Corporate Compliance

Note from the Instructor: Implanted Devices Received for Free in Clinical Trials or as Sample

Medicare Insider, February 17, 2015

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This week’s note from the instructor is written by Kimberly Anderwood Hoy Baker, JD, regulatory specialist for HCPro.  
I thought I would take the opportunity to review free and discounted device billing in this week’s note. The OIG continues to find issues in hospital specific reviews and hospitals have had difficulty complying with the requirements, including situations where the available codes are not adequate for clinical trials and free samples. In late January, CMS issued a transmittal announcing the implementation of Condition Code 53[1] to address this situation, but the confusion and difficulty will inevitably continue.
The first and most difficult step is identifying the devices and cases that must be reported under CMS’ free and discounted device policy. CMS specifies the devices the policy applies to in Table 27 of the 2015 OPPS Final Rule (see table below) and their associated APCs are listed in Table 26 (see table below). The problem is that free and discounted devices come into the hospital in a variety of ways, including devices ordered for a specific patient to free samples that come in with physicians, outside the inventory control systems. 
Nevertheless, the OIG and CMS have indicated in policy statements and audits that any savings the hospital receives when providing procedures should be passed on to the Medicare program. For hospitals, this means a robust compliance initiative to find these devices and discounts. Multiple departments have to work together, including staff in supply, surgery, accounts payable, coding and billing. The appropriate staff in these departments have to be aware and look out for discounts as well as samples and clinical trial items that qualify for the policy. 
Once the devices are identified, they must be properly reported to ensure the payment to the hospital is adjusted appropriately. Payment under OPPS is generally made for the procedure and not the device, and generally determined by the reported codes rather than charges. Therefore, simply reporting the items with a zero charge will have no effect on the payment to the hospital.  
CMS changed the policy for free and discounted devices in January 2014, causing some confusion around free samples and clinical trial. The guidelines since January 2014 require hospitals to report value code FD[2] when they furnish a “new replacement device” received without cost or with a credit of 50% or more of the cost of the replacement device. When value code FD is reported, it must be accompanied by condition code 49 (Product Replacement within Product Lifecycle) or 50 (Product Replacement for Known Recall of a Product).
This guideline left hospitals unsure how to report free devices received as part of clinical trials or free samples, particularly when they are associated with initial placement of the device. It was clear under prior policy statements and OIG audits that hospitals needed to report that they received these devices for free, but the existing codes left no way to do that. If the provider reported the device code with zero dollars, they would still receive full payment unless they also reported value code FD with the amount of the credit. The problem is that value code FD requires an accompanying condition code and the two available condition codes do not apply.
Claims Processing Transmittal 3181 solves this problem – or it will, once the adoption of condition code 53 is effective July 1 and implemented in processing systems July 6. The effective date of a policy usually relates back to the date of service on which the affected item is provided. However, in this case the effective date relates to the date the claim for services is received. The accompanying revisions to the claims manual make it clear that the policy itself is retroactive to January 1, 2014. 
What this means for providers is that if they have received free samples or devices in clinical trials, they will have to hold those claims until July. Further, they may have to search their records to make sure they identified all free samples and clinical trial devices furnished since January 1, 2014. Some of these claims may be beyond timely filing once the system can actually accept them in July. Providers may have to submit one of the new automated adjustment claim requests, which will be implemented in April.
When a provider submits a claim with value code FD and one of the applicable condition codes, the payment for the procedure is then reduced by the amount reported with FD. The reduction is limited to the device offset percentage for the procedure, which represents the amount of the APC payment CMS calculated represents the packaged devices for the procedure. The offset percentage is available on the Annual Policy Files website for 2015.
This new transmittal gives providers an opportunity to review their policies and procedures related to free and discounted devices to ensure they are catching them all and are reporting them correctly. Unfortunately, some claims will have to be held until July for billing, but at least at that time we will have clearer instructions and the correct codes available to bill these special situations that have been a frustration for providers up to this point.
Table 26: APCs that Require Value Code FD Reporting
APC    APC Description
0039    Level III Neurostimulator & Related Procedures
0061    Level II Neurostimulator & Related Procedures
0064    Level III Treatment Fracture/Dislocation
0089    Level III Pacemaker and Similar Procedures
0090    Level II Pacemaker and Similar Procedures
0107    Level I ICD and Similar Procedures
0108    Level II ICD and Similar Procedures
0227    Implantation of Drug Infusion Device
0229    Level II Endovascular Procedures
0259    Level VII ENT Procedures
0293    Level IV Intraocular Procedures
0318    Level IV Neurostimulator & Related Procedures
0319    Level III Endovascular Procedures
0351    Level V Intraocular Procedures
0385    Level I Urogenital Procedures
0386    Level II Urogenital Procedures
0425    Level V Musculoskeletal Procedures Except Hand and Foot
0655    Level IV Pacemaker and Similar Procedures
Table 27 Devices that Require Value Code FD Reporting
HCPCS Code CY 2015 Short Descriptor
Code   HCPCS Short Descriptor
C1721 AICD, dual chamber
C1722 AICD, single chamber
C1728 Cath, brachytx seed adm
C1764 Event recorder, cardiac
C1767 Generator, neurostim, imp
C1771 Rep dev, urinary, w/sling
C1772 Infusion pump, programmable
C1776 Joint device (implantable)
C1777 Lead, AICD, endo single coil
C1778 Lead, neurostimulator
C1779 Lead, pmkr, transvenous VDD
C1785 Pmkr, dual, rate-resp
C1786 Pmkr, single, rate-resp
C1789 Prosthesis, breast, imp
C1813 Prosthesis, penile, inflatab
C1815 Pros, urinary sph, imp
C1818 Integrated keratoprosthesis
C1820 Generator, neuro rechg bat sys
C1840 Lens, intraocular (telescopic)
C1881 Dialysis access system
C1882 AICD, other than sing/dual
C1891 Infusion pump, non-prog, perm
C1895 Lead, AICD, endo dual coil
C1896 Lead, AICD, non sing/dual
C1897 Lead, neurostim, test kit
C1898 Lead, pmkr, other than trans
C1899 Lead, pmkr/AICD combination
C1900 Lead coronary venous
C2619 Pmkr, dual, non rate-resp
C2620 Pmkr, single, non rate-resp
C2621 Pmkr, other than sing/dual
C2622 Prosthesis, penile, non-inf
C2626 Infusion pump, non-prog, temp
C2631 Rep dev, urinary, w/o sling

[1] Condition code 53: Initial placement of a medical device provided as part of a clinical trial or free sample – code is for outpatient claims that have received a device credit upon initial medical device placement in a clinical trial or a free sample.
[2] Value code FD: Credit Received from the Manufacturer for a Replaced Medical Device

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