Problems with Cost Plus Payment in CRT

United States Coins.

United States Coins.

Complex Rehab Technology (CRT) products are specialized and customized to fit each individual’s needs. These products are provided to individuals with significant disabilities in order to address their medical and functional needs.

When determining the cost of CRT products, the cost of the product, cost of the service, delivery and support system must be recognized. The cost of the product itself is only about half of the actual cost of providing the equipment. CRT studies have found that for every dollar of funding, product cost is approximately 49 cents and service cost is approximately 46 cents. To make sure that people with disabilities are able to access the CRT equipment they need, a funding system must incorporate the total costs of providing the product and the supporting services. Because of these operational and financial challenges, there are only a limited number of companies that will supply CRT and that number is decreasing.

Problems with Cost Plus Payment Methodology

  1. Unless the Cost Plus methodology incorporates all costs of products and services with an appropriate multiplier, it does not provide appropriate payment rates.
  2. A Cost Plus system is time consuming for the payer. Since CRT orders are so complex, there may be 20 to 30 invoice line items to review on each claim. This creates additional administrative burdens.
  3. A Cost Plus system penalizes CRT suppliers and rewards companies that don’t. Because dedicated suppliers buy more products, they will typically have a lower product cost compared to the company that buys fewer products. The result of this is a supplier getting paid less than a company that has made a smaller investment.
  4. A Cost Plus system reduces the supplier’s desire to negotiate better acquisition costs.

Alternative Payment Methodologies  

  1. Use published Medicare Fee Schedule to ensure that the most current fee schedules are in place.
  2. Use Manufacturer’s Suggested Retail Pricing (MSRP) to decrease the likelihood that a supplier will provide a low quality product.
  3. Use a combination of Medicare Fee Schedule and MSRP. Use the Medicare Fee Schedule for coded items and MSRP for non-coded items.

There are a number of problems with applying the Cost Plus payment methodology to CRT. The National Coalition for Assistive and Rehab Technology (NCART) works hard to make sure that individuals with disabilities have access to CRT products and services. Contact us to find out how you can help!