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Provider Perspective in the Health Care Economics of Lower-Limb Prosthetic Rehabilitation

Kaluf, Brian, BSE, CP, FAAOP

JPO: Journal of Prosthetics and Orthotics: January 2019 - Volume 31 - Issue 1S - p P43–P48
doi: 10.1097/JPO.0000000000000230

ABSTRACT Health care economic science holds great potential for improving the quality of lower-limb prosthetic care. To realize this potential, health care providers need to adopt an outlook that economic analysis is not strictly limited to the scrutiny of cost, but includes a better understanding of the value generated in the provision of lower-limb prostheses. Health care providers in the United States currently have a negative perception of cost containment efforts implemented by regulators to rein in health care spending. The United States currently spends more on health care than any other developed country (17.9% of GDP; National Health Expenditure Projections 2017–2026. Centers for Medicare and Medicaid Services; 2017), whereas other countries have reduced cost and increased quality of care through health care economic science.

The clinical outcome of restoring mobility and independence to a person with lower-limb amputation has an appreciable impact on quality of life. By measuring the quality improvement and comparing costs associated with available lower-limb prosthetic alternatives, health care economic science can improve decision making regarding the best use of resources and improve the overall value of care. Although limited economic evidence exists concerning lower-limb prostheses, a better understanding of the purpose of health care economic science can lead health care providers to contribute to the economic research that is needed.

BRIAN KALUF, BSE, CP, FAAOP, is affiliated with Ability Prosthetics and Orthotics, Inc, Exton, Pennsylvania.

Correspondence to: Brian Kaluf, BSE, CP, FAAOP, Ability Prosthetics and Orthotics, Inc, 660 W Lincoln Hwy, Exton, PA 19341; email:

Disclosure: The authors declare no conflict of interest.

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The current US health care reimbursement environment fosters a perception among providers that any evaluation of health care costs is associated with cost-containment activities that result in fewer choices and limit patient access to prosthetic technology. However, this perception does not reflect a full understanding of the intended goal and variety of approaches used in health care economic science. It is important to explore the perceptions held by providers if health care economic analysis is to become more prevalent in research of lower-limb prostheses.

The perception of economic science by certified prosthetists is predisposed by experiences with the frequent auditing and reimbursement recovery activities initiated by Medicare after an Office of the Inspector General (OIG) report in 2011, which claimed a potential saving of $43 million in questionable billing of lower-limb prostheses claims.1 The Recovery Audit Contractors (RAC), Comprehensive Error Rate Testing (CERT), and prepayment audit efforts by Medicare intend to reduce health care expenditure on lower-limb prostheses by reducing waste due to fraud and abuse. Much of the focus of these audits surround documentation requirements defined in the Local Coverage Determination Policy for Lower-Limb Prostheses (LCD).2 The LCD requires documentation of a Medicare Functional Classification Level (MFCL), and the policy restricts access to more expensive, higher functioning prosthetic technology to patients who are documented as having higher potential capacity for mobility. This increased scrutiny and expanded documentation requirements have resulted in 15,000 new appeals per week,3 a backlog of 650,000 administrative law judge (ALJ) cases,4 and delays for hearings reaching 1,051 days.4 Prosthetic practices have experienced financial strain from the delays in receiving payment on claims for lower-limb prostheses provided, and 100 small businesses had reportedly closed during the height of the RAC audits by Medicare.5 As a reaction to this uncertain reimbursement environment, providers have adopted a widespread belief that Medicare is attempting to limit access to higher functioning and more expensive prosthetic technology through these auditing activities.

In addition, private insurance policies often target higher cost prosthetic interventions and limit coverage through a variety of strategies. Some policies stipulate that only the “least costly alternative”6 will be covered. Because the Affordable Care Act (ACA) has been partially repealed, there is a possibility for insurance companies to reinstitute annual or lifetime caps on prosthesis-related coverage. It is important to note that decisions to implement these cost-containment strategies by private insurance companies are based on cost of the prosthesis alone and forego any evaluation of quality improvement provided by various lower-limb prosthetic alternatives.

Finally, emerging technologies for lower-limb prostheses face a restricted pathway for securing reimbursement, which ultimately inhibits translation of new technologies into clinical practice. Most private insurance companies and public funding agencies follow the Healthcare Common Procedure Coding System (HCPCS) and a reimbursement fee schedule set by Medicare. The process of securing a new HCPCS L-code for a lower-limb prosthetic technology involves submitting a new code application to the HCPCS workgroup. This workgroup determines if a new technology warrants a new L-code based on certain criteria, such as whether the new device functions substantially differently from devices described by current L-codes.7 This process of issuing new L-codes has not kept up with the pace of innovation in lower-limb prostheses, with multiple applications being required over several years and a low approval rate for new L-codes.

On those rare occasions in recent years when the HCPCS workgroup has acknowledged a substantial innovation in prosthetic technology, this has not automatically guaranteed Medicare coverage.7 For example, the working group recently issued a new L-code for a powered ankle (L5969), but the LCD policies were subsequently updated to deny coverage of this technology, stating that it was not “reasonable and necessary.”2 Although cost is not formally considered as one of the criteria used to determine if a new L-code is warranted, the low rate of new L-codes issuance restricts the pathway for new innovative technology to secure reimbursement and creates an inherent bias toward older and less expensive technologies that existed before the establishment of HCPCS in 1978. Innovation and emerging technologies increase the diversity of lower-limb prosthetic choices, which could provide more opportunities to improve the quality of care or ultimately reduce cumulative health care costs. However, it remains increasingly difficult to secure reimbursement for technologies that have not yet been issued an L-code as insurance companies label these technologies as “experimental/investigational” or “deluxe.” This creates a “valley of death” that can stifle innovation of emerging prosthetic technology that hold potential to improve the outcomes and value of lower-limb prosthetic care.

When the aforementioned circumstances describe most economic or cost-related discussions surrounding lower-limb prostheses, it is understandable that health care providers, and certified prosthetists especially, are apprehensive about the potential impact of health care economic science. However, it is important to point out that the cost-containment activities and coding system restrictions described previously reflect health care decisions made with a very narrow economic approach in the absence of any evaluation of the quality of care. If any type of health care economic analyses were used to inform these decisions, it was likely limited to cost-containment approaches, where the effectiveness of the various alternatives are assumed to be equal and only associated costs are compared. This approach to economic analysis often results in selecting the least costly alternative. Under this economic approach, health care providers become frustrated by the lack of consideration of incremental quality and improvements in patient outcomes from different prosthetic technology alternatives. The improvement to quality of care from various treatment alternatives is apparent to health care providers treating persons with lower-limb amputation, and this perhaps explains why providers associate health care economics with a negative connotation.

As a result of these frustrations, providers advocate for inclusion of quality measures in the health care economic analysis and decision-making process. With measures of quality, health care economic analysis can demonstrate which types of prosthetic care and which emerging technologies provide the best value and therefore represent the best choice for investment of limited health care resources. The following discussion demonstrates how health care economic science can provide a solution for the reimbursement debates and unlock innovation stifling regulation.

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Health care providers are familiar with economic analysis used to reach decisions within their respective health care practices, where costs of available alternatives are compared in order to make purchase or investment decisions, manage staff, and streamline clinical processes. Hospital systems evaluate return on investment (ROI) regarding purchase of new equipment. ROI is a practically applied form of cost-benefit analysis (CBA) in which the equipment cost is compared against potential revenue from procedures performed using that equipment. Prosthetic fabrication facilities analyze cost of different material options for fabrication of custom sockets, where, in addition to material cost, the quality of the material is also considered an important factor. The processes implemented by clinical staff to fit a patient with a lower-limb prosthesis are also studied to identify steps that contribute to improving the overall quality of care and removing steps that take away from process efficiency. These economic decisions made within health care practices regarding the business operation and delivery of care are well understood by providers. They can provide a good comparison to understand the type of health care economic science that is needed on a larger societal level.

The purpose of health care economic science is to inform decision making regarding the most efficient use of resources and achieving the highest possible quality of health care. Health care economic analysis can be much like other research methods to compare health care alternatives, with cost being one of the additional factors quantified and evaluated. Similar to studies comparing length of stay8 or total clinician and technician time and effort,9 analysis of health care cost is one way to quantify the resource demand of various lower-limb prosthetic devices or treatment options. Efforts to reduce the hospital length of stay or number of required clinic visits both aim to make the use of limited time and space resources more efficient. Health care economic science takes the same approach regarding limited available health care funding.

Unlike the quasi-CBA, approaches used to make decisions about capital equipment investments, other formal types of economic analyses of health care cost related to lower-limb prostheses require consideration of quality and effectiveness. Like many health care interventions, lower-limb prosthesis alternatives provide incremental improvements in the quality of clinical outcomes experienced, and more effective alternatives may have a higher health care cost. Providing no prosthesis at all represents the least costly alternative. However, for most patients who are considered for management by certified prosthetists, this alternative is unacceptable. Similarly, the most basic prosthesis, which consists of wooden prosthetic foot technology dating back to the mid-1950s,10 is undesired due to known increases in sound side limb loading and other issues.11 Providers recognize the difficulty patients have in achieving a comfortable prosthetic socket fit and maintaining their mobility in the community after limb loss. Without modern technology such as elastomeric socket liners, prosthetic knees that provide stability and improved balance, or prosthetic feet that allow more efficient gait, it is understood that patients could not achieve the level of mobility, independence, and quality of life they currently rely upon. Because of the diversity of prosthetic components, the general lack of outcomes-based evidence in prosthetic rehabilitation, and inconsistency of individual patient response, it is difficult to predict to what extent the variety of prosthetic alternatives will produce greater outcomes and which patients will benefit most from these technologies. This makes it difficult for reimbursement agencies to evaluate which prosthetic alternatives present a good value or whether more costly prosthetic technologies provide a meaningful improvement in patient quality of life.

The type of health care economic analysis that compares effectiveness and associated cost of treatment alternatives is called cost-effectiveness analysis (CEA). Health care economists maintain that CEA should not be viewed as a cost-containment measure.12 The key difference between CEA and other forms of economic analysis is the inclusion of a measure of quality to calculate the overall value. CEA is best used for comparing two treatment alternatives by calculating an incremental cost-effectiveness ratio (ICER), which comprises the costs of the two alternatives and some measure of quality of the patient outcome. This quality measure can take many forms; for example, the effect on longevity, fall prevention, pain reduction, mobility, or independence could be quantified with the two treatment alternatives and compared along with the cost of the alternatives by calculating an ICER.

To ensure that health care economic science assesses effectiveness of different lower-limb prosthetic intervention options, quality measures should be included. Quality measures that represent the most important shared domains to providers and patients with lower-limb loss include mobility and independence. With this understanding of CEA, the various stakeholders (patients, providers, and payers) can become aligned about the purpose of health care economic science and perform analyses that better inform decision makers of the value of lower-limb prostheses.

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Existing research into the economics of lower-limb prostheses is limited, with a recent systematic literature scoping report finding six articles of cost comparison.13 The articles reviewed presented cost-identification or cost-consequence analysis, but they did not contain the types of CBA, CEA, or cost-utility analysis (CUA) that are useful for informing health care decision making by providers and regulators. This review summarized findings into three topic areas: care models, prosthetic treatment, and prosthetic sockets. The evidence statements summarize whether cost of care was higher depending upon the setting of rehabilitation,14 limb salvage versus amputation surgery,8,15 socket fitting, and fabrication techniques.9 Knowing which alternatives have higher associated costs is valuable information, but the current existing health care economic evidence lacks any measure of incremental effectiveness or quality. Without that information, it is not possible to determine whether a higher cost alternative is worth the investment. The authors of the literature review concluded that the evidence was insufficient for further review, conclusions, or policy guidance.13

A literature review performed to accompany these state-of-the-science proceedings (“Health Care Economics in Lower-Limb Amputation Surgery, Prosthetics, and Rehabilitation: A Narrative Systematic Review of the Literature,” Stevens et al.) expanded upon the previous review article to include descriptive economic literature. This evidence review provided insight into expected health care cost associated with the variety of amputations, inpatient hospitalization and rehabilitation, and prosthesis-related costs of different patient diagnoses and sociodemographic factors. The authors of this review also summarized evidence that supports lower health care cost associated with limb salvage over amputation, due to the higher hospitalization and prosthesis cost. However, this finding was based on associated costs alone and included no evidence of the quality of clinical outcome.

Emerging evidence comparing the outcome of various surgical alternatives to transtibial amputation serves to highlight the importance of including quality measures in health care economic analysis. Recent outcome studies of limb salvage surgery and transtibial amputation secondary to severe distal tibia or hindfoot injury have found that patients have less sickness impact16 and greater self-reported musculoskeletal function and performance on high-demand testing with a transtibial amputation over certain limb salvage procedures, depending on the severity of ankle trauma.17 When surgical alternatives to transtibial amputation are compared using cost alone, such as in the descriptive economic evidence reviewed13 (“Health Care Economics in Lower-Limb Amputation Surgery, Prosthetics, and Rehabilitation: A Narrative Systematic Review of the Literature,” Stevens et al.), the quality of the outcome can be overlooked, and decision making regarding this important health care decision may not be fully informed.

To contribute to more meaningful health care economic evidence, the full costs associated with various lower-limb prosthetic alternatives need to be quantified. This involves not only primary health care costs incurred, such as the cost of prostheses, but also secondary health care costs avoided. An example of potential costs avoided is the reported direct medical cost of falls in persons with transfemoral amputation ($25,652).18 Other health care costs avoided with more effective prosthetic alternatives could include positive effects on comorbid conditions, reduced pain medication, or avoidance of secondary medical conditions such as osteoarthritis. Avoided costs may also be associated with non–health care costs and productivity loss, such as caregiver support, transportation, or other assistive devices. A study comparing the cost-benefit of microprocessor knees over nonmicroprocessor knees included both health care and non–health care costs and found that a microprocessor knee and nonmicroprocessor knee had similar costs, despite the microprocessor knee having a greater component cost.19 These health care–related and non–health care–related cost savings from more effective lower-limb prosthesis alternatives are well understood by providers through professional experience treating patients with lower-limb loss. The struggle for health care economic science is finding ways to quantify and compare these costs incurred and costs avoided, as typically only the health care–related costs incurred by the patient are recorded.

Similar studies of microprocessor knees have used a type of health care economic analysis, which focuses on years of life gained from different health care interventions, called CUA.20,21 This approach is similar to CEA, where costs are compared against a quality measure; however, CUA more specifically compares health care costs against quality-adjusted life-year (QALY). QALY is a measure of years of life gained, modified on a 0 to 1 scale based on a quality of life (QoL) measure. Incorporation of a measure of longevity and QoL can make CUA more responsive to factors that are important to providers and patients with lower-limb loss. For example, a lower-limb prosthetic intervention that improves QoL but does not extend longevity over an alternative would still be evaluated positively with CUA. The QoL instrument used most frequently to measure QALY, and the instrument used in the CUA studies of microprocessor knees,20,21 is the EuroQol EQ-5D. The EQ-5D is a patent-reported outcome measure that assesses QoL in five dimensions: mobility, self-care, usual activities, pain/discomfort, and anxiety/depression.22 This measure includes several dimensions that are very relevant to the goals and outcomes associated to lower-limb prostheses. The main goal of providers is restoring independent mobility with a lower-limb prosthesis, but recent research has demonstrated the correlation of mobility with other dimensions such as QoL and general satisfaction.23 The EQ-5D presents potential as a measure of quality for future health care economic science, whereas other measures of quality should be explored that more directly assess domains relevant to lower-limb prosthetic rehabilitation such as mobility and independence.

Some of the difficulty in performing health care economic research can explain the limited published evidence. One difficulty is capturing an accurate measure of the health care–related and non–health care–related costs of treatment alternatives. Insurance claims data can be used to access health care–related costs, but reimbursement for lower-limb prosthetic interventions may vary depending upon regional fee schedule and contractual discounts. A recently completed study performed a CBA by retrospectively accessing Medicare claims data and comparing health care utilization.24 By creating matching cohorts and comparing health care–related costs of patients who received a prosthesis to patients who did not, this study found that the additional cost of the prosthesis resulted in a similar cost savings from health care–related costs avoided.24 Another method for overcoming the difficulty in measuring health care costs is to develop a simulation model. Recently, a simulation model was created to compare the cost-effectiveness of microprocessor and nonmicroprocessor knees.25 This study used existing research evidence related to quality of life and occurrence of falls and extrapolated the health care–related costs and QALY of the two alternatives. This health care economic research resulted in an ICER ($11,606 per QALY) that was lower than pervious prospective research efforts.20,21 These more recent health care economic analyses were not included in the previously mentioned literature review, because their publication dates fell outside of the inclusion criteria (“Health Care Economics in Lower-Limb Amputation Surgery, Prosthetics, and Rehabilitation: A Narrative Systematic Review of the Literature,” Stevens et al.) and because they were not relevant to the transtibial amputation level.13

Although more health care economic evidence is needed to improve decision making and health care policy decisions regarding lower-limb prostheses, the existing literature is very informative and can improve an understanding of the potential impact of health care economics science from a provider's perspective.

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With an informed understanding of the purpose of health care economic science and methods used in previous research, it becomes apparent that a measurement of quality is necessary for comparison of lower-limb prosthetic treatment alternatives. The science of quality measurement in health care is an ever-growing field, which is used for various goals including continuous quality improvement (CQI) activities, comparative effectiveness research, and health care economic science. Quality measurement is used to evaluate how well care is provided using a theoretical framework called the Donobedian model,26 where quality exists in structure, process, and outcome. For example, a higher-quality clinical practice facility and more rigorous clinical processes would be expected to yield a higher-quality clinical outcome. For calculating ICER, measurement of the quality of the outcome is the main focus for making economic comparison. However, the Donobedian model can be useful for recognizing differences in setting or process of clinical care that result in improved quality. For example, a comparison of lower-limb prosthetic care that is delivered in conjunction with an interdisciplinary rehabilitation team could be considered to be higher quality than the care a patient might receive in the absence of such a care continuum. Although health care economic science is focused on comparing the cost and effectiveness of the clinical outcome and not the setting or process directly, the value of a higher-quality health care setting or process can be uncovered by comparing the value of the resulting outcome.

It is no coincidence that quality measurement and health care economic science are becoming increasingly relevant topics. The US health care system has been moving in the direction of fee-for-performance or fee-for-value, as opposed to a fee-for-service reimbursement model. Certain health care providers are already participating in Medicare's Quality Payment Program.27 Providers eligible to participate in the Merit-Based Incentive Payment System (MIPS) are incentivized to document and report quality data to Medicare and stand to receive positive adjustments and avoid a penalty to their reimbursement.28 Although the MIPS program is described as focusing on providing high-quality and efficient care, the data collected will also include cost as a measure of performance in the future. Currently, certified prosthetists are not eligible for the MIPS program; however, other health care providers who collaborate in the treatment of persons with lower-limb loss are eligible, including physicians, physician assistants, nurses, and others.28 Regardless of whether these specific fee-for-value reimbursement models or others are expanded to include certified prosthetists, the concept of being held accountable to the quality of clinical outcome is a likely future for providers of lower-limb prostheses.

Among certified prosthetists, clinically relevant outcome measures have experienced increasing adoption for improved documentation. The profession has gravitated away from a historically apprenticeship and technically focused specialty, where care was typically provided in privately owned small practices, and has moved toward an allied health care profession with entry-level clinical master's degree education, where patients are treated by interdisciplinary teams and in academic health care centers. This evolution has also promoted the use of standardized patient-reported and performance-based outcome measures to improve evaluation, discrimination, and prediction of patient functional deficits and clinical outcomes.29 Many of these outcome measures may also be relevant as quality measures for health care economic analysis. For example, patient-reported outcome measures of mobility, balance, participation, or QoL can be responsive to different lower-limb prosthetic intervention alternatives, and therefore these instruments would be beneficial to include in health care economic research. As the collection and documentation of relevant outcome measures becomes routine, the potential for meaningful cost-effectiveness research using retrospective outcome data from clinical practice and health care costs from claims will become more attainable.

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In attempting to address the social dilemma of increasing need for lower-limb prosthetic rehabilitation and limited financial resources, health care economic science will need to play an increasingly important role. Along with balancing the cost and quality of lower-limb prosthetic care and treatment alternatives, health care economic research can potentially support new approaches or new technologies that traditional research methodologies would not uncover and current reimbursement policies prohibit. With an understanding of the CEA and CUA described previously, researchers may focus on endpoints that are more relevant to health care economics such as longevity, quality of life, and reduction in health care–related and non–health care–related costs. Prosthetic technology alternatives that are more durable or require less frequent replacement will be evaluated more favorably. Management of at-risk patients, such as mobility-limited patients, are likely to be found to have a greater incremental cost-effectiveness, because this population may experience a greater improvement in quality of life and reduction in secondary complications of lower-limb loss in comparison to more capable and more mobile patient groups. An example that highlights this is the emerging evidence that supports the effectiveness of microprocessor knees in limited community ambulators (MFCL K2).30,31 Another example could be the potential economic benefit of adjustable prosthetic sockets, where replacement of sockets may be required less frequently if adjustable sockets can maintain an adequate and comfortable fit longer than static rigid sockets. Certainly, the incremental increase in quality from time invested in training and physical therapy during prosthetic rehabilitation could be highlighted through economic analyses, because the successful outcome with a lower-limb prosthesis is highly reliant upon the patient being sufficiently trained to use his or her device. Rehabilitation models that provide the most effective training and physical therapy will be positively reinforced with health care economic research.

Without a way to evaluate the costs and incremental quality benefits from the variety of lower-limb prosthetic intervention alternatives, it is difficult for regulators to make informed decisions. Ensuring that measures of quality of care are included in economic decision making will lead to the greatest health care value and not limit patient access to the least costly alternative. With a new perspective of health care economic science, providers and researchers can include costs and quality as research endpoints to support the treatment alternatives and care models that maximize value for persons with lower-limb loss.

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prosthetic; prosthesis; rehabilitation; lower-limb loss; amputation; health care economics; cost-effectiveness

© 2019 by the American Academy of Orthotists and Prosthetists.