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Reimbursement Page
The Ever-Evolving Reimbursement Scene
Developments in prior authorization, competitive bidding, audit programs, and more
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THIS PAST YEAR MAY not have been as disruptive as 2020, but 2021 was still a busy year. We saw the full implementation of prior authorization take effect. We saw the implementation of Round 2021 of the competitive bidding program (CBP), which for the first time included off-the-shelf orthoses. We saw the reintroduction of the Target, Probe, and Educate (TPE) audit program. And we experienced many other smaller, but just as significant, changes.
This month’s Reimbursement Page offers a recap of some of the 2021 changes that you may have missed, overlooked, or forgotten—and takes a sneak peek at some updates in store for 2022.
Fee Schedule Updates
The best place to start is at the beginning—and in this case, that’s the 2021 durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule. The annual Medicare fee schedule increase for DMEPOS services and items is based on a combination of two factors: 1) the change in the Consumer Pricing Index for All Urban Consumers (CPI-U) from June to June of the previous year, and 2) the annual multifactor productivity adjustment (MFP). The CPI-U for June 2019 through June 2020 was 0.6 percent, and the annual MFP adjustment was -0.4 percent. This resulted in roughly a 0.2 percent increase in the 2021 DMEPOS fee schedule.
Looking to next year, the CPI-U from June 2020 to June 2021 was 5.4 percent. The official MFP has not been released; however, it is expected to be between 0.2 and 0.4 percent. Given these numbers, it is possible that the 2022 DMEPOS fee schedule could see an increase between 5.0 and 5.2 percent.
What about the mandatory 2 percent sequestration-based reduction to all Medicare payments? At the start of the COVID-19 public health emergency (PHE), the 2 percent sequestration-based reduction was suspended until Dec. 31, 2020, but was later extended to March 3, 2021. Then, the March suspension was extended to the end of this year. Currently, there is no indication that the suspension will continue past Dec. 31, 2021.
The fee schedule also was impacted by the implementation of Round 2021 of the CBP—and not just for suppliers who won contracts in one or more of the 130 competitive bid areas (CBAs). The Social Security Act requires “that the payment determined under the competitive bidding program be used to adjust the fee schedule amounts that would otherwise be used in making payment for DMEPOS furnished outside of the competitive bidding areas for these items.” This means there is a statutory
requirement to adjust the Medicare fee schedule for the 23 off-the-shelf spinal and knee orthoses subject to Round 2021 of the CBP, including non-CBAs, and this adjustment became effective for dates of service on or after Jan. 1, 2021. The adjusted rates for non-CBAs are calculated using a rather complex formula that takes into account an average of the single pricing amounts established within multiple CBAs and whether the service was provided in a rural or nonrural area or ZIP code.
Additional adjustments resulting from the PHE included a “blended rate” calculation methodology, resulting in a temporary increase in adjusted fee schedule amounts for nonrural areas. The blended rate calculation has been extended until April 20, 2021, or the end of the PHE, whichever comes later. As a result of the CBP, the fees for the 23 off-the-shelf spinal and knee orthoses saw a reduction, on average, between 35 and 40 percent in the CBAs.
New Codes in 2021
CMS in 2020 made a change in how it processes applications and requests for new or revised Healthcare Common Procedure Coding System (HCPCS) Level II codes. The agency implemented shorter and more frequent coding cycles. Previously, all code applications were required to be submitted by the end of the calendar year, and then the applications would be reviewed the following midyear, and any new codes or revisions would be implemented at the start of a new calendar year. This meant that if a code application was submitted in 2021, the review would take place in 2022 and a new code would be implemented in 2023.
Under the updated process, code applications are submitted on a biannual basis for DMEPOS, and CMS publishes coding decisions more frequently. Code applications can now be submitted in January, for example, with a review in July and the codes becoming active in October; applications submitted in April will have a meeting and review in December and the codes may become effective in April of the following year.
In 2021, we saw the introduction of two new codes in April, instead of January; they were the result of the Second Biannual 2020 nondrug and nonbiological items and services review cycle (which includes orthotics and prosthetics), held in December 2020. These two new codes became active for dates of service on or after April 1, 2021: • K1014—Addition, endoskeletal knee-shin system, four-bar linkage or multiaxial, fluid swing and stance phase control • K1015—Foot, adductus positioning device, adjustable.
In July 2021, CMS held the First Biannual 2021 nondrug and nonbiological items and services review cycle. This resulted in one new prosthetic code: K1022—Addition to lower-extremity prosthesis, endoskeletal, knee disarticulation, above knee, hip disarticulation, positional rotation unit, any type. The K1022 became effective for claims with a date of service on or after Oct. 1, 2021.
Since these three new codes were all introduced midyear, they were assigned K codes, or temporary codes, and in due time they should be transitioned over to the more traditional L codes. At the time this article was written, none of these codes had been assigned a fee—they are paid under an individual consideration by each DME MAC.
The Second Biannual 2021 nondrug and nonbiological items and services review cycle should take place in early December, and it is possible that new O&P codes could be introduced with an implementation date of early 2022. At the time this article was written, there was no information available on the code applications for the Second Biannual 2021 nondrug and nonbiological items and services review cycle.
LCD, PA, and Coding Reminder Updates
The local coverage of determinations (LCDs) and policy articles (PAs) did not undergo significant change in 2021; however, the durable medical equipment Medicare administrative contractors (DME MACs) and the Pricing Data Analysis and Coding (PDAC) contractor did release new coding reminders and updates.
First, on March 11, the DME MACs and the PDAC published a joint correct coding bulletin regarding HCPCS code descriptors that include only the term “prefabricated, includes fitting and adjustment,” and do not mention “offthe-shelf” or “customized to fit a specific patient by an individual with expertise” (or custom fitted). The bulletin indicates that HCPCS codes that only include the term “prefabricated, includes fitting and adjustment,” such as L0472, L1005, L1686, L1831, and L1910, are to be classified and categorized as
custom-fitted orthoses. This means they may only be used to describe orthoses that require customization and/ or modification by a certified orthotist or other properly trained individual.
This announcement also made it clear that orthoses described by these codes that are delivered as off-theshelf, without customization and/or modification, must be billed using the appropriate not otherwise specified code (L1499, L2999, or L3999). In addition, if a custom-fitted orthosis does not have a corresponding off-theshelf code, and the brace is provided as off-the-shelf (no custom fitting or adjustments), then you also must use the appropriate miscellaneous code. For example, the thoracolumbosacral orthosis, L0460, does not have an equivalent off-the-shelf code—so if the L0460 is provided without custom fitting, you must bill it as L1499.
Next, the DME MACs and PDAC released guidance requiring the mandatory coding verification of products described by HCPCS codes L6715— Terminal device, multiple articulating digits, includes motor(s), initial issue or replacement, and L6880—Electric hand, switch or myoelectric controlled, independently articulating digits, any grasp pattern or combination of grasp patterns, includes motor(s). So, for claims with a date of service on or after Jan. 1, 2022, only the products that have been verified and listed on the PDAC Product Classification List (PCL) as L6715 and L6880 may be billed to Medicare.
Lastly, the DME MACs and the PDAC updated their correct coding guidance for the bilateral lumbosacral hip orthosis, L1690—Combination, bilateral, lumbosacral, hip, femur orthosis providing adduction and internal rotation control, prefabricated, includes fitting and adjustment. The guidance states that, at a minimum, an L1690 must have the following characteristics: • Contains left and right hip joints specialized for combined planar motion • Each hip joint uses rigid connectors for attachment to a rigid lumbosacral component to
maintain therapeutic alignment • Rigid lumbosacral component wraps around the posterior pelvis, includes anterior closures • Lumbosacral component extends from the distal sacrum to L2/L3 • Hip joints align the femurs in abducted posture, set by supplier • Each thigh cuff attaches to the rigid distal upright of each hip joint, includes closures • Each hip joint provides internal rotation control of the hip joint during ambulation • May be worn when seated and during ambulation.
Since the L1690 states “includes fitting and adjustment,” it would be considered a custom-fitted orthosis and require more than minimal self-adjustment at the time of delivery. In addition, there is no off-the-shelf equivalent for the L1690 so if it is provided without being custom fitted, it must be billed as L1499.
DMEPOS Supplier Enrollment Activities
CMS directed the National Supplier Clearinghouse (NSC) to suspend certain activities related to enrollment in response to the PHE. These suspended activities included the charging of the enrollment application fee, fingerprinting and background checks (for select suppliers), and the revalidation process for currently enrolled suppliers. These activities were resumed starting in October.
Suppliers who missed their original revalidation date because of the PHE will be notified of their new revalidation due date in two ways: A letter will be sent to the most recent correspondence address on file with NSC and listed in the Provider Enrollment Chain and Ownership System, and the Medicare Revalidation List (https://data.cms.gov/ tools/medicare-revalidation-list) will be updated to reflect the new dates. The letters and revalidation site will be sent and updated at least three months prior to the new revalidation due date.
If you were originally scheduled to revalidate your locations and supplier numbers during the PHE, keep an eye out for your revalidation letter and begin checking the revalidation website. Failure to respond to the revalidation request by the revalidation due date will result in the deactivation of your Medicare billing privileges.
The application fee will only apply to new locations that are being enrolled for the first time and any current locations being revalidated. The application fee for 2021 is $599; the fee for 2022 has not yet been released.
Finally, as part of enrollment and revalidation, your locations are subject to site visits and inspections to determine compliance with the DMEPOS Supplier Standards. These site visits were previously conducted by NSC; however, in 2021, site inspection duties were transitioned to two new contractors: Deloitte Consulting and Palmetto GBA. Deloitte will handle site inspections west of the Mississippi River and Palmetto will handle site inspections east of the Mississippi River.
This article reviewed some of the updates that took place in 2021—get ready for more change as we head into 2022.
Devon Bernard is AOPA’s assistant director of coding and reimbursement services, education, and programming. Reach him at dbernard@AOPAnet.org.
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BALDWIN BELT
(shown on model)
PHOTO: Getty Images NEED TO KNOW
Ø O&P clinicians can make a big difference in the recoveries of their senior limb loss patients by ensuring they have optimal rehabilitation plans. Ø Rehabilitation programs that emphasize balance, gait symmetry, and reintegrating into the community are particularly important for patients with comorbidities. Ø Appropriate therapy and a healthy lifestyle can help senior patients improve motor function, neural function, and reaction times. Ø Prosthetists should be aware of older patients with decreased muscle density and reduced skin protection characteristics, which may impact volume changes and affect proprioception and socket fit. Ø Leveraging technologies such as telehealth and step-monitoring devices can enhance the rehabilitation process for older patients.
THE COMBINATION of amputation and aging can be discouraging to older O&P patients. Many senior patients undergo amputation due to diabetes, peripheral artery disease (PAD), or other ailments, which can complicate the postamputation rehabilitation journey. Clinicians and rehabilitation professionals who work closely with these patients, help them commit to appropriate rehabilitation protocols, and offer encouragement can help them regain mobility—and hope.
“Aging happens with us all,” says Cory Christiansen, PhD, PT, professor in the Department of Physical Medicine and Rehabilitation at the University of Colorado (CU) and co-director of the Interdisciplinary Movement Science Lab at CU’s School of Medicine. He works with postamputation seniors for his research, much of which is focused on improving quality of life for people with major lowerlimb amputations due to complications of severe diabetes mellitus and severe PAD. When he asks older patients about their problems, “many of them will jokingly say, ‘Well, I’m just getting old,’” he reports. “But we don’t take that as an excuse.”
Christiansen and his team focus on debunking the myth that aging inevitably leads to disability, and that older adults can’t get stronger or more active—“that hopeless kind of mindset,” he explains. When we look at aging, Christiansen suggests we must separate out “primary” aging, which is directed by genetics, from “secondary” aging, which is influenced by the environment and life experience—for example, health behaviors and physical activity.
“We can address a lot of the causes of secondary aging that are reversible— things that you might not even think can be altered,” such as motor function, neural function and reaction times, and cognitive function. “It’s important for clinicians that work with older adults to identify those modifiable changes that happen with aging, and target those with intervention.”
Cory Christiansen, PhD, PT
Strengthening, muscle extensibility, joint mobility, and neuromuscular coordination are alterable, according to Christiansen, so clinicians and physical therapists should work with seniors to identify their personal goals, then work on improving their physical function to achieve those goals.
Recognizing Seniors’ Unique Perspectives
Working with seniors who have comorbidities can be daunting, says Chelsey Anderson, CPO, FAAOP, a clinician and rehabilitation science research student in the Department of Physical Medicine and Rehabilitation at CU’s School of Medicine. Anderson, who collaborates with Christiansen to facilitate research studies geared toward improving health for seniors, points to a particularly alarming statistic: “There is an approximately 50 percent survival rate over five years after amputation in the older dysvascular population,” she says, citing a popular article in the Physical Medicine and Rehabilitation Clinics of North America. A focus on rehabilitation and mobility can help seniors in this population defy the odds to live longer and more productive lives.
“Maintaining a healthy lifestyle, including physical activities like walking, can help support the aging minds and bodies of seniors,” agrees Jesse Mitrani, CP, LP, a clinician at Hanger Clinic in South Florida who also provides mobile prosthetic services. “Staying active is critical for seniors with lower-extremity limb loss, to reduce illness, maintain flexibility, improve balance, and reduce chances of falling. Rehabilitation programs are important for them to learn proper techniques for safe ambulation and exercise.” He emphasizes that exercise and training to regain balance and gait symmetry are particularly important. “Encouraging and creating a plan for senior patients to practice exercising and walking in their own living environments instills confidence that they can return to activities that they enjoy.”
Mitrani believes in the importance of community, which is supported by Christiansen’s and Anderson’s research: Their studies demonstrate a link between lack of community reintegration and poor physical outcomes following postamputation rehabilitation. “Being involved in the community socially is linked to improved health” for patients with lower limb loss, Christiansen explains. “With decreased social support, there’s decreased participation.” On the flip side, finding ways to help seniors show self-efficacy—to self-manage their healthcare or physical activity—may help them become more physically active and engaged in their community.
The success of a patient’s rehabilitation journey also is dependent on the patient’s understanding of the process. “It’s important to detail the added health benefits of increased mobility when providing encouragement,” says Mitrani. When working with older patients and setting rehabilitation goals, he tries to identify important factors that will affect patients’ immediate and future outcomes, such as their ambulatory/mobility goals, home environment, ability to independently fulfill activities of daily living and self-care, and skin and hygiene considerations.
In her work with dysvascular seniors, Anderson has embraced “motivational interviewing” techniques to help patients set realistic and attainable goals. This is a collaborative style of communication wherein the healthcare professional listens to the patient’s concerns and priorities, then guides the patient to identify their own meaningful goals, in a patient-led approach.
“We don’t make goals for them; we talk about what’s important to them,” by asking probing questions such as, “What brings you joy? What activities keep you on track for achieving that happiness?” explains Anderson. Patients’ motivations may be related to their family, specific activities, or continued independence, she says. “Especially as older adults, it’s emotional to accept the limitations of their bodies. As practitioners, we want to energize them to continue to want to achieve or accomplish some form of activity,” she says. “I lean on their values, and revisit their goals, and talk through the rationale behind their goals a little bit more frequently than with younger patients. “We help them set smaller, more realistic goals that they can accomplish over time,” she explains. This approach helps keep patients motivated and enthusiastic during their rehab, according to Anderson. Successfully achieving smaller goals will help them eventually return to the activities that matter most to them.
Chelsey Anderson, CPO, FAAOP Jesse Mitrani, CP, LP
Promoting Progressive Exercise
Exercise during rehabilitation is important for senior patients, so prosthetists, PTs, and other rehab professionals should be careful not to treat older adults as if they’re fragile. “PTs sometimes worry they’re going to hurt patients if they push them too hard,” Christiansen says, explaining that the perceived fragility is related more to comorbidities than aging. “Being able to push people to test their boundaries and limits is really critical, especially with the older adult population, because many people aren’t getting ‘dosed’ the right amount of exercise and physical activity,” Christiansen says. Sometimes, clinicians think that they’re going to cause harm—“but the research would suggest not.”
Mental Health Matters
Patients’ ability to participate in their rehabilitation can be affected by their mental health. Anxiety, diminished cognitive function, or mood disorders are all possibilities among the senior population, says Jesse Mitrani, CP, LP, a clinician at Hanger Clinic. “This can reduce their motivation to do their exercises. Memory function can cause problems for consistent, proper prosthetic use and care. There can also be effects to their balance, making them worried about falls,” he says. Finding the right prosthetic design to reinforce patients’ confidence is important, as is their continued practice through home training and rehabilitation, he says. “Support from immediate family, caregivers, friends, and community is very beneficial.”
Cory Christiansen, PhD, PT, professor in the Department of Physical Medicine and Rehabilitation at the University of Colorado (CU), encourages practitioners to refer patients to mental health professionals, when appropriate. “Depression is common in older adults, and among older adults with amputation,” he says. “You lose a limb, you have to go through the stages of loss, no matter how expected or unexpected the loss may be.” Depression affects motivation for addressing health problems, and it limits people’s desire to participate in the community, which can result in reduced physical activity, Christiansen says. “Like other issues, it’s not inevitable, and it’s definitely treatable.
“If depression is an issue, we have to address that head-on before we can make any headway with prosthetic rehabilitation,” adds Christiansen. He suggests engaging in direct conversations and asking patients if they are feeling depressed, and even employing some basic depression screening tools. “It’s not always comfortable, especially with new clinicians, to discuss this issue with patients” since prosthetists and PTs are not experts in this area. “But we don’t have to be mental health experts to be sure the patient has appropriate resources.” Christiansen’s team at CU includes a staff psychologist, but all clinicians can refer patients to local mental health experts.
IMAGE: Getty Images
Older adults must build on the gains they make during rehabilitation appointments—developing their strength and joint motion—by continuing to exercise on their own, in their homes and their communities, according to Christiansen. “Just because we’re older, doesn’t mean we can’t have progressive exercise prescribed to us,” he says. He notes that best results occur when both the patient and clinician embrace the concept that progressive exercise will improve mobility.
Of course, for patients with diabetes and PAD specifically, healing can be delayed, “so we have to be very intentional about how we move forward,” cautions Christiansen. “We want to be progressive in terms of increasing the amount of exercise and activity that people do, but we need to do it in a way that is tailored for the individual.” Some eager older patients may try to do too much immediately postamputation, “but they don’t have the capacity to heal as quickly as they did when they were younger,” Christiansen notes. If they ramp up the wear of their prosthesis too quickly, they risk developing a wound, which can delay rehabilitation for several months.
For rehabilitation to be successful, patients require a well-fitting prosthesis— a more challenging proposition when working with senior patients. “Older patients commonly have other comorbidities that need attention,” says Mitrani. “It’s also important to take note of any medications they may be taking, as these will often play a role in limb presentation and limb maintenance as they progress through the different phases of rehab and mobility.”
For patients who have diabetes or PAD, these pathologies affect the circulatory system and often are accompanied by nerve complications and reduced sensations, says Mitrani. “Senior patients also often have decreased muscle density and reduced skin protection characteristics, and can demonstrate limb volume fluctuations,” he says. “This can affect their proprioception, balance, and socket fit.”
He incorporates limb interfaces that can provide increased protection into the socket design and utilizes “knee and feet options to maximize safety, stability, comfort, and energy efficiency.
“Volume changes and fluctuations need to be anticipated so that their activity and rehabilitation can be optimized,” Mitrani continues. When volume changes are identified, “we can plan for the ideal time of day for a casting appointment and diagnostic fittings. We can plan for use of volume socks in many cases, or, if applicable for the patient, incorporate an adjustable socket system.” It is critical to educate seniors and their caregivers on how to manage, adjust, and understand proper socket fit, using visual, tactical, and auditory feedback to reinforce the learning process, says Mitrani.
It’s also important for O&P and rehabilitation professionals to explain to patients how their prosthesis may impact other aspects of their health— particularly because many patients with diabetes or PAD may also have kidney disease, high blood pressure, or peripheral neuropathy. “The rehabilitation specialists that work with older adults have to have a good handle on the pathophysiology of all these conditions,” because they may cause limitations in the limbs, says Christiansen. For example, if a limb loss patient has diabetes, complicated by high blood pressure and neuropathy, “we have to talk about how they manage their blood glucose,” he says. Exercise may influence the patient’s blood sugar and blood pressure, as well as how their residual limb heals. “We have to do a lot of problem-solving as clinicians, but we also should engage the patient in the problem-solving” to prevent sores and episodes of low blood sugar, he says.
Rehabilitation is likely to be most successful when prosthetists work closely with other members of the healthcare team—physical and occupational therapists, physicians, and even dietitians, says Christiansen. “It has to be a team effort with older adults, addressing their complex health conditions.”
—JESSE MITRANI, CP, LP
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Leveraging Technology
While some may view senior patients as technophobes, that’s been proven untrue for the majority of baby boomers. In fact, many seniors have embraced telehealth—which can enhance the rehabilitation process.
“Telehealth really improves healthcare access” and increases the chances that seniors without social support or access to transportation will participate in appointments, says Christiansen. Telehealth also enables clinicians to work with patients in their homes, rather than the controlled clinic setting. “I see exercise as a health behavior, and for people to change health behaviors, they need to practice it in their own environment,” he explains.
Seniors also benefit from adopting new self-monitoring resources, according to Anderson. Many of her older patients use Fitbits and other step-count monitoring devices to calculate steps each day as a frame of reference for their progress. “This has been huge—they’re getting information on how much they’re walking” more effectively than in the past, which helps to validate some of their feelings. “If they come in and they’re feeling really exhausted, we can talk through what it felt like, and what led to that exhaustion,” says Anderson.
For example, if a patient with a recent amputation is adjusting to using their prosthesis, and they develop an ulcer on their residual limb, “we can look back to see what their Fitbit looked like that week,” Anderson explains. “They may realize they did a lot of shopping—which involved much more walking than they realized—maybe 2,000 steps more than they normally take.” Prosthetists and rehab professionals can use that information to set safer ranges for activities. In addition, this feedback “allows for setting smaller goals that empower an individual to work up to larger tasks safely.”
Of course, technology also is integral to the prostheses themselves. Many patients who meet the criteria for microprocessor knees are learning to walk with these more advanced components. “We rely on our thorough clinical evaluations and specialized treatment plans to support our patients’ mobility needs and goals. We will use specialized technology when applicable to ensure positive treatment outcomes,” says Mitrani. “Detailed research studies have demonstrated microprocessor knee technology is able to provide patients with superior clinical and economic results compared to mechanical systems.” For patients who are benefiting from microprocessor feet or knees, they can allow clinicians to view and analyze their activity from stored data on the device, according to Mitrani.
—CORY CHRISTIANSEN, PhD, PT
Offering Hope
Prosthetists who treat senior patients should recognize their position in the rehabilitation process. “Our field has always acted as patient champions,” explains Anderson. “We’re the ones that are driving the ship in a lot of ways, and there is a lot of uncertainty that people experience.”
Because O&P professionals are typically more accessible than other members of the healthcare team, “it falls on prosthetists many times to clarify the whole process and elucidate what needs to happen in order to actively and effectively use a prosthesis,” she says. “It’s really challenging for a lot of patients, and prosthetists can serve as a pillar in the process.”
Christine Umbrell is a contributing writer and editorial/production associate for O&P Almanac. Reach her at cumbrell@contentcommunicators.com.
THE INDUSTRY COPES WITH GLOBAL SUPPLY CHAIN PROBLEMS
NEED TO KNOW
• O&P companies at all levels are facing backlogs in their orders for materials and products, triggered by plant closures, labor shortages, and shipping and port delays. • In response, some manufacturers and distributors are stocking up on available supplies, offering substitute materials, and advising patient-care facilities to order early and anticipate patients’ needs. • Some clinics are increasing their use of 3D printing, when appropriate; printer supplies are delayed, too, but they are not as difficult or expensive to come by as casting materials. • Supply chain disruption is causing delays in delivering devices to O&P patients—some of whom are sympathetic, but their expectations remain high.
AGLOBAL SUPPLY CHAIN crisis triggered by the COVID-19 pandemic and exacerbated by pent-up demand for goods is affecting nearly every segment of the U.S. economy, and the O&P industry is no exception.
Major snarls in the supply chain— that is, the path on which goods get from where they are manufactured or harvested to those who want to buy them—is not only disrupting the flow of goods and services, but also fueling worries about inflation. Rising costs for supplies and materials are creating concerns that patient-care providers whose payor contracts do not adjust for inflation will not be compensated for their increased expenses to care for patients. For instance, The Chicago Sun-Times recently reported the price of ethylene, a component of modified polyethylene often used in socket liners, is up more than 40 percent. Meanwhile, the supply of plastic resins took a hit not only from the pandemic, but also due to a winter storm that dramatically reduced domestic production capacity and increased prices 30 to 50 percent, according to an industry report.
Not surprisingly, hospitals and healthcare providers across the spectrum are reporting universal problems procuring medical supplies, according to a survey by the healthcare consulting firm Kaufman Hall. Roughly eight in 10 respondents said pandemic supply shortages have forced them to seek out new vendors and even stockpile supplies when possible. The overall supply chain crisis is so acute, and so pervasive, that President Joe Biden has asked the European Union and 14 “like-minded” countries to cooperate on near-term supply chain disruptions. At the same time, the White House points out that more goods than ever are moving across American ports, warehouses, and stores. Between January and September of this year, more than 7 million loaded containers were imported, 18 percent more than the same period in 2018, which had been the previous record.
O&P device manufacturers and distributors are experiencing difficulties obtaining raw materials, especially plastics and resins that are produced in Asia, because they are in short supply. And when materials are available, significant shipping delays are adding to the lag time. O&P product distributors and fabricators report that when they can obtain hard-to-get materials or components, they’re stocking up. But that can be difficult for labs with constrained space, and may require them to seek out storage, which adds to operational costs. Some also report staffing shortages in-house, which reflects an extremely tight labor market nationwide. Many O&P businesses have been forced to innovate workarounds to meet customer needs.
Materials Shortages
“Our biggest issue is managing the inconsistency of imported goods from overseas,” says Jeff Collins, president of Cascade Orthopedic Supply, which is headquartered in Chico, California. “Unfortunately, these same issues impact our domestic suppliers, many of whom rely on raw materials coming from overseas.”
About 20 percent of the industry’s products come from overseas, according to Pete Stoy, chief operating officer at Hanger Inc. “Plant closures, labor availability, and shipping and port delays have increased product lead times and caused product backorders of 30 to 90 days,” he says.
In addition, domestically skilled manufacturing labor shortages, coupled with wage increase pressures, have increased manufacturing lead times. “Raw material price increases— especially oil-based products—and manufacturing interruptions from weather events have also added to supply interruptions,” Stoy says. To minimize the impact, Hanger has been proactive in partnering with its suppliers on long-term usage forecasts, has increased its warehouse safety stock inventory levels, and is redirecting customers to clinically equivalent alternate items, according to Stoy.
At Cleveland-based PEL, shipping delays are problematic, but an increasing lack of clarity about order statuses is making a bad situation worse, says Michael A. Sotak, president and CEO. “One of our biggest challenges is obtaining accurate and reliable information from our vendor partners when purchase orders are delayed,” he explains. “Our goal is to provide our customers the best possible service, which includes providing accurate availability information.” The company is offering alternative brands and product solutions for scenarios “where first-choice products are unavailable or delayed.”
Sotak reports that petroleum-based products, resins, and products originating in Asia seem to be the most affected by the supply chain breakdown. General supplies have only been a problem intermittently. He also says it’s been a challenge to get “consistent vendor partner performance filling purchase orders” completely and on time. “Carriers no longer guarantee delivery times, and they are warning that their service levels will get worse as we approach the holidays,” Sotak says. “The volume of packages is simply more than their capacity, which is resulting in longer delivery times to customers.”
Most everyone in the O&P industry is in a similar situation, and everyone in the supply chain—even most customers—are sympathetic, but that doesn’t solve the real problem. “Customers understand what is happening, but their expectations remain high,” Sotak explains. To help mitigate the supply chain issues affecting his customers’ practices, he is advising facilities to “order sooner, order more.” He explains, “We suggest they revisit their ordering processes, specifically reviewing the timing of when items are ordered relative to when patients are scheduled. Adding two to three days may avoid having to reschedule patients who show up and the ordered items have not arrived.”
Long Island City, New York-based Hersco Ortho Labs, a lower-extremity central fabricator that specializes in custom foot orthotics, ankle gauntlets, and ankle-foot orthoses, has encountered particular difficulty acquiring an adequate supply of cork and ethylenevinyl acetate (EVA). Hersco technicians typically use the materials in large, thick sheets placed on CAD/CAM router tables to carve custom foot orthotics.
How To Manage Supply Shortages
• Identify historically challenging supplies. Develop acceptable substitutes, if possible, and diversify and partner with several alternative suppliers to ensure that critical needs are met.
• Focus on inventory management. While supply chain staff must collaborate with clinical staff to ensure their inventory needs will be met, supply chain staff should have full responsibility for inventory management so clinical staff can focus their energy on delivering patient care. Utilize technology as economically feasible to gain early insight into issues and enhance maintenance, efficiency, and accuracy. • Gather supply chain data and build supply demand models per category or supply item. Share this data with vendors, request the same supply chain visibility from them, and work together to evaluate and verify the accuracy of the data. Be conscious of variations in product demand from historical usage patterns, which may be attributable to short-term disruptions in patient census or the supply chain. • Manage vendors. Thoroughly vet all vendors to understand past performance, initiate vendor business reviews with targeted vendors, and institute bilateral information and data sharing regarding supply availability.
SOURCE: Kaufman Hall’s 2021 Fall Report
Seamus Kennedy, CPed, BEng(Mech), and owner/operator at Hersco Ortho Labs, says he learned from his supplier in late summer that inventory of cork and EVA was running low. “Their raw material was bottlenecked in California, so as an alternative we accepted delivery of half sheets,” Kennedy explains. “Using smaller sheets is less efficient, but maintaining delivery to our customers is more important than internal efficiency.”
Hersco also made preparations to use a similar substitute material if supplies became completely depleted, says Kennedy. “So far, we have not had to deploy this contingency,” he says, and he is hopeful that the supply chain pressures are easing. However, the company has had to improvise to meet other supply shortages: “We have paid higher prices to alternate vendors to get what we want,” while waiting longer for deliveries, Kennedy notes. “In certain cases, we have accepted close substitutes. For example, the plaster bandage we use for cast pouring was changed. It did not affect the final product, but it altered the process.”
Hersco also is planning further ahead to meet its ongoing supply challenges, according to Kennedy. “In order to secure supply, ensure seamless production, and insulate our customers from the [supply chain] issues, we have invested in larger inventories and triggered reorders sooner.” Patient-Care Solutions
It’s not just the manufacturers that are coping with supply chain delays. O&P facilities also are finding ways to shorten the lag times in delivery of devices.
Eric Shoemaker, CPO, executive director of clinical operations at Ability Prosthetics & Orthotics, headquartered in Exton, Pennsylvania, says his company has been challenged by delays due to supply chain issues, as well as COVID-19-induced staff shortages. “One fabricator sent everyone’s jobs back when he was forced to quarantine for 14 days,” he says. “They’re all having difficulty hiring, too.
“It’s delaying care, and we are having to find creative solutions” in some cases, says Shoemaker. For example, Ability P&O has a contract with prisons to fit patients with diabetic shoes. When “we learned our supplier was back-ordered until February or March,” the team found comparable shoes to provide the prisoners to ensure they receive timely care.
Some clinics are pursuing high-tech solutions to their problems. Comb O&P, an Ohio-based 3D-scanning company designed by and for O&P practitioners, is seeing interest in its services spike. Stefan Purington, Comb O&P’s accounts manager, says he’s had at least a dozen conversations with potential new clients since mid-October stemming from their frustrations with supply chain challenges.
“Because of COVID-19 and supply shortages, there are a lot of materials that are more expensive and sparse,” Purington says, citing plastic and plaster casting materials in particular. Before the supply chain issues spiked, practitioners generally sent casts to fabrication facilities and would expect to get devices back “in a few days.” Those days—at least for the moment— are a thing of the past.
That’s not only because supplies are tight, but because a glut of orders and cutbacks in the U.S. Postal Service have slowed shipping times. “It’s taking four
or five-plus days to get it there, and an equal amount of time to get it back,” Purington says. The supply shortages also affect 3D printing, but not as much as traditional fabrication. “The 3D-printing components are going to be a little bit more difficult to get, but at the same time they are still readily available. You can purchase them in bulk, and you can have them shipped, so I don’t think the actual filaments for 3D printers will be as difficult or as expensive to come by as something like casting materials.”
Collins also points to employee shortages as a problem in solving supply chain disruptions. “Staffing has been a challenge” for Cascade, “but fortunately, we have been able to manage the operational needs with reduced staffing levels,” he says. “Overtime and temporary labor have also helped augment our traditional staff levels, but these temporary measures are not longterm solutions.”
Cascade has plans in place to return to pre-pandemic employment levels, except in its distribution centers, where they’re moving toward automation to alleviate labor shortages in entry-level jobs, according to Collins. “In our distribution centers, we have invested heavily in technology and the inVia Robotic Automation System to help mitigate the impact of labor shortages,” Collins says, adding that it is not just a temporary solution. “Automation will be deployed at all of our sites and will reduce labor in entry-level positions that historically have had the highest turnover,” he explains. “We had been in the planning stages for this technology years before the pandemic.”
SPS, a distributor of O&P devices and components, is advising customers to order items that are already in-stock when possible, according to Regina Weger, president of SPS. “With our new ‘typically in-stock’ filter on our website, we have made it easier than ever for customers to find the products they need and determine their availability,” she says. “Customers should also be flexible when possible by ordering alternative, comparable product choices if their regular items aren’t available.”
It’s hard to tell how long the O&P industry—and the U.S. economy at-large—will have to contend with supply chain disruptions. But Weger says planning ahead and devising alternatives is the smart play. “While there is no way to really know when these issues will be resolved, we do expect to see some of the same challenges through 2022, including shipping delays, inflation, and labor shortages,” she says. “Until then, SPS will concentrate on our safety stock and finding alternative options for our customers, so they can focus on their patients.”
Michael Coleman is a contributing writer to O&P Almanac.
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