A Healthesystems publication

Fall 2011

Electrotherapy: Identifying the drivers to better manage costs

Electrotherapy products and services comprise one of the largest portions of total DME spend for workers’ compensation claims, typically falling within the top five most costly items. For many payers, upwards of one third of all claims receiving DME services include electro-therapy equipment. Although the individual charges and paid amounts can be relatively small for most electro-therapy equipment and supplies, the total financial impact driven from the utilization and number of claims necessitates developing better strategies to manage costs. Healthesystems has compiled the following information from our innovative Ancillary Benefits Management (ABM) program. Based upon our analysis, better management and cost savings for electrotherapy can be achieved by focusing on these three primary areas:

The data analyzed was for home usage of electrotherapy, not equipment and supplies billed by physical therapy clinic visits.

Price and Quantity

The prices for electrotherapy products usually are relatively small. A TENS unit can be rented for approximately $40-$60 per month and the associated supplies such as electrodes, batteries, lead wires, etc. will add another $75-$100 per month. As a result, over a five month period, electrode supplies comprise as much as 71% of the total electrotherapy costs (depending on the types of electrodes and duration of electro-therapy, i.e. the longer the duration, the greater the need for replacement batteries and additional lead wires).

The significant challenges most payers encounter when evaluating the price of these products is being able to determine the individual services (the correct code), the quantity dispensed (appropriate billing quantity) and whether the equipment is purchased or rented.

Prices vary significantly by HCPCS code. For example, the most commonly billed electrotherapy code is A4556, for electrodes. Prices for these products range from a few cents to over $100. Other price variables include whether the electrodes are reusable or disposable, the size and quantity. The price of disposable electrodes is approximately $2-$3 per pair and the price of reusable electrodes can be around $9-$10 per pair. While, the prices of disposable electrodes are significantly less than reusable ones, the actual monthly spend is less for the reusable based upon the lower total monthly quantity of units. The net result could result in a savings of $10 per month per claim (monthly disposable electrode cost = $50, monthly reusable electrode cost is $40. See chart on next page).

Savings calculations compared to state fee schedules can be quite substantial for electrotherapy, however, they can also be misleading depending on the actual product being used. The following is an example of savings calculations in California. The fee schedule for all HCPCS code A4556 products is $10.35 per pair.

Using the price per pair for a reusable electrode of $10, the savings below fee schedule is $.35 (3.3%). Compared to a disposable electrode price per pair of $2.50, the savings below fee schedule is $7.85 (75.8%). However, the total monthly cost is still lower for the $10 reusable electrode. Therefore solely using the savings from fee schedule will not identify the most cost advantageous approach.

Another factor to consider is quantity — how many electrodes, replacements or lead wires are being billed and paid? Electrodes are dispensed in many different quantities. The most common quantities are per each, per pair, and packages of 4, 20 and 48. In order to better manage the pricing of electrodes, identifying the translation of dispensed quantities compared to billed quantity is crucial. Using the previous example, the HCPCS code A4556 expects a per pair scenario. However, if a supplier bills for two electrodes, does it equate to two pairs or one pair? Frequently, the supplier bill is for two electrodes and not two pairs and the likelihood is that payers are charged too much.

The higher quantity packages of 20 and 48 are also very challenging to validate correct billing and payment. Often a quantity of 20 pairs is used to provide a monthly supply of disposable electrodes. However, the package of 20 should be priced as 10 pairs and yet it is billed as 20. Validating the correct quantities is an important step in the adjudication process, especially since the quantities billed are highly variable and the specific item and package size frequently aren’t included on the bill within the A4556 HCPCS code.

Another challenge with validating quantities occurs with rentals and purchasing of TENS units and other combination stimulator units. There are different billing scenarios associated with TENS units and combo-stimulator units. These include:

Typically the process of distinguishing and validating appropriate quantities for TENS and combo-stimulator units requires matching each bill to the authorization without knowing what was ordered. As a result, it becomes impossible to validate what price the provider used to arrive at the billed amount due to the various quantities and prices used within a single HCPCS code. Implementing a prospective authorization process is the necessary solution for managing costs associated with TENS units.

Duration of Electrotherapy

Duration of electrotherapy treatment has two components, the duration of the rental and the number of times supplies are to be delivered. A TENS unit may be rented for three months and then converted to purchase with intent of using it for two more months resulting in a total of five months of therapy and five months of supplies.

Reducing the duration of electro-therapy treatment by 60 days can lead to a 15% reduction in the cost of electrotherapy services for a claim.

The following are some questions to ask about your program:

What is your average duration of electro-therapy treatment? Is it more or less than 180 days? How are your DME suppliers managing electrotherapy supplies on your behalf? Do they automatically ship another month’s supply to an injured worker? Do they send $75 worth of supplies without validating that all the supplies were needed?

The savings opportunity is real — for example, 1000 claims accumulating two months of unused electrotherapy supplies equates to $150,000 of cost to those claims.

Proactively monitoring DME suppliers and ensuring they are verifying electro-therapy supplies are being provided only when needed is another critical step in managing DME costs.

Evaluating Electrotherapy Spend

For most payers, monitoring and evaluating their electro therapy costs is not an easy task. The starting point is compiling a limited set of HCPCS codes. The 11 HCPCS codes listed below represent the vast majority of costs for electrotherapy equipment and supplies, while the remainder is billed using miscellaneous codes, particularly E1399.

Controlling the use of E1399’s is another critical element in managing electrotherapy costs. Based upon the analysis Healthesystems has performed, we have found the use of E1399 is only appropriate for certain types of electrotherapy equipment such as combination units where there is no defined HCPCS code. However, these are frequently expensive items, with the most commonly used units ranging from $330 to $3,500. In order to ensure the appropriate contracted rates and fee schedule structures are being applied, these products require more stringent prospective oversight to effectively manage them.

Incorporating a tool such as the Healthesystems ABM Catalog provides a process to identify and map the specific equipment and supply items to categories and sub-categories independent of billing codes, thus allowing a greater degree of management over price and utilization. Maintaining visibility into the details of the miscellaneous code activity is critical. The list below contains some of the most frequently dispensed and more expensive of the electrotherapy unit items billed with the E1399 HCPCS code.

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