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Q/A: Payment for HCPCS code J2354

APCs Insider, May 11, 2012

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Q: We don’t understand why our MAC is denying HCPCS code J2354 (injection, octreotide, non-depot form for subcutaneous or intravenous injection, 25 mcg. Use this code for Sandostatin®). It appears on the self-administered drug list, but its status indicator is N, so we receive no payment. Why is our MAC denying a line item for a drug with no payment?

A: In your scenario, payment indicators collide with coverage requirements. Assignment of a reportable status indicator under OPPS means that you may at times report the code. The status indicator in Addendum B indicates how CMS will reimburse for a code when reporting it is appropriate.

For status indicator N, CMS always packages payment into other services on a claim. However, classification as a self-administered drug excludes code J2354 from coverage under Medicare.

Packaged services are reimbursed under OPPS but not on the individual line item; the cost and payment are packaged into another service on the claim. In the situation you describe, CMS includes payment for the Sandostatin in the payment for the drug administration service. If your MAC processed the claim with J2354 as a covered service, it would provide payment and coverage for the drug.

Was the charge reported as a covered service with the charge in the covered column on the UB-04 claim form? Because Medicare considers this a non-covered service, it must be reported with the dollar amount in the non-covered column. It also should be reported under revenue code 637 to indicate that it is a self-administered drug. You may be able to report this with J2354 and modifier –GY (item or service statutorily excluded or does not meet the definition of any Medicare benefit) with revenue code 637 along with the charge in the non-covered column.

Don’t forget the charge for the drug administration. If a drug is not covered, neither is the service to administer it. The drug administration service should be reported with modifier -GY and with the charge(s) in the non-covered column.

Editor’s note: Andrea Clark, RHIA, CCS, CPCH, chairman, CEO, and founder of Health Revenue Assurance Associates, Inc., in Plantation, Fla., answered this question.

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