NSM’s Ballard identifies K-11 problems & sees fixes

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Wednesday, March 31, 2004

After more than a decade of gradual progress by NRRTS, RESNA and the RATC to separate re/hab from HME, payors are once again lumping us into one basket. The reason is no surprise. Whether you specialize in high-end re/hab chairs, or K0011 (hereafter K-11) power wheelchairs, the ‘lay’ community does not parse the wheelchair community. Given the chilly new climate that we’re operating in, thanks to Houston’s K-11 fiasco AND the meteoric rise of the K-11, we’re all guilty by association.

It is an abomination that out-of-the-box, K-11 power wheelchair suppliers can even be remotely compared to the re/hab supplier. And yet that’s exactly what’s happening. Re/hab providers and the patients they serve are today caught in the crossfire of reform measures. The reputations of re/hab professionals have been sullied and now we are fighting draconian reimbursement cuts for highly disabled children and adults throughout the country.

No doubt, most beneficiaries of these low-end power chairs have had their lives enriched. Whether provided by the mass marketing titans or the smaller local providers, I believe that the elderly recipients of these power chairs are now leading much better and more functional lives as a result.

But it is also true that the emergence of the sales driven K-11 business model with its accompaniment of saturation advertising, runaway utilization and fraud has caused CMS, DMERCS and now state Medicaid agencies to adopt across-the-board cuts and protocols that may mitigate some problems in the K-11 area but is destroying re/hab.

The K-11 business model is a consumer products model, not a medical model. It creates its own demand through direct mail and TV advertising and the involvement of medical professionals is more of an adjunct and a technical formality in order to get paid.

Your cost for the power chair is $1200 and you get paid $5300. Over a 70% gross profit margin. Yes, you’ll spend about $850 in advertising for each chair sold but you’ll still do very, very, well. Different providers have some variations of the model and of course, some are better and more professional than others

But it isn’t even remotely similar to the re/hab model. This model doesn’t advertise or do anything that directly drives utilization. The provision of services generally only starts after a referral from a medical practitioner who is actually rendering care to a patient who is almost always non-ambulatory and in most cases has multiple disabilities that require the intervention of a knowledgeable specialist (CRTS) who can assist in sorting through a myriad of products and adaptations that result in a mobility system that the individual will use for most of their waking hours.

The perception of these two business models as similar and therefore subject to the same regulatory and reimbursement rules is ludicrous and patently unjust. It’s as absurd as treating an orthopedic surgeon performing a hip transplant the same as the corner drugstore that dispenses canes.

In conclusion and of utmost importance, providers need to stop treating CMS and Medicare as the common enemy. Like it or not CMS is a customer and it’s best to get the customer’s permission to fish in his pond. There’s a lot of blame to be parceled out for the current fiasco and certainly a few folks at CMS and the DMERCs were “asleep at the wheel.” That allowed fraudulent sharpshooters to have their way for awhile, but a lot of legitimate providers took advantage of the situation, too. Doesn’t this seem like déjà vu? HME

- Mike Ballard is president of National Seating & Mobility, based in Chattanooga, Tenn.
Ballard on K-11 model
1. Spend a bunch of money on advertising to generate leads from Medicare recipients.

2. Screen the leads to the 1 out of 15 that seem to be eligible for Medicare reimbursement.

3. Deliver a standard commodity power chair as soon as possible (many cases in 24 hours).

4. Contact the recipient’s physician and get him or her to get you the necessary documentation and then bill Medicare.

5. If you find out that despite your best screening efforts the recipient didn’t qualify after all, let them keep the wheelchair. There’s enough money in it that it’s cheaper to give it away.
Ballard’s reform measures
1. Re/hab providers need to separate from the HME industry similar to the O&P industry. That means we need to support NCART. The fact that some of our suppliers have big stakes in the HME industry is irrelevant. NCART needs to promote licensure, accreditation and state level reimbursement. It’s time to move on.

2. CMS should separate the K0011 code into the 3 codes as recommended by the RATC coding committee and set the reimbursement levels accordingly. The current allowable is either too high for the low-end user (about 80% of users) or way to low for the higher-end user.

3. CMS should create a true prior authorization unit. The current ADMC structure does not work to assure that medical necessity is met and that payment is authorized. Prior authorization works very well on the state level. The payors are the customer. Let them decide prospectively. Prior authorization will cost the government far less than post pay audits. At NSM, 94% of all mobility systems we provide are submitted to the payor for prior authorization. The other 6% is Medicare. It would solve a lot of problems.

4. An outright ban on consumer advertising by providers. Chair manufacturers should be exempted but should be required to adhere to strict guidelines. (i.e., no reference to reimbursement from third party payers.) Personally, I think it is just wrong for a provider to advertise directly to a consumer in an attempt to promote utilization. The transaction should only start after referral from one of the patient’s independent caregivers.

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