CMS to overhaul coding, fee structures for ostomy supplies

Thursday, January 31, 2002

WASHINGTON - In an effort to get HME providers to stock and take assignment on ostomy supplies, CMS has bumped up the number of ostomy codes and is now working on new fee structures for them.

CMS has created 20 new K codes to identify technological advances in ostomy supplies, according to a transmittal (AB-02-001) released Jan. 11. The codes include everything from non-pectin based paste (K0561) to flange-locking mechanism for pouches (K0580).

"These changes should help preserve the availability of ostomy supplies for people who are increasingly finding their local dealer has stopped carrying them because reimbursement is so low," said Linda Aukett, chairwoman of government affairs for the Irvine, Calif.-based United Ostomy Association. "Right now, I'm repeatedly getting calls from people travelling two hours for what they need."

The new codes go into effect April 1. The DMERCs are now trying to pound out fee structures.

Aukett said the association hopes new, more profitable fee structures will help change the perception of ostomy supplies as notoriously low-ticket items.

One big change in coding is that the components of an ostomy pouch, like comfort panels and odor barriers, will have their own codes. Rather than billing for the pouch as a unit, providers will bill each component individually.

"These are items that a dealer couldn't stock and sell at anything but a loss," Aukett said. "With the current reimbursements they'd never make money, not even break even. The new fee structures may result in just a few cents here and there, but it'll add up."

The change in coding comes on the heels of CMS's failed attempt to make ostomy supplies more attractive to providers in October 2000. Then, CMS increased the amount of ostomy supplies a patient is allowed. For instance, 60 closed pouches are allowed where only 31 were allowed, and 20 skin barriers are allowed where only 10 were. But few providers took advantage of the change; it didn't make sense to.

"They went from losing money to losing even more money because patients could ask for more supplies but they weren't getting reimbursed any more," Aukett said.

Dianne Eastman, president and CEO of the California-based manufacturer Cymed, agreed. She said if CMS even increased the reimbursement for just the additional supplies they began allowing in 2000, it would be a "huge improvement."

Eastman said she's seen that while mail-order companies, which have made an "OK business" out of ostomy supplies, are convenient for established patients, new patients often prefer to see different products and get advice in person. Sadly, that's becoming less and less of an option, she said.

Aukett said the United Ostomy Association is currently putting together educational material detailing the new codes. It also hopes to establish an e-mail network. Providers who are interested can e-mail HME