L-Codes: What's Wrong? What's Right?

Home > Articles > L-Codes: What's Wrong? What's Right?
By Judith Philipps Otto

L-Codes make great scapegoats. According to many practitioners, the woes of the world begin and end with L-Codes. But while the United States unique O&P reimbursement system has some flaws, and some cracks have appeared in its foundation over time (see "L-Codes: Are They Meeting the Needs of O&P?" in this issue), the L-Code system offers some clear advantages that other reimbursement systems do not offer. We talked with industry experts about the systems pros and cons.

Who's in Control?

"One of the unfortunate misconceptions held by a number of people in the field," points out Kathy Dodson, senior director of government affairs for the American Orthotic & Prosthetic Association (AOPA), "is that AOPA owns the codes, which is certainly not true. Some people think that somehow we have the right to say yes or no on code-related issues, and Medicare has to pay attention. This is not the case, and it never was. It's purely a consulting kind of arrangement."

In fact, the Medicare Healthcare Common Procedure Coding System (HCPCS) Panel has not asked AOPA experts for an opinion on coding changes since 1998, due to some legal "safeguards" Congress implemented that require the Centers for Medicare & Medicaid Service (CMS) to consider input from all private groups-or from none, explains John Michael, MEd, CPO, FAAOP, FISPO. "In an effort to make the process more open, Congress inadvertently eliminated input from experts in the field, which is the heart and soul of the L-Code. No longer having ready access to insightful opinions based on consensus from experts in the real world makes it difficult to maintain the integrity of the coding system."

However, Dodson says the situation has improved. "Since that time, we've been primarily providing information to Medicare on an as-needed, informal basis. Recently, however, AOPA has become more involved. The SADMERC [Statistical Analysis Durable Medical Equipment Regional Carrier] intends to revise the L-Code section of the HCPCS system over the next five years and has asked for our input, which we are providing," she says.

Is the L-Code System Too Complex?

The extensiveness of the codes themselves is both a strength and a weakness, observes Brian Gustin, CP, AOPA president-elect. "Having the large number of codes allows us to describe in minute detail, through the add-on system, exactly what we are providing. Ironically, because many people don't understand how to correctly combine those codes, sometimes they add too many codes or use redundant codes, and that can get them into trouble from an abuse standpoint."

Dodson explains that most devices must have one base code, and they may also use additional codes that define different features the device may provide. "So you may end up with, for example, eight to ten codes to describe a device. That drives Medicare crazy. They would like to end up with fewer codes and wrap some of these additions into the basic code so that you may need to bill only a base code and one or two additions." The system could be simplified if codes were combined and consolidated into large categories that were less descriptive but easier to use and less susceptible to abuse. However, Gustin says, "From my standpoint, I would rather try to make the codes even more detailed than they are now, so you [could be] even more descriptive and precise."

Misleading or Deceptive Nomenclature

"If I had to identify one of the biggest problems with the code system right now," offers Gustin, "its poor verbiage in the code descriptors, such as, on the prosthetic side, continued use of the word socket. The payers think they're paying for five sockets because there are five different socket codes. But they're not individual sockets; they are materials or procedures (e.g. a test socket) that are used in creating the final product. The verbiage of the codes is less than accurate."

Obtaining New Codes

As a manufacturer, AOPA President Brad Ruhl says his company is involved in applying to have codes established for new products and defending those applications. "It can take several years before a code gets established. Often its several months before they decide if they're going to create a new code; then they wait until the first of the following year before they assign an allowable to the code."

Gustin points out that there are no clear-cut guidelines that tell manufacturers what they need to demonstrate in order to have a new code granted. "From a regulatory standpoint, I would like to see [it] become more of a definitive process so manufacturers or developers of technology...know what it would take.

"Right now, I think its stifling our technology because manufacturers are reluctant to put R&D dollars into anything because they're not sure if they're ever going to get a code for [a new] device. And if they can't get a code, they're going to have a hard time selling the product."

Michael agrees. "I can confirm that this sort of barrier to free-market entry has discouraged people from investing private funds in orthotic-prosthetic research, which is a tragedy. The irony is that we have DARPA [Defense Advanced Research Projects Agency] pouring millions of dollars into advanced prosthetic research for items that will most likely never receive an L-Code-and will thus remain inaccessible to many amputees who might benefit from them."

So while manufacturers wait for a new product code that may never be granted (Michael notes that roughly 95 percent of all L-Codes submitted by prosthetic manufacturers or clinicians in recent years have been denied), they have to offer their new innovation with the recommendation of a miscellaneous code, making reimbursement uncertain and the amount unknown.

"Oftentimes," Ruhl says, "practitioners are reluctant to bill a miscellaneous code because there's a very real concern that they may not get paid for it and that it's subject to review as a miscellaneous code."

Fee for Service or Fee for Device?

"Some people criticize the L-Codes because they think the service element isn't visible enough," says Michael, "but it's actually there; it's just under the surface."

Gustin agrees that this is a common misconception. "There is a service component built into each code. Unfortunately, the service component that's required with today's newer technology devices is much greater than was required when those codes were originally created, and thus does need to be revised."

Ruhl notes that some have recommended implementing a variation on the old "fee-for-service" system that preceded the L-Code system. "At that time, you billed for the time that you spent with an individual, plus the cost of your materials. An alternative for the future might be to move in the direction of the physicians billing system and its CPT® [Current Procedural Terminology] codes."

While the American Medical Associations (AMA) fee-for-service CPT system is an attractive model, Michael points out that it would not be appropriate for O&P in its current form.

"At this point, our field has no control at all over the coding system, whereas the CPT system is copyrighted and controlled very strongly by the AMA, which will litigate if someone tries to usurp or misuse it," Michael says.

He also notes that with very few exceptions, the CPT code is based on the professional service cost. "It would need to be substantially changed if P&O chose to use this model for reimbursement because one thing thats unique about P&O is that we have a variable mix of professional time and tangible technical components.

"One...thing L-Codes do very well that a flat-fee-per-service plan does not," he adds, "is make the distinction between a simple service and a complicated service, taking into account its level of complexity and the highly variable costs of the embedded technology."

How Do Other Systems Handle O&P?

"Other countries are trying to find ways to prevent unqualified providers from getting access to using [their systems] codes," Ruhl says, noting that AOPA is a "strong proponent" of implementing a similar policy in the United States.

Michael confirms that most other countries systems forbid encroachment by unqualified competitors, in contrast to the United States.

"In some countries, they offer testing and have to pass certain standards. That is very effective at restricting competition. In some countries, the state or insurance pays for the professional time, but the cost of the tangible components is paid for by the patient. That typically gives patients a disincentive for anything that's advanced-and therefore more expensive."

In Canada, a movement is afoot to standardize a system of O&P nomenclature that can be recognized by hundreds of different funding agencies, including insurance companies, provincial governments, group policies, social services, and federal programs.

The Canadian Compendium of Prosthetic and Orthotic Treatment (CPOT) defines patient care by breaking it down into categories based upon its study of the AMAs CPT codes. "This was the only [coding system] we looked at that recognized that their patient could have the same pathology and be treated the same, but have different levels of complexity related to an outcome," explains Kirsten Simonsen, BSc, CP(c), CPOT project manager.

"In our case, were going into super-detail, knowing that there's a likelihood that if this effort was looked at [from] a reimbursement perspective, we'd have to lump things together," Simonsen adds.

The Hong Kong system is primarily a government-owned and controlled universal-care program that works very efficiently, says David Boone, CP, MPH, PhD, who lived and worked in Hong Kong from around 2000 to 2005.

"Almost all care is delivered through the government hospital systems-large tertiary care hospitals and rehab systems that have a fixed P&O department within the facility," Boone explains. "Less than five private O&P providers were available.

"A formulary called the standard limb system is used by department managers, who annually evaluate their budget and their anticipated patient needs. They then work with the manufacturers to determine ranges of components that fit within the standard limb provision. No coding or fee schedules are involved. When someone needs a prosthesis, there's just a very small co-pay for each clinic visit; the components within the standard limb scheme are covered."

Private providers simply present a written proposal with a quotation to any supplemental funding source. "There was no authority setting a price or value for any procedure or device," Boone recalls, "so there was a huge variation in reimbursement-just whatever the market would bear."

What's the Solution? Is There One?

Dodson believes that the consensus among CMS and the O&P community is to keep the system as it stands and improve it by refining, correcting, and updating it. "Many people at CMS recognize the flexibility and specificity of the system and don't want to do a tremendous overhaul and come up with a whole new system. I think most CMS people want to refine the system that they've got right now."

"My personal assessment is that the L-Coding system is still the best-available system-nobody else in the world has a better way of doing it right now," Michael says. "The system is still workable even though it doesn't function as well as it did...when it had a lot of expert input based on widespread consensus. So we have to ask ourselves, 'Is it really broken enough that we have to get rid of it?' Or is there the risk that well inadvertently make things even worse?"

Others are also mindful of the dangers of change.

"The devil we know is better than the devil we don't know," Gustin says. "Eliminating codes and redoing the system opens the door for Medicare to not only change the codes, but change reimbursements, and that's a very nebulous path to go down. If you eliminate the whole L-Code system, reimbursement could be drastically different."

And most agree-it could be a lot worse.

Judith Philipps Otto is a freelance writer who has assisted with marketing and public relations for various clients in the O&P profession. She has been a newspaper writer and editor and has won national and international awards as a broadcast writer-producer.