Payer Requests for Manufacturer Invoices: A Call for a Unified Response
September 2014 Issue
The issue of how to best respond to a third-party payer's request for a manufacturer's invoice has been surfacing time and again since I began in O&P almost two decades ago. And I have yet to see an authoritative publication or guidance from a national organization addressing this, or an investigation into the legal and regulatory aspects of the issue.
The company I work for has seen a recent upsurge in these requests, and as I searched for experience and advice on how to handle this situation, I received the same suggestions over and over from O&P professionals, who provided only anecdotal outcomes. Although the success rates were often unsatisfactory in that they resulted in reimbursements well below the actual cost of providing the service, I still have not encountered meaningful discussion on an industry-wide level about how to provide a unified approach to defend against the unfair policy of payers requesting manufacturer or supplier invoices and basing reimbursement on those component invoices. This issue is ripe for a unified solution throughout the profession, and all companies will benefit if the payers receive a consistent and clear response to this inappropriate request.
The request for a component manufacturer's invoice is inappropriate when it is used as the basis for a pricing methodology because it does not take into consideration the service component and the associated material costs that are required to provide a custom prosthetic or orthotic device–these provider costs are a significant portion of the overall expense. As noted in "More than a Supplier: Responding to Payer Requests for Component Invoices", significant training and education costs are involved as we operate appropriate, accessible facilities that are staffed by certified O&P practitioners. In addition, the components purchased are incorporated into the patient's care and do not represent a complete service without the significant and material additions and input contributed by the practitioner. In most cases, individual components are nonfunctional without an O&P provider's expertise and will require follow-up for optimal function.
If, after presenting this explanation, the payer stands firm and withholds reimbursement unless the component manufacturer's invoice is disclosed, contending that it is required by its policies and procedures, then a more aggressive response must be mounted. This response must be consistent throughout the profession in order to shape this trend in thirdparty payer reimbursement policies.
In my own struggles with this issue, I realized that to succeed I need solid information about the legitimacy of the payer's right to demand this documentation, as well as a better understanding of the intent behind any regulations that say this information must be provided upon demand by certain government payers. Legal advice from the trade and business associations representing the O&P profession, such as the American Orthotic & Prosthetic Association (AOPA) and the Orthotic and Prosthetic Group of America (OPGA)/POINT Health Centers, Waterloo, Iowa, regarding the legal arguments that would support the proprietary nature of this information and fair business practices, as well as contract law advice to challenge the legitimacy of third-party payer contracts and policies basing payment on manufacturer invoices, implemented subsequent to these contracts, would also be helpful. I need to know the legal and regulatory issues surrounding the provision of manufacturers' invoices to third-party payers to guide my decision making and responses.
This is clearly an issue for our profession as a whole, not just for individual patient care facilities. We need to convince payers that policies need to be adjusted. Let's turn the squeaky wheel into a deafening roar and speak out as one voice.
Susi Ebersbach, MT (ASCP), MBA, is a senior reimbursement specialist with Ability Prosthetics & Orthotics, headquartered in Exton, Pennsylvania. She has more than 25 years of experience in healthcare management, most of which has been focused in O&P.