Health Information Management

Tip of the week: Bill the patient, not Medicare, for noncovered drugs

APCs Weekly Monitor, March 28, 2008

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You should not bill noncovered drugs to Medicare. Although it is true that hospitals do not receive a separate APC payment for packaged drugs, billing a noncovered drug to Medicare could cause compliance problems, even if the drug is packaged. In some cases, hospitals receive cost-based payments for outpatient claims. Cost-based payments are calculated based on total billed charges on the claim, including charges for packaged items and services. That means that if a hospital bills a noncovered drug as a covered charge, the hospital could end up getting additional money from Medicare for the noncovered drug even if the drug is packaged for OPPS purposes (assuming that the FI or MAC does not indicate that the drug charge is noncovered).

"The classic example is an outlier claim. If a case becomes an outlier and you billed a noncovered drug as a covered charge, you'll receive a higher outlier payment due to the inclusion of the drug charge on the claim," says Hugh Aaron, MHA, JD, CPC, CPC-H, senior advisor at HCPro, Inc., in Marblehead, MA.. "The additional outlier payment would be an overpayment."

Although you should not bill noncovered drugs to Medicare as a covered charge, you should bill them to the patient. "This is a potentially serious compliance issue," notes Aaron.

In Program Memo A-02-129, CMS states:

    Neither the OPPS nor other Medicare payment rules regulate the provision or billing by hospitals of non-covered drugs to Medicare beneficiaries. However, a hospital's decision not to bill the beneficiary for non-covered drugs potentially implicates other statutory and regulatory provisions, including the prohibition on inducements to beneficiaries, section 1128A(a)(5) of the Act, or the anti-kickback statute, section 1128B(b) of the Act.
"The bottom line is, regardless of whether [noncovered drugs] have an OPPS status indicator of N, bill them to the patient and don't bill them to Medicare as a covered charge," Aaron says.

(The above tip was excerpted from the April issue of Briefings on APCs)



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