Labor code error sends providers into panic

BALTIMORE--After an incorrect update late last year, industry stakeholders expected CMS to release revised labor codes for repairing DMEPOS items.

“CMS had apparently been working on some faulty data,” said Sharon Hildebrandt, executive director of NCART. “They now have up-to-date data and will be releasing new labor rates soon.”

When CMS released the 2009 labor code revisions in December, rehab providers in several states, including Massachusetts, Maine, New York, Nevada and Washington, were stunned to learn that their reimbursement would decrease dramatically.

New York took the biggest hit: The reimbursement for code 1340  (repair or nonroutine service for DME requiring the skill of a technician, labor component, per 15 minutes) was scheduled to decrease from $21.97 to $14.40.

“If we're not going to be reimbursed a reasonable labor rate, how are we going to get this equipment repaired, replaced and fixed?” said Dan DeSimone, CEO of Continued Care of Long Island in Farmingdale, N.Y.

In Washington, where Medicaid  adopted a 9.5% reimbursement cut on the 10 product categories included in national competitive bidding, labor payments were scheduled to decrease from $19 to $13.41.

“We're already having to say, 'No,' to repairs because we can't afford to do it at a loss,” said Trish Couch, rehab manager of Mount Vernon-based Holland RST.

The reason for the changes, CMS stated, was that annual inflation adjustments had not been applied consistently from state to state. There were also disparities in payments and rates differed dramatically from state to state.

Industry stakeholders contacted CMS about the drop in reimbursement and learned that there had been a mistake.

CMS will release a revised fee schedule but providers shouldn't expect their reimbursement to necessarily increase, sources said.

“Just because the reimbursement dropped, doesn't mean the reimbursement is wrong,” said Rita Hostak, vice president of government relations for Sunrise Medical.