Critical Developments at the VA Impact the O&P Community

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By Peter W. Thomas, JD, and Leela Baggett, JD

Within the past year, the U.S. Department of Veterans Affairs (VA) has altered or has announced its intention to alter the provision of O&P care to our nation's veterans. Although some of these changes are intended to improve the delivery of O&P devices and services, some of these efforts have the potential to significantly compromise veterans' access to the care that best meets their needs. This article provides an update on some of these developments.

VA OIG Report on the Use of Not Otherwise Classified Codes for Prosthetic Limb Components

On August 27, the VA Office of the Inspector General (OIG) published a report, Veterans Health Administration: Use of Not Otherwise Classified Codes for Prosthetic Limb Components (the Report). The Report found that private prosthetists who have contracts with the VA to augment the VA's prosthetic capacity incorrectly used "not otherwise classified" (NOC) Healthcare Common Procedure Coding Systems (HCPCS) Level II L-codes to classify certain prosthetic components when existing HCPCS codes adequate-ly described these devices. As a result, the OIG concluded that the Veterans Health Administration (VHA) improperly "overpaid vendors about $7.7 million from October 2014 through July 2017" for prosthetic components that the Centers for Medicare & Medicaid Services (CMS) reimburses at much lower levels. The Report also found that the VA does not have sufficient processes and oversight in place for the assignment of L-codes and reimbursement values.

Based on these findings, the OIG made five recommendations to the VHA, and the VHA submitted an action plan concurring with the recommendations. The recommendations are as follows:

 Review [Prosthetic and Sensory Aids Service's (PSAS's)] Ottobock microprocessor knee instructions (August 2011, March 2013, and August 2013), coordinate with appropriate officials to determine which CMS HCPCS Level II L-codes are appropriate to classify these items for reimbursement, and issue revised guidance.

 Coordinate with appropriate officials to establish a formal oversight and reporting structure that defines the roles and the responsibilities of the PSAS Orthotic and Prosthetic L-Code Committee, as well as who has the authority to approve recommendations for the use of CMS HCPCS Level II L-codes to classify specific prosthetic components for reimbursement.

 Develop and implement effective processes and procedures to monitor the use of NOC codes and communicate these procedures to the [Veterans Integrated Service Networks] to ensure compliance with VHA Directive 1045 and the CMS HCPCS Level II Coding Procedures.

 Coordinate with the appropriate officials to develop and implement processes and procedures to ensure any pricing guidance about the pricing of prosthetic items classified using an NOC code is developed and concurred with by VA's Office of General Counsel and VA's Procurement and Logistics Office prior to issuance.

 Issue corrected guidance to replace PSAS's Ottobock microprocessor knee instructions (March 2013 and August 2013) and the prosthetic limb contract template issued in August 2014 by coordinating with appropriate officials to develop and implement pricing guidance to ensure VA pays a fair and reasonable price for items classified using an NOC code.

The OIG's recommendations may not appear unreasonable on their face, but they are premised on OIG findings that are highly questionable. The findings reflect limited understanding of coding and reimbursement of new prosthetic technology. Consequently, depending on how these recommendations are implemented, they have the potential to impede veterans' access to cutting-edge prosthetic technology in future years.

For at least the past two decades, the VA has promoted its ability to provide innovative prosthetic technologies to veterans. The VA's ability to furnish innovative components is largely attributable to the fact that the VA permits prosthetists to use NOC L-codes when submitting claims for novel prosthetic technologies that have not yet been assigned an HCPCS L-code by CMS. The VA's coding and pricing policy ensures that veterans have timely access to cutting-edge prosthetic technologies that do not fall under existing HCPCS L-codes, and are often unavailable to other consumers. In this manner, veterans routinely gain access to new prosthetic technologies well before non-veterans do through other third-party payers (if other payers cover the new technologies at all).

The major flaw in the OIG's findings involves the assertion that contract prosthetists were overpaid by a total of $7.7 million over three years. If existing non-NOC HCPCS codes were used to compensate prosthetists for these new technologies, as the Report asserts they should have been, veterans would not have gained access to the technologies. In most instances, the cost to procure the new prosthetic technology significantly exceeded the reimbursement amount under existing HCPCS L-codes. Accordingly, prosthetists would have taken significant financial losses to provide these cutting-edge prostheses to veterans.

Prosthetists would not have been able to cover expenses under reimbursement values assigned to existing HCPCS codes and would have worked with their local VA clinics to select alternative prosthetic components that would have allowed adequate compensation for the prosthetists' professional services. In other words, without VA's approval to use NOC codes for these new technologies, veterans would not have received these devices. The $7.7 million overpayment is illusory. Unfortunately, the recommendations are designed to address this illusory finding.

The OIG's finding that the VA lacks the appropriate processes and oversight for the assignment of codes and reimbursement values is also questionable because the VA established a coding committee to ensure that veterans have access to prostheses that meet their specific needs. The Report, along with the OIG's previous report on the acquisition of prosthetic limbs, also calls into question the quality of the OIG's analysis on prosthetic limb issues and policies in general.

PSAS Briefing to the Federal Advisory Committee on Prosthetics and Special Disabilities

On October 17, the Federal Advisory Committee on Prosthetics and Special Disabilities held a meeting to receive a briefing from the PSAS. In this day-and-a-half-long meeting, the PSAS provided a status update on a proposed rule, Prosthetic and Rehabilitative Items and Services (the Proposed Rule), which would grant the VA the sole authority to choose the prosthetist or orthotist who will provide care to veterans, whether that practitioner is a VA employee or a private practitioner with a contract with the VA. If finalized as proposed, this new rule would reverse over five decades of veteran choice of O&P practitioner. Choice of practitioner is a key quality assurance mechanism where veterans can literally "vote with their feet" and go to another provider if they are unsatisfied with the level of care they are receiving.

Since the publication of the Proposed Rule over one year ago, the VA received considerable criticism from veterans, Veteran Service Organizations (VSOs), Congress, and the O&P community over its proposal. Many stakeholders expressed serious concerns that the Proposed Rule would significantly impede veterans' ability to select a practitioner who can best meet their medical and functional needs, and reverse decades of VA practice.

In December 2017, the VA received over 300 comments from the public on the Proposed Rule. The Proposed Rule has largely remained dormant since the closing of the public comment period, and it is unclear whether the VA will finalize the Proposed Rule in its current form, modify its proposal, or rescind the Proposed Rule altogether.

In the meeting of the Federal Advisory Committee on Prosthetics and Special Disabilities, the PSAS announced that the VA is proceeding with the rulemaking process and is still reviewing public comments. The PSAS suggested that the VA could take up to an additional year (or perhaps longer) to finalize its proposals, although it remains unclear what form the final rule will take. One potential reason for this lengthy timeframe is that the VA is simultaneously in the process of promulgating regulations under the recently enacted VA Maintaining Systems and Strengthening Integrated Outside Networks (MISSION) Act of 2018, which allows veterans to gain access to non-VA, community providers for primary care and related services. The PSAS indicated that once the VA finalizes the Proposed Rule, it will update existing VA handbooks and policies to ensure consistency with the final regulation.

In addition to the discussion on the Proposed Rule, the PSAS addressed the process for ordering prosthetics, as well as what prostheses are covered under Patient-Centered Community Care (PC3) contracts created under the MISSION Act and its predecessor, the Veterans Access, Choice and Accountability (CHOICE) Act of 2014. This is the legislation that stems from long delays in primary care treatment for veterans in many areas of the country. It is important to note that the VA defines prosthetics very broadly, much more expansively than limb prostheses and orthotic braces. The VA uses the term prosthetics to mean everything from internal implants to service animals, hearing aids and cochlear implants, vision equipment, and wheelchairs.

The PSAS confirmed that prosthetics staff may directly purchase prosthetic devices with a reimbursement level up to $10,000 without going through the formal VA procurement process. Previously, the prosthetics staff could only directly purchase prosthetic devices that were at or below $3,500. Purchases over the $3,500 micro-purchase threshold fell under the purview of the Office of Acquisition, Logistics, and Construction (OALC), which necessitated a longer procurement process. The National Defense Authorization Act for Fiscal Year 2018 increased the micro-purchase threshold to $10,000. This increase will likely have a positive impact on many orthoses purchased by the VA from private orthotists with VA contracts. It will likely have less of an impact on limb prostheses as these typically exceed the $10,000 reimbursement level.

The PSAS also discussed the provision of certain prosthetics under PC3 contracts. PSAS confirmed that urgent or emergent prosthetic items (e.g., splints, crutches, slings, or soft collars) are covered under PC3 contracts, while non-urgent and non-emergent items (i.e., the vast majority of custom orthotics and prosthetics) will continue to be provided by PSAS under the existing procurement and reimbursement processes. Accordingly, the limb prostheses that prosthetists commonly provide under contract with the VA would continue to be subject to the PSAS process.

 Closing Thoughts

The VA remains active in the O&P space. The National Association for the Advancement of Orthotics and Prosthetics, the O&P Alliance, and the entire O&P community must continue to vigilantly monitor and advocate for VA policies that have the potential to maximize veterans' access to quality O&P care.

 Peter W. Thomas, JD, is a principal with the Powers Law Firm, general counsel for the National Association for the Advancement of Orthotics and Prosthetics (NAAOP), and counsel to the Orthotic and Prosthetic Alliance. Leela Baggett, JD, is an associate in the Powers Law Firm's healthcare practice group.