Key Questions for Medicare Coverage
& Funding for AAC Devices
© 2001 by Lewis Golinker., all rights reserved

Lewis Golinker, Esq.
Director, Assistive Technology Law Center
202 East State Street, Suite 507
Ithaca, New York 14850
607-277-7286 (voice)
607-277-5239 (fax)
lgolinker@aol.com (e-mail)

I

Is the Person a Medicare Recipient?

Disabled Under Social Security
Disability Insurance Program (Title II)

Dually Eligible for Medicare & Medicaid

Disabled Adult Child of Retired,
Disabled or Deceased Worker

II

Does the AAC Device Fit the
Scope of Any Covered Medicare Services?

Durable Medical Equipment

Prosthetic Devices

Speech Language Pathology Services

III

Is the AAC Device "Reasonable & Necessary?"

Is the Device "Treatment"
for a Speech Disability?

Has the Person Previously Received Medicare
Funded Speech Language Pathology Services?

IV

Do Any Medicare Exclusions Apply?

Is the Device A "Convenience Item?"

Medicare Policy Changes in 2000

Medicare Agrees to Withdraw its
"Convenience Item" Guidance

Medicare Agrees to Cover AAC
Devices as Durable Medical Equipment

Medicare Adopts 4 "Codes" for
Different Categories of AAC Devices
Additional Codes are Created for
AAC Software and AAC Accessories

Medicare Regional Carriers Propose
Uniform Evaluation and Coverage Criteria
for AAC Devices

Medicare Regional Carriers Propose to
Limit AAC Device Coverage to "Dedicated
Devices"

Medicare Adopts New National Coverage Decision
That Excludes All Computer Based Devices

Medicare Adopts AAC Device Fee Schedule
That Will Permit Generous Reimbursement for AAC Devices

Medicare Adopts Codes for SLP Services Related to
AAC Assessment, AAC Training, and AAC Re-evaluation

Medicare Proposes to Call AAC Devices
"Speech Generating Devices"

Who Needs AAC Devices?

All Medicare Recipients:                                                       Approx. 40 Million

Conditions Associated with
AAC Need and AAC Device Use:                                          ALS
                                                                                                  Cerebral Palsy
                                                                                                  Locked In Syndrome
                                                                                                  Multiple Sclerosis
                                                                                                  Parkinson's Disease
                                                                                                  Brain Stem Stroke
                                                                                                  Traumatic Brain Injury

Communication Impairments
Associated with these Conditions:                                            Dysarthria
                                                                                                   Apraxia
                                                                                                   Aphasia
                                                                                                   Aphonia

Estimated Number of Medicare
Recipients with these Conditions
At a Severity level that Creates
A Need for AAC Device Use:                                                  < 47,000

Medicare Guidance Related To AAC Devices

Durable Medical Equipment

"Augmentative Communication Devices"

Augmentative Communication Device                                                   see Communicator

Communicator                                                                                          Deny -- convenience item, not
                                                                                                                   primarily medical in nature
                                                                                                                  (§ 1861(n) of the Act).

Medicare National Coverage Decision 60-9, reprinted in CCH Medicare &
Medicaid Guide, ¶ 27,221 at p. 29,803 (Oct. 1992)(DME Reference List).

Medicare announced on April 26, 2000 that this Guideline will be withdrawn, effective January 1, 2001. It officially withdrew this Guidance on November 30, 2000, when it adopted a new AAC Device national coverage decision, # 60-23.

Medicare Definition Of Durable Medical Equipment

There is no statutory definition of DME

There is a non-exclusive statutory list of items:
including iron lungs, oxygen tents, hospital beds,
wheelchairs, power operated vehicles that may be used
as a wheelchair and seat lift chairs. The only
general characteristic stated is that the equipment is
"used in the patient's home." 42 U.S.C. § 1395x(n).

The Medicare regulations add to this definition
by describing four characteristics a device must
have to be classified as DME:

» can withstand repeated use;

» is primarily and customarily used to
serve a medical purpose (Medicare guidance
states that the equipment "can be expected
to make a meaningful contribution to the
treatment of the patient's illness or injury,");

» generally is not useful to an individual
in the absence of an illness or injury; and

» is appropriate for use in the home.

42 C.F.R. § 414.202

"Reasonable and Necessary"

        Medicare is prohibited from making payment under Parts A or B for any items or services "which . . . are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member."

42 U.S.C. § 1395y(a)(1).

Necessity for the Equipment

        Equipment is necessary when it can be expected to make a meaningful contribution to the treatment of the patient's illness, injury or to the improvement of a malformed body member. In most cases, the physician's prescription for the equipment and other medical information available to the carrier will be sufficient to establish that the equipment serves this purpose.

DMERC Region A Supplier Manual at p. 21-7 (July 1996)

Medicare Guidance Related to the "Reasonableness" of DME

1. Would the expense of the item to the program be clearly disproportionate to the therapeutic benefits which could ordinarily be derived from use of the equipment?

2. Is the item substantially more costly than a medically appropriate and realistically feasible alternative pattern of care?

3. Does the item serve essentially the same purpose as equipment already available to the beneficiary?

Medicare Carriers Manual, § 2100.

"Regional Medical Review Policy" (RMRP)
Requirements to Show AAC Devices
Are Reasonable and Necessary

Prior to the delivery of the SGD, the patient has had a formal evaluation of their cognitive and language abilities by a speech-language pathologist (SLP). The formal, written evaluation must include, at a minimum, the following elements:

1. current communication impairment, including the type, severity, language skills, cognitive ability, and anticipated course of the impairment;

a. an assessment of whether the individual's daily communication needs could be met using other natural modes of communication;

b. a description of the functional communication goals expected to be achieved and treatment options;

c. rationale for selection of a specific device and any accessories;

d. treatment plan that includes a training schedule for the selected device;

e. demonstration that the patient possesses the cognitive and physical abilities to effectively use the selected device and any accessories to communicate;

f. for a subsequent upgrade to a previously issued SGD, information regarding the functional benefit to the patient of the upgrade compared to the initially provided SGD; and,

2. The patient's medical condition is one resulting in a severe expressive speech disability; and,

3. The patient's speaking needs cannot be met using natural communication methods; and,

4. Other forms of treatment have been considered and ruled out; and,

5. The patient's speech disability will benefit from the device ordered; and,

6. A copy of the SLP's written evaluation and recommendation have been forwarded to the patient's treating physician prior to ordering the device; and,

7. The SLP performing the patient evaluation may not be an employee of or have a financial relationship with the supplier of the SGD.

If one or more of the SGD coverage criteria 1-7 is not met, the SGD will be denied as not medically necessary.

Medicare Coverage "Codes" for
AAC Devices, Software and AAC Accessories

K 0541 - Speech generating device, digitized speech, using pre-recorded messages, less than or equal to 8 minutes recording time

K 0542 - Speech generating device, digitized speech, using pre-recorded messages, greater than 8 minutes recording time

K 0543 - Speech generating device, synthesized speech, requiring message formulation by spelling and access by physical contact with the device

K 0544 - Speech generating device, synthesized speech, permitting multiple methods of message formulation and multiple methods of device access

K 0545 - Speech generating software program, for personal computer or personal digital assistant

K 0546 - Accessory for speech generating device, mounting system

K 0547 - Accessory for speech generating device, not otherwise classified.

Software (K0545) that enables a laptop computer, desktop computer or PDA to function as an SGD is covered as an SGD; however, installation of the program or technical support are not separately reimbursable.

Accessories (K0547) for K0541 - K0544 are covered if the basic coverage criteria (1-7) for the base device are met and the medical necessity for each accessory is clearly documented in the formal evaluation by the SLP.

Medicare Coverage Limitations Regarding
Dedicated & Computer Based Devices

Laptop computers, desktop computers, PDAs or other devices that are not dedicated SGDs are noncovered because they do not meet the definition of durable medical equipment (DME).

Source: Proposed Regional Medical Review Policy, Oct. 24, 2000

Devices that would not meet the definition of speech generating devices and therefore, do not fall within the scope of § 1861(n) are characterized by:

Devices that are not dedicated speech devices, but are devices that are capable of running software for purposes other than speech generation, e.g., devices that can also run a word processing package, an accounting program, or perform other non-medical functions.

Laptop computers, desktop computers, or PDAs, which may be programmed to perform the same function as a speech generating device, are non-covered since they are not primarily medical in nature and do not meet the definition of DME. For this reason, they cannot be considered speech-generating devices for Medicare coverage purposes.

A device that is useful to someone without severe speech impairment is not considered a speech generating device for Medicare coverage purposes.

Source: National Coverage Decision 60-23 (issued November 30, 2000, effective 1/1/01).

Medicare Fee Schedules for AAC Devices

                        Code Fee                                                                      Schedule Amount

                        K 0541                                                                              $ 541.00

                        K 0542                                                                              $ 1,446.05

                        K 0543                                                                              $ 3,241.71

                        K 0544                                                                              $ 6,475.12

Medicare reimburses for DME at the rate of 80% of the fee schedule amount for items that cost more than the fee schedule amount

Medicare reimburses for DME at the rate of 80 % of the actual charge for items that cost less than or equal to the fee schedule amount.

Example:

AAC Device                                          Fee Schedule                                          Medicare
Device Cost                                          Amount                                                    Reimbursement
                                                                                                                                 Amount

Dynavox
$ 6,995                                                  $ 6, 475.12                                                  $ 5,180.10. 1/

Dynamyte
$ 6,395                                                  $ 6,475.12                                                   $ 5,116. 2/

1/ Because the Dynavox costs more than the fee schedule amount, Medicare will provide 80 % of the fee schedule amount for this device.

2/ Because the Dynamyte costs less than the fee schedule amount, Medicare will provide 80 % of the actual charge for the Dynamyte.

Required Payments by Medicare
Beneficiaries for AAC Devices

Medicare beneficiaries will be required to pay one of the following 4 amounts for an AAC device:

1. 20% of the actual charge for the device when the actual charges are less than or equal to the fee schedule amount for that device

Example: Dynamyte, actual charge = $ 6,395; fee schedule = $ 6,475.12

Beneficiary co-payment for Dynamyte will be 20 % x 6,395

2. 20% of the fee schedule amount for devices that have actual charges above the fee schedule, but for which the manufacturer/supplier will "accept assignment"

Example: Dynavox, actual charge = $ 6,995; fee schedule = $ 6,475.12

Beneficiary co-payment is 20 % x 6475.12 because Dynavox Systems will accept assignment for the Dynavox (and Dynamyte)

3. The full retail price of the device for devices that have actual charges above the fee schedule, but for which the manufacturer/supplier will not "accept assignment"

4. Zero, in special circumstances.

When Assignment is not Accepted, Beneficiaries'
Costs for AAC Devices Are Much Greater

A manufacturer/supplier may elect not to accept assignment. This is likely to occur for devices with selling prices a great deal higher than the fee schedule amount.

If assignment is not accepted, beneficiaries will be required to pay the manufacturer/supplier the full price for the device, if the person or family can afford it. Medicare will still provide reimbursement: accepting assignment merely determines who Medicare pays; it does not affect the amount Medicare pays. When assignment is not accepted, Medicare reimbursement will be paid directly to the beneficiary.

Example:

Dynamo, price:                                                                              $ 1,995
Assignment Taken:                                                                       No
Beneficiary Initial Outlay:                                                            $ 1,995
Total Payment to Supplier:                                                           $ 1,995
Medicare Reimbursement (to
Beneficiary):                                                                                  $ 1,156.84
Net Beneficiary Outlay:                                                                $ 838.16

If Assignment had been taken:

Beneficiary Outlay:                                                                        $ 289.21
Medicare Reimbursement (to
Supplier)                                                                                          $ 1,156.84
Total Payment to Supplier:                                                             $ 1,446.05

Alpha Talker Expanded Package:                                                 $ 2,645
Assignment Taken:                                                                        No
Beneficiary Initial Outlay:                                                             $ 2,645
Total Payment to Supplier:                                                            $ 2,645
Medicare Reimbursement (to
Beneficiary):                                                                                   $ 1,156.84
Net Beneficiary Outlay:                                                                 $ 1,488.16

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