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[Informative article and history on Medicare Billing L-Codes from The O&P Edge]
16 Dec 2008 Note: a new ICD set will apply soon. ICD-10.]

L-Codes: Are They Meeting the Needs of O&P?

By Miki Fairley

Regardless of your view toward the United States L-Code system and its reimbursement methodology, there is no arguing that the system is complex, as shown by the plethora of coding seminars, manuals, and software available to help navigate its maze. But given the unique nature of O&P—the only healthcare specialty that inextricably links expertise and specialized education to providing a device—complexity may be unavoidable.

But virtually everyone agrees that there are some difficulties with the system as it exists today.

What are these? What has caused them? What are the solutions? History Sheds Light
Birth of the L-Code

As the profession went through the learning curve of the new methodology, there were some glitches.

The Health Care Financing Administration (HCFA), the previous name of the Centers for Medicare & Medicaid Services (CMS), adopted the South Carolina system and established the Healthcare Common Procedure Coding System (HCPCS) in 1978. The HCPCS was established to provide a standard coding system for describing the specific items and services provided in healthcare delivery. L-Codes are included in HCPCS Level II codes.

As explained by CMS, HCPCS includes three levels of codes:
  • Level I: The American Medical Association (AMA) Current Procedural Terminology (CPT®). The AMA owns the CPT codes and decisions regarding the addition, deletion, or revision of codes.
  • Level II: Includes codes that identify services, products, and supplies not included in the CPT codes, such as ambulance services and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), when used outside a physician’s office.
Reimbursement Methodologies Evolve

Obviously, facilities that systematically billed high-end rates would automatically receive higher Medicare reimbursements than facilities billing at more reasonable rates, regardless of the quality of services provided. Medicare also had the onerous responsibility of maintaining profiles on hundreds of separate facilities. Thus, the fee schedule system was born.

When the fee schedules were created in 1989, Medicare used the usual and customary and reasonable allowables for each of the existing codes for the 12-month period comprising the last half of 1986 and the first half of 1987 to arrive at the allowable assigned to each code, Dodson explains. This fee schedule amount was basically an average of the allowables for those time frames for those codes.

This basic fee schedule only changes each year if Congress passes a bill for a change, increasing or decreasing an amount for a certain time frame, or freezing the amount. The current law states that O&P will receive an annual increase equal to the Consumer Price Index-Urban (CPI-U), unless Congress mandates otherwise.

New Codes, New Devices

Determining fees for new codes, if there is no previous or temporary code that can be crosswalked into the new code, is a complex process.

The process begins with CMS accessing information through the Durable Medical Equipment Medicare Administrative Contractors (DME MACs) to help determine the actual cost of the device and what the going payment rate is outside of Medicare.

Information is gathered from O&P practitioners, manufacturers, private insurers that may already be paying for the device, and Internet searches. CMS tends to use information from the lower end of the spectrum from manufacturers not used by, or even unknown to, the O&P community, Dodson notes.

Of course, since the cost of living and overall costs of doing business have considerably outstripped congressional fee increases, the new fee frequently does not accurately reflect real-world costs.

The L-Code system is not without its flaws. Persons interviewed for this article identified the following as major problems:
  • There is an overlarge number of codes, many of which are unclear and outdated.
  • New code development is not keeping pace with rapid advances in O&P technology and the time and expertise required in the service component, thereby impeding the introduction into the marketplace of new technology that can benefit patients.
  • CMS has failed to crack down on unqualified providers in states with O&P licensure, which can contribute to misuse of codes, as well as fraud and abuse. BIPA mandates that in states with licensure, O&P services must be provided by licensed practitioners. Depending on each states individual licensure law, these providers can include other disciplines as well as traditional O&P providers.
  • There is ongoing confusion of O&P with DME in the minds of payers, lawmakers, and regulatory agencies.
‘Flawed Implementation’?
Again, history sheds light on today’s situation.

The O&P profession pursued this idea and encouraged the adoption of codes to allow certain custom-fitted devices considered by industry experts to be functionally equivalent to the custom-made alternatives.

A bright spot is that AOPA appears to be developing a better working relationship with the SADMERC, which has significant influence on the outcome of coding decisions made by CMS, Kaiser notes.

Both Kaiser and Allen have ideas for improving the L-Code system, albeit opposing ones. Noting that O&P practice and technology has changed greatly in the 30-plus years since the system was created, Kaiser feels that reimbursement should reflect the far greater amount of time and expertise now required for follow-ups. He suggests deleting all L-Codes not related to custom O&P, such as those for off-the-shelf orthoses, and restricting L-Code billing to certified and/or licensed orthotists, prosthetists, and pedorthists, who would have to meet continuing education requirements to keep up with new technology and other advances. Non-custom categories could be billed under another type of code and could allow billing by other providers as well as traditional O&P. Besides opening the door for fairer reimbursement for the increase in time and expertise required at the higher level of O&P care, restricting the L-Codes in this way could eliminate much of the current fraud and abuse, Kaiser believes.

Allen would like to see the codes reach a higher level of specificity for accurate description of devices, which might require more codes, he notes. He also would like to see all the codes that relate to orthotics, prosthetics, and pedorthics brought under the L-Code umbrella, rather than being included in other code listings. In a practical way, this would simplify billing and maintaining a coding database in the facility; rather than searching several code sets, the practitioner could simply search one, he notes. Coding updates and changes could be more quickly and easily incorporated into the database.

One bright spot Allen sees is the development of the CMS National Correct Coding Initiative (NCCI) to promote correct coding methodologies and to control improper coding. Although the NCCI Coding Policy Manual currently covers very little O&P, if it extends further, it could be a valuable aid. ( Editor’s note: For more information, visit www.cms.hhs.gov/NationalCorrectCodInitEd )

As for the near future, it appears that CMS may consolidate some codes and their associated reimbursements, according to some of the persons interviewed. The industry needs to be
vigilant, they add, to help ensure that any code and reimbursement changes accurately reflect provider time, expertise, associated costs, and contemporary O&P practice, and are not
simply for the purpose of reducing reimbursements.
Separating O&P from DME

Impeding progress in coding and reimbursement issues is the ongoing problem of separating O&P from DME in the minds of legislators, CMS, insurers, and the public—a dragon that has yet to be slain.

Joyce Perrone, Promise Consulting Inc., Pittsburgh, Pennsylvania, also sees the confusion with DME as a major underlying problem for O&P in legislation and reimbursement.

Miki Fairley is a contributing editor for The O&P EDGE and a freelance writer based in southwest Colorado. She can be contacted via e-mail at miki.fairley@gmail.com