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I am continuing on the theme from Part III which discusses how Ultra-Customization is used by the For-Profit Wheelchair Industry to maximize profits.
Here is how to squeeze more profit from the strategy of upselling. If I buy a standard ultralight wheelchair using only the K0005 code, the company must provide me an entire ultra-light wheelchair for $2,458 which consists a frame, STD seat pan, STD casters, STD back support, STD back upholstery, STD armrests, and STD wheels. But by upselling me, they replace the STD parts with “upgrades” which are all separately reimbursable by insurance. Now they no longer have to provide any of these STD items. The entire $2,458 gets applied to the frame. Here is another way to think of it. Assume the frame costs $1,000 to fabricate and the STD items cost an additional $750. The gross profit is $2,458 – ($1000 + $750) = $958.
But by upselling and replacing the STD components with the other billable items (also sold at a profit), there is no need to supply the original $750 of standard components. That means the gross profit on the frame alone is now $2,458 - $1,000 = $1,458. That is an almost 50% increase. The K0005 insurance code will provide reimbursement for $2,458 for an entire wheelchair or apply the $2,458 to just the frame with no STD items attached.
Ideally, upselling replaces all the removable STD items on the wheelchair leaving just the frame. The Double Dip occurs by getting all $2,458 which is supposed to pay for an entire wheelchair, but only a frame is supplied (Dip #1), and then profiting on each of the upsold items that are put back onto the frame to build the custom wheelchair (Dip #2).
The last thing the For-Profit Wheelchair Industry wants to do is to sell you an entire ultralight wheelchair for $2,500. And they rarely do