IN APRIL, RESPIRONICS unveiled one of its most advanced continuous positive airway pressure devices, the REMStar Plus. Now the respiratory equipment manufacturer is going through the nail-biting process of waiting for Medicare to assign a medical device code to the new CPAP.

But it isn't just any code that Respironics is banking on. Developed for the growing sleep apnea market, the REMStar Plus is billed as the first in a line of Respironics CPAPs with a built-in heated humidifier, says Jacquelyn McClure, manager of government relations and corporate reimbursement services for the Pittsburgh, Pa.-based Respironics.

The company, which expects to get coding verification by this month, wants Medicare to assign HCFA Common Procedure Coding System codes E0601 and K0531 to the device. That would not only properly categorize the REMStar Plus as a CPAP, it would qualify its use for Medicare coverage, McClure says. The product would thus gain favorable attention from HME providers and ultimately, consumers. (For more on how coding affects home medical equipment providers, see sidebar on page 80).

But while the product was carefully designed with the aim of assuring it a desired HCPCS code under Medicare, there is no guarantee Medicare will assign it those codes.

“The RemStar is an important device because it offers users a CPAP with an integrated heated humidifier, which evidence has shown can make users more comfortable and compliant,” McClure says. However, she adds, “From a coding point of view, the REMStar Plus is still a CPAP.”

The Big Dilemma

THE RESPIRONICS SITUATION illustrates a common dilemma for HME manufacturers. Most want their products to qualify for Medicare reimbursement because they are then available to a huge segment of the targeted population. But they also want to innovate.

Yet manufacturers can run the risk of not getting a code if their product is too revolutionary or, instead, getting one that calls for lower reimbursement. And that could inhibit product innovations, some manufacturers say.

“Does the current process tend to stifle innovation? Yes,” McClure says. Even on covered devices with only minor improvements, she says, “the cost to the manufacturer is higher. Yet the reimbursement remains disappointingly unchanged.”

Manufacturers say they aren't afraid of introducing breakthrough products and, like Respironics, they are experts at getting through the Medicare approval pipeline and in meeting the Centers for Medicare and Medicaid Services' complicated, often frustrating, coding and coverage criteria.

However, as CMS has gotten tougher on medical fraud and the HME industry has expanded into new products and technologies, the agency has grown more careful about what passes scrutiny.

So what's a manufacturer to do? Although it does happen, manufacturers do not typically submit requests for new codes or ask CMS for a coverage decision. Most play it relatively safe, staying close to devices with a proven track record, strong reimbursement potential and a well-established HCPCS code. Even before the prototype of a new home medical device is developed, manufacturers say, they usually ensure that it meets the specifications of an existing, covered HCPCS Level II code.

“There's the tendency to stick to products that have worked successfully in the past,” says Martin Szmal, general manager for reimbursement services with Pride Mobility Products in Exeter, Pa. “When you create a power wheelchair, for example, you're pretty sure it's going to be OK. You're not falling too far from the tree.”

Equipment is, therefore, most often submitted to determine whether it falls under an existing code in a process called coding verification, manufacturers say.

Learning the Code

IT MIGHT BE a shorter process than seeking a new code or asking for a coverage decision, but getting through coding verification is no easy task. “It's become extremely complicated and demanding,” says David Williams, director of government relations with Invacare in Elyria, Ohio.

Manufacturers must submit in writing a number of detailed facts and figures about the new equipment, from how it is to be used to its pricing structure, working parts and marketing potential.

The manufacturer also must include hard evidence that the device will not only work as intended but will meet a proven medical necessity. The equipment must also have market clearance from the U.S. Food and Drug Administration before it is even considered for coding verification.

“The government wants to see a detailed list of descriptions and data about virtually every aspect of the product before it determines whether the device meets code specification,” Williams says.

For many, that list turns into more than 40 pages of clinical and financial data, experts say. CMS also requires that equipment be available to the public for the 90 days of the coding verification process.

The paperwork and time involved can be nerve-wracking, according to manufacturers, and the process can take up to a year without any final assurance that the device will get the code that the manufacturer originally intended for it.

CMS officials acknowledge that coding verification is a detailed process. But the agency defends its procedures as necessary to ensure that medical devices live up to their claims.

As to the requirement that a product be sold before its code can be determined, CMS says it adheres to common sense. “It makes little sense to make a decision on a product that, if unmarketable, has little or no hope of staying in the HME marketplace,” a CMS official says.

An Unfair Process?

NEVERTHELESS, WILLIAMS SAYS the process is often unfair.

“Medicare doesn't seem to realize the amount of work it takes to get these devices to providers. Then it asks us to undergo this extremely difficult, lengthy procedure with no certainty whatsoever in the end that the device will receive the proper code,” he says.

That's precisely what happened to Invacare recently. In September 2000, the company applied for coding verification for its new Infinity Airflow Low Contour cushion.

In January, the Statistical Analysis Durable Medical Equipment Regional Carrier, which decides on coding verification, replied in writing. One of the three cushions in the Infinity line was assigned a HCPCS code that Invacare did not agree with. “The code it received (E0176) was much lower than the one we expected (E0192) and would have involved a much lower reimbursement,” Williams says.

If Invacare had accepted the SADMERC's lower code designation, the expected reimbursement for the cushion would have been one-third of what Invacare had anticipated when designing the cushion.

“In the coding, the product went from a low-pressure cushion to a low-pressure pad. We found that unacceptable,” Williams says.

The company submitted a request for reconsideration and had to provide additional data on the cushion, including engineering drawings, clinical evidence, detailed comparisons with similar cushions, and findings of a second study conducted especially for the reconsideration.

In July, the SADMERC decided against Invacare and kept the E0176 code for the cushion. Williams and his team were disappointed by the decision, but have decided to live with it for now.

“At this time, the company has no plans to request a re-review,” Williams says.

A Little Help, Please

IF EQUIPMENT MAKERS had more help from the government, they could avoid missteps with coding verification, many say.

“The system is quite antiquated,” says Gregg Garland, president of Aircare Therapy, a manufacturer of mattresses and support systems in St. Louis, Mo. “[CMS] fails to provide assistance as to what changes are going to take place and what we as manufacturers should do to design products that meet its criteria.”

But the biggest complaint from manufacturers has been getting the government to issue a timely coverage decision. Just because a piece of equipment has a HCPCS Level II code doesn't mean it is automatically subject to coverage. (According to CMS, coding and coverage decisions are separate and unrelated issues, although for providers, they are integral to the payment process).

The coverage policy is spelled out in a CMS policy manual. The four DMERCs are also empowered to review and decide coverage for their areas.

Going for a New Code

IF CODING verification is a lengthy process, getting a new code from CMS, while not impossible, takes even longer.

CMS says it accepts several requests annually for new codes. The agency does issue new codes when warranted, but it requires that a home health device be sold in the open market for at least six months to help determine its medical effectiveness and viability. (A big sticking point is whether equipment fits the general category of a medically necessary device as Congress intended when it passed the Medicare benefits laws.) It also carefully reviews whether the device is a medical innovation or duplicates an existing covered technology.

CMS also receives requests to review an existing code or to consider a different version. The agency says it makes code changes each year but on a case-by-case basis. It follows formal criteria in doing so, including how the new device is to be used, whether carriers are getting a significant number of claims to justify a separate code, and whether an existing HCPCS would fit the item. The requests are submitted through the SADMERC for review.

Hope on the Horizon

NO MATTER which way a manufacturer goes — seeking coding verification or a new code — the process is lengthy and cumbersome, manufacturers say. An industry group is trying to alleviate some of these problems. Since January, industry representatives have met with officials from both CMS and the SADMERC to address manufacturers' concerns.

“There is a dialogue beginning. The government is showing an interest in listening to these issues,” says Marcia Nusgart, executive director of the Coalition of Respiratory Care, Seating and Positioning and Wound Care Manufacturers in Bethesda, Md.

Last December, the group submitted a white paper citing key points, including the need for:

• improving the procedures for submission, review and approval of HCPCS applications for new codes and coding verification;

• opening the process for reviewing new HCPCS codes to allow manufacturers to meet with the HCPCS Alpha-Numeric Editorial Panel;

• a timely response from CMS and the SADMERC on coding decisions and coding verifications;

• a process for re-review in cases of adverse coding decisions and a formalized reconsideration process on rejected codes;

• publication of definitive criteria for both new HCPCS codes and the coding verification process;

• a “road map” from CMS for equipment makers to follow in designing products to fit the HCPCS code descriptors.

“[CMS is] still trying to refine the elements of its national coverage policy. But it's a very long process, which for a manufacturer can take years,” says Nusgart.

The Facts About Coding Verification

CODING VERIFICATION decisions are made for the entire country by Blue Cross Blue Shield of South Carolina based in Columbia. The Medicare contractor for DME coding, the carrier is commonly known as the SADMERC — the Statistical Analysis Durable Medical Equipment Regional Carrier.

The SADMERC usually arrives at a decision with the aid of the four Durable Medical Equipment Regional Carriers.

If the SADMERC's decision goes against the manufacturer, the company can submit a written request for reconsideration. The process usually involves resubmitting the original documents with additional information in hopes of changing the carrier's original decision, says David Williams, Invacare's director of government relations. There is no CMS automatic appeals process.
— H.K.

Trouble for Providers

WHAT DOES all this mean to providers? In June, the billing department at Dependicare, a provider in the Chicago, Ill., area, was surprised to learn that CMS had finally issued new codes for bariatric beds, something it had waited for years.

The new codes (K0449 and K0550) are temporary until CMS determines that there will be no problems with them, but Dependicare wasted little time in downloading the codes and using them with its automated billing system.

“Until now we've had to use the more generic E1399 code for the beds, which really designated miscellaneous items,” says Carmen Davies, Dependicare's reimbursement manager.

Using the miscellaneous-items code was not only inaccurate, but Dependicare would lose money on the bed rentals each month, Davies says.

In addition, “the miscellaneous code had to accompany documented proof of necessity for the same customer each month. The claims took nearly forever to be paid, and there was never any assurance of payment using the old code,” she says.

Until CMS issued the new bariatrics codes, providers faced the threat of losing money on each bed rental. “The only reimbursement they could retrieve came from the mattresses, which CMS does cover,” says Gregg Garland president of Aircare Therapy, a manufacturer of mattresses and support systems in St. Louis, Mo.

Without the mattress claim, the provider would have received no payment at all, says Davies.
— H.K.