Will CMS Fill the Gap?

Now that CMS has released the final set of new codes for power mobility devices, we are awaiting several additional pieces of information to gain a complete understanding of how the new power mobility benefit will impact beneficiaries and the industry. The new codes, along with new DMERC regional medical policy and new fees, are currently scheduled to be implemented Oct. 1, 2006.

The first additional document, which at press time was scheduled to be released by the end of June, is the SADMERC’s Product Classification List, which will identify which manufacturers’ products fit in which of the 64 new codes.

Next, scheduled to be issued late this month or early August, will be the DMERCs’ new regional medical policy, which will give more specific coverage criteria for an understanding of when a beneficiary will quality for a particular category and code of product. Finally, CMS will issue new fees sometime before the implementation date. And that’s the rub.

CMS uses the “gap-fill” method to develop fees whenever it issues new HCPCS codes (under the Six-Point Plan mandated by OBRA 1987). The agency developed this methodology as a way to approximate what an item’s price would have been in 1986, the base year from which data was used to develop the original fee schedules under the Six-Point Plan.

CMS uses gap-filling to estimate what the price of a current piece of DME would be if it had been on the Medicare fee schedule in 1987. This 1987 estimated price is then trended forward to the present using the actual increases in fee schedule payments mandated by statute and regulations.

In its recent proposed rule implementing competitive bidding, CMS acknowledged the deficiencies with its gap-fill methodology and has proposed some general alternative methods to develop fees for new HCPCS codes. CMS still plans, however, to use gap-filling to develop fees for PMDs, despite the acknowledged fact that this methodology is seriously flawed and can result in Medicare payment amounts for power wheelchairs that are not realistic and equitable.

Under the methodology, Medicare payments for power wheelchairs could decrease by about 25 percent, with some models experiencing decreases greater than 30 percent.

However, a 2005 Muse & Associates survey of power wheelchair manufacturers commissioned by the American Association for Homecare indicated clearly that by using the Consumer Price Index for All Urban Consumers (CPI-U) for deflation to determine 1987 prices, CMS’ gap-fill methodology overstates the actual price changes in power wheelchairs.

The report found that, from 1992 through 2004, power wheelchair prices decreased by 1.4 percent and .16 percent annually for products in the K0011 and K0012 codes, respectively, and from 1998 to 2004, increased by .5 percent annually for products in K0010 codes. Recently, an additional Muse analysis of historic pricing dating back to 1987 confirmed that price increases for power chairs have increased at a rate much lower than the CPI-U.

AAHomecare and the industry are asking CMS, with support from Congress, to fix the gap-fill methodology for PMDs. The problems are as follows:

• The CPI-U reflects general price increases in the economy. It does not represent the increases in prices for DME in general, and power wheelchairs in particular. This causes an understatement of the estimate of 1987 prices resulting in a significant understatement of the 2004 fee schedule price.
• Prices of power wheelchairs have remained very stable for many years.
• Many new manufacturers have entered the market since 2000, making it impossible to find historic prices for their models.
• Older models have been discontinued and replaced with newer products, making it extremely difficult to find a large volume of historic prices.

If CMS uses its current gap-fill methodology to establish fee schedules for the new PWC codes, it needs to make appropriate modifications to that formula. Otherwise, the Medicare reimbursement amount for the new power wheelchair codes will be unrealistically low, reducing beneficiary access to this technology.

A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is vice president, government relations, for Invacare Corp., Elyria, Ohio. Bachenheimer previously worked at the law firm of Epstein, Becker & Green in Washington, D.C., and at the American Association for Homecare and the Health Industry Distributors Association. You can reach her by phone at 440/329-6226 or by e-mail at [email protected].