Thank you to all California members who sent suggestions for responding the Governor’s recommendation that O&P be placed alongside DME for competitive bidding purposes. Following is COPA’s response to the proposal, aka HHS25.
The California Performance Review (CPR), the document that recommends the competitive bidding, relies on the DMEPOS San Antonio study. Some of our comments reference it. If you would like to see the entire report – it is significant, please go to:
http://www.cms.hhs.gov/researchers/demos/DMECB.asp and click on the tab at the bottom that says “full report.” It is 189 pages. Ignore the Florida data, there was no O&P in that project – reference the San Antonio data. Also look closely at the appendix at the end. It shows exactly what codes were used in the project and what the bid prices were compares to regular Medicare. For instance: L4360 $162.54, L3982 $222.63 and L3730 $613.20.
COPA is working behind the scenes with DHS and Legislative contacts to resolve this issue. As soon as there is more news I will post it here.
COPA’s offficial response is as follows:
August 16, 2004
California Performance Review
Health & Human Services Agency
Stakeholder Survey
Re: CPR Item HHS25
Dear CPR Advocates:
On behalf of the California Orthotics and Prosthetics Association (COPA) and the physically challenged population of California, I must register our complete disapproval of the recommendation to require competitive bidding for orthotics and prosthetics products. There are several important reasons why competitive bidding is not advisable for these products.
The nature of the products themselves make them inappropriate for competitive bidding. Orthotics and prosthetics require a significant professional service component due to the custom, individualized, highly specialized nature of the devices. Competitive bidding is only appropriate for mass produced, commodity type items that are identical in each application. (Oxygen is oxygen, a walker is a walker, a crutch is a crutch). In most cases, orthotic and prosthetic devices are individually crafted for the individual end user.
Commodity purchasing is not possible where individual single unit fabrication, design, fitting is required to accommodate or prevent deformity, reduce pain and/or restore function to the disabled individual. Orthotic and prosthetic devices are not durable medical equipment, as they are fabricated to each individual patient either my means of a cast mold or series of measurements, evaluated for, taken by and fit by a certified O&P professional. The inapplicability of competitive bidding for O&P services causes COPA’s board to question whether the inclusion of this category was a strategy that was not thought through to its practical application.
COPA strenuously objects to the CPR’s assumption that the O&P field is somehow a part of the DME industry and vehemently denies that any significant fraud is taking place on the part of certified practitioners.
Unlike DME retailers, all O&P providers participating in the Medi-Cal program must keep current certification. The Department of Health Services has produced no evidence that fraud on the part of certified O&P Providers is a problem. Lumping legitimate, highly respected professionals who have dedicated their careers to helping injured servicemen and physically challenged children in with DME “scam artists”
is an insult. There has been absolutely no reason to suggest that there is fraud that would warrant any onerous approach to O&P claims.
As for the data suggested by the Florida study, O&P fraud was indicated in that state and the primary cause for the fraud was the state’s resistance to require that practitioners show reliability through certification. Since the Florida Grand Jury Report, the Legislature enacted licensure for this category as a means of attacking fraud. In California, the DHS took further action in this area in October of this year by removing the asterisk from numerous codes included in the O&P category which had previously been supplied by non-certified individuals.
Since this change, there are virtually no O&P products that can be provided under the state’s Medi-Cal system unless they are prescribed by a physician and provided by a certified practitioner or otherwise licensed physician. Requiring professional distinction in order to distribute the products creates a gate-keeping function whereby providers entering the program are invested in their professions and also gives the Department the ability to bar fraudulent persons from participation by reporting violations to their respective certification or licensure boards.
Unlike DME, there are very few large O&P companies, with only one company having facilities in a majority of the state. More than half of the profession in California consists of small private companies owned by an individual practitioner. These businesses provide consumers with individualized care on which they depend for mobility.
For arguments sake, if there were more than one company that could bid for services on a regional basis, no single entity could replace the care given to rural patients. Unlike DME where a patient can be shipped a product via UPS, O&P patients most often require multiple visits spanning years, or in the case of an amputee, a lifetime. If competitive bidding were even possible, its implementation would create access to care issues that would never withstand the scrutiny of the courts.
When reviewing the sources indicated for making this recommendation it is clear that there are very little savings to be found in including O&P products in a competitive bidding program. In the Texas program, the RFP process was halted due to provider concerns and threatened litigation. In the Medicare study there was only one test market for competitive bidding and it only encompassed simple orthotics requiring very little customization. The savings demonstrated were small, ranging from about 3% to 25%, depending upon the product. The overall savings for the simple orthotics was less than $100,000 and even less in the second year. The report also admits that part of this savings could have come from reduced utilization, however there has been no data collected by the study to demonstrate whether access to care and product availability had been effected for the O&P category specifically.
It is interesting to note in the study that several companies that do not specialize in O&P were included as bidders, which would ultimately have downward pressure on pricing. “Cherry-picking” a few simple orthotic items and inviting the “Wal-Marts” of the medical supply industry to bid on them against full service O&P facilities is not a realistic assumption of how competitive bidding would occur if the entire category were placed under competitive bidding. The large medical supply distributors do not apply more complex devices and would not be capable of bidding for them.
As the Medicare report points out, there are significant costs associated with a competitive bidding reimbursement program. The total reimbursed charges for the orthotics portion of the demonstration project (both
years) was $719,319, with the total for all products (wheelchairs, etc) being $34,194,518. Orthotics thus was 2% of the product mix being tested by the project. 2% of the total cost of the project ($4.8 million) is $96,000. The In other words, if the orthotics program took only its fair share of the cost to implement the program, savings would have been les than $50,000 per year for the two year program.
Given the inapplicable nature of applying competitive bidding to the rest of the product category, it seems logical that pursuing cost savings in this manner is unwarranted. Many of the lower cost items used in the study have such a small percentage markup from their wholesale cost, that the expense involved in starting a patient chart and billing for the product is not even covered by the margin. In that only 14 providers participated in San Antonio for the category, it is doubtful that the program would be successful on a statewide basis for a limited number of low cost products. The actual effect would be that access to these products would be unavailable for most patients.
When evaluating current DHS spending for the categories of O&P and DME, it should be noted that where DME products have seen steady increases amounting to an over 200% increase for their category, O&P products have slowly been reduced to the point where many common products are being provided by orthotists and prosthetists at below wholesale cost.
The balance of products that are steadily being reimbursed at below wholesale cost (see attached list) is growing and many businesses are near the point of turning patients away. At many meetings practitioners have stated that they are subsidizing the Medi-Cal patient because these patients, who rely on their devices for simple human dignity, have no alternative for care. In addition, some have said that the state has eliminated the benefit de facto, through negative profit margins, leaving practitioners to deliver the axe to patients, while the administration and the legislature are not held responsible for leaving patients “limbless.”
Where the CPR recommends cost cutting at every opportunity, COPA earnestly suggests that it recommend using some of the savings obtained by utilizing competitive bidding for DME to augment the budget for O&P before California’s most vulnerable population of aged and disabled patients find themselves carting themselves in homemade devices on the streets of our cities similar to what can be seen in most Third World Countries.
While COPA commends the work of the new administration in trying to develop cost savings plans during this crisis period, we must be realistic in what can be achieved in this area. Medi-Cal reimbursement is the lowest reimbursement received by this profession. While there may still be savings available in the DME category, the state has wrenched all possibilities of savings from O&P through years with no increases for the category, no reimbursement for the service component involved with the products and increasing administrative burdens.
At this point in time it may be best for the authors of the CPR to ask themselves, “Is California really at the point where we need to ask those stricken with the most horrible deformities or those who have suffered amputation, to give a little more?”
COPA looks forward to a response to this document.
Sincerely,
Rick Chavez, CPO
President, COPA
Pricing attachment:
CODE MODEL # MEDICAL REIMBURSMENT $ COST $
L6700 MODEL #3 $165.52 $493.90
L6705 MODEL #5 $130.52 $241.41
L6710 MODEL #5X $169.02 $236.79
L6715 MODEL #5XA $169.02 $241.41
L6720 MODEL# 6 $349.04 $854.47
L6725 MODEL#7 $196.79 $280.49
L6730 MODEL#7LO $373.57 $462.28
L6735 MODEL#8 $171.39 $241.41
L6740 MODEL#8X $169.80 $298.75
L6745 MODEL#88X $194.53 $246.44
L6750 MODEL#10P $169.80 $244.98
L6755 MODEL#10X $169.80 $245.48
L6765 MODEL#12P $169.80 $265.76
L6775 MODEL#555 $222.11 $291.70
L6780 MODEL#SS555 $169.02 $316.85
L6795 HOOK, 2 LOAD $562.04 $867.37
L6800 APRL VC $446.34 $773.71
L6805 MODIFIERUNIT $157.33 $225.82
L6806 TRS GRIP VC $807.80 $950.00
L6807 TRS ADEPT $583.36 $580.00
L6809 TRS SUPER $182.88 $235.00
L6825 DORRANCE VO $527.65 $738.32
L6830 APRL VC $610.94 $1,039.08
L6835 SIERRA VO $557.35 $897.36
L6840 BECKER IMP $408.60 $490.52
L6845 BECKER LOCK $348.25 $437.01
L6860 ROBIN AIDS VO $259.49 $362.13
L6865 PASSIVE HAND $172.40 $135.85
L6868 PASSIVE HAND $116.55 $139.93
L6870 CHILD MITT $112.24 $95.89
L6872 NYU CHILD HAN $472.59 $502.90
L6875 OTTO BOCK VC $371.31 $408.41
L6880 OTTO BOCK VO $290.47 $201.34
L8420 PROS. SOCK W $11.79 $10.38
L8430 PROS. SOCK W $11.79 $13.05
L8435 PROS. SOCK W $11.99 $7.28
