be necessary to further clarify that device.

“All features listed in the code description must be provided,” said Mitchell Dobson, CPO, FAAOP, director of compliance for Hanger Prosthetics and Orthotics Inc. “There are a few exceptions to this within Medicare policy, but generally the code descriptor is comprehensive.

“We have actually seen a change in the code descriptors over the past few years. They have become more expansive and exhaustive in their descriptions of the device,” he said.

Practitioners often code devices using an encounter form, which is broken down into categories for orthotic treatment and prosthetic treatment. Once the patient is treated, the form goes to the billing staff for processing.

Use a first-aid kit to mend the process

CompassAccording to Naft, there are a few ways to improve the coding and billing process. The first involves simplifying the encounter form by further breaking it into categories. For example, if a patient needed an orthotic device, the encounter forms used for that visit would include separate sheets for upper extremity, lower extremity, spinal, etc.

Naft also suggests instituting a checks-and-balances system in the office. Enforcing this method among the billing staff, practitioners and technical staff ensures that the coded devices were actually provided.

“It is often typical in our industry that a practitioner will want to start a device a certain way, then they will change their minds as to what they are doing,” Naft said. “That all has to be traceable through the office procedures.”

Advanced offices use an electronic coding system that allows practitioners to choose preloaded codes from a handheld personal digital assistant. The selected codes then can be sent wirelessly to the billing staff.

Lighten the load with basic coding guidelines

Because Medicare coding is often a complex process, Naft offers additional tips for O&P practitioners:

  • Select a code based on the language in the code descriptor. Do not select the code based on the level of reimbursement. Always choose the code based on the description in the code and the function of the product.

“In today’s economy, people might feel pressured to first look at the reimbursement of the code and then see if they can make it fit,” Naft said. “Sometimes I think [it is] because of the aggressive contracting that is out there. Never look at the reimbursement, find that it is too low and decide to find another code, because that would be fraudulent.”

Naft added that this process should not interfere with the decision of the best treatment for the patient.

“Once you have made the decision of what is best for the patient, then choose the code solely based on the language of the code, not on the [reimbursement].”

  • Consider a device’s functional equivalence with the code descriptor when matching a product to a code. Naft provides the example of L5976, which describes specific energy storing feet.

“There are feet that can be used with L5976 other than the ones mentioned in the code descriptor,” he said. “To be a match, they must be functionally equivalent to the feet mentioned in the original descriptor.”

  • Use only one base code to describe a device. The L-code system uses one base code, plus any appropriate addition code to completely describe a product. If two or more base codes are used, there must be two devices that can be worn independently from the other.
  • If a functionally equivalent code does not exist, then an LX999 must be used. This miscellaneous code, also called a Not Otherwise Specified (NOS) Code, can be applied to new devices that do not fit the descriptors.
  • All codes used to describe a device should be medically necessary and supported with thorough documentation. Any codes for devices that are deemed not medically necessary will be denied by CMS.

Speed through new code requests

Enforcing a checks-and-balances system among the billing staff, practitioners and technical staff ensures that the coded services were actually provided.Along with the abundance of new technologies hitting the market comes the need for new L-codes. Most often, new code requests are filed by those who have created the devices, but practitioners also may submit applications.

When requesting a new code, the practitioner, manufacturer or a private inventor must complete the application form found on the Centers for Medicare and Medicaid Services (CMS) Web site, including a complete description of the product, the reason for a new code and the number of units sold in the last year. Due to CMS by Jan. 1 of that year, this form is then reviewed by the Healthcare Common Procedure Coding System (HCPCS) Workgroup, which consists of Statistical Analysis Durable Medical Equipment Regional Carrier (SADMERC), the PFC medical directors and staff, and a representative from Veterans Affairs (VA).

Once all the new code applications have been reviewed, the HCPCS Workgroup, or Alphanumeric Panel (ANP), announces a preliminary decision on the code and offers an open public meeting to allow for any comments supporting or disagreeing with the preliminary findings.

HCPCS announces its final decision in either October or November and, in the case of a favorable decision, the new code or code descriptor changes would go into effect Jan. 1, at least one year from the original application date.

Although applicants have correctly filed the paperwork, they might still find that new code requests have been denied. The two main reasons for denial are technology without user data and new devices that fit into an existing code.

“If it is a new product and there have not been enough units sold of the product, [it might not] warrant CMS’ administrative burden to create a code,” Naft said. “In that scenario, practitioners would use the miscellaneous code to describe the product to get reimbursed. CMS will start seeing high frequency of the miscellaneous code for the new product, and then, ultimately, would grant a code.”

Billing with the miscellaneous code would ensure the patients still have the opportunity to receive the device, despite the lack of an assigned code.

“The miscellaneous code may take longer to get paid,” Naft said. “CMS also finds it an administrative burden to process those.”

CMS often reviews a product after a new code request has been submitted and finds that a new code is not warranted because an existing code fits the description. Then the applicant must appeal CMS’ decision and convince the workgroup that, in fact, the new device necessitates a new code.

The decision to use an existing code may negatively affect the practitioner’s reimbursement. The code may accurately describe a product, but the reimbursement level may be less than the device cost.

“Ultimately, the reimbursement level should be reasonable for the product,” Naft said.

However, he does not believe low reimbursement merits a new code.

“That in itself is not a reason to get a new code. The most important reason, in my opinion, for getting a new code is, Why is it not clearly described by any existing codes? Why is this new function best for a patient?”

When applying for new codes, Naft advises applicants to focus on the function of the device, as opposed any new features it might offer. He uses the example of a knee orthosis with an electronically controlled locking mechanism, versus an already available manually controlled locking mechanism.

“CMS may consider the locking mechanism to be the same mechanical function, so a new code is not granted,” he said. “However, it is our profession’s responsibility to teach CMS the difference between features and functions, and why the function does not match any existing code. The function may be similar but this new function provides new benefits for the patient.

“Perhaps now patients will not have to let go of their walkers to unlock their braces, which would make them unstable and put them at risk to fall,” Naft said. “A remote control switch built into walkers should be deserving of a new code because it is a new function to benefit the patient, not simply a new feature on an existing codeable brace.

“It is our job as practitioners and manufacturers to teach CMS that [the request] is not about a special feature, it is about a function that will have significant benefit to a patient.”

Steer around rocky reimbursements

If Medicare determines the level of reimbursement to be such that it is lower than a device costs, it can have devastating effects on its sales.According to Dobson, there are three obstacles in going from new technology to reimbursement. The first is the code application and code grant.

“This is a big hurdle, but certainly not the only one,” he said.

The second, and sometimes more difficult, obstacle is coverage. Dobson explained that the ANP manages the HCPCS code set, which is to be standardized for all heath care providers and insurers under federal Health Insurance Portability and Accountability Act (HIPAA) law.

“Thus, they sometimes create a code that they simply will not cover,” he said. “The most notable recent example of this was the donning sleeve that is designed to aid amputees in proper donning of suction sockets.”

In this case, the ANP created the code L7600, but Medicare deemed that device to be “non-covered.” Although other insurers and payers may reimburse this product, Medicare will not.

“If you are successful in navigating the ANP application process and actually get a code, and then have Medicare deem that it is a covered device, you still have one big hurdle left,” he said.

Finally, there is reimbursement. If Medicare determines the level of reimbursement to be such that it is lower than a device costs, it can have devastating effects on its sales.

“Up until recently, Medicare exclusively used a gap-filling process to determine its allowable for new codes,” Dobson said. “While the mathematical equation is detailed and extensive, the practical result of the gap-filling was an allowable, which was often just above acquisition cost for the supplier. This may work for a commodity type market, but O&P is not a commodity-type profession. Our services require professional staff, professional locations with professional equipment to provide the device.”

Recently, CMS has revised this process – which Dobson refers to as “Individual Consideration” – assisting in reasonable allowable creation. This system allows the provider of the service, not the manufacturer of the device, to substantiate the costs to Medicare.

“This has delayed allowable release and many providers confuse the ‘Individual Consideration’ request from Medicare as a denial, but it is the providers’ best chance to prove the value of their professional service and move away from a commodity model,” Dobson said. “Hopefully this trend will continue.”

Stay afloat after negative outcomes

“From the way the code application is written to the speakers public comment forum, each manufacturer takes the approach that it thinks will best support its position and, ultimately, its product,” Dobson said. “Sometimes this works and sometimes it does not.”

Dobson mentioned another hurdle – sales of the product.

The HCPCS Workgroup is more likely to grant a new code if there is sufficient sales data to substantiate that need. However, this can be a vicious cycle, as practitioners tend to avoid using products until codes, coverage and reimbursement are granted. This tasks the manufacturer with convincing the practitioner to purchase devices without codes, and the practitioners with gaining appropriate reimbursement using miscellaneous codes.

“Many insurers will not recognize or pay for [that], thus sales are limited,” Dobson said. “As a result, it can take years before enough reimbursement and sales data is gained to satisfy the ANP to grant a code.”

“As new technology is brought to us, the challenge is, How do we get these devices to be paid for by the patients’ insurance companies when new codes do not exist?” Naft said. “Does that make them self-pay to the patient? Does it put a burden on the insurance industry to continue to evaluate miscellaneous codes?

“The majority of O&P practitioners choose devices that are best for the patient,” Naft said. “But clearly, we cannot be in business if we are putting devices on patients that cost us more than we are being reimbursed. Ultimately, it may sometimes mean that patients are not able to get a particular device they need, or that is best for them, if they cannot afford it.

“[This is] a reminder that, although the contracting has gotten more aggressive, we still need to remember to appropriately choose our codes,” Naft said. “As trained and experienced practitioners, we are expected to know those rules.”

Stephanie Z. Pavlou is a staff writer for O&P Business News

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