Corporate Compliance

Note: CMS clarifies billing for devices and supplies

Medicare Insider, March 24, 2009

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This week, CMS published an MLN Matters article related to the April update to the OPPS published in Transmittal 1702 to the Claims Processing Manual. CMS made two clarifications on billing devices and supplies that might be of interest to hospitals.

The first related to surgical “kits” that contain devices that have been assigned a HCPCS code. If the kit contains only a device with a HCPCS code that maps to status indicator “N,” signifying it is packaged to the procedure payment, the hospital may include a charge for the entire kit on the line for the device HCPCS code.  However, if the kit contains a device that maps to status indicator “H,” signifying it has been granted pass-through status, the hospital must separate the charges for the device and the associated supplies included in the kit.

Although there were no designated pass-through devices for CY 2009, CMS clarified that if a kit contains a device that has been granted pass-through status, the device must be billed separately from the remainder of the kit. This is very important because the payment for pass-through devices is derived from the hospital’s charge for the device, reduced to cost by applying the hospital’s cost-to-charge ratio. If the charge on the line for the device includes other supplies, in addition to the device, the payment to the hospital will include payment for the cost of the device and the other supplies. This will result, in essence, with inappropriate pass-through payment for supplies that have not been granted pass through status.

Second, CMS clarified that for any medical or surgical supplies that do not have either a “N” or “H” status indicator, the hospital should not include the HCPCS code when billing for those supplies. They provide the example of an indwelling catheter placed temporarily during surgery. An indwelling catheter has HCPCS code A4338, which maps to the status indicator “A” for an item paid under another payment system, in this case the DME fee schedule. However, in this case the catheter was used as a supply to the procedure and it would be inappropriate for the facility to be paid for the catheter separately on the DME fee schedule, because payment for the catheter was build into the payment for the surgical procedure.

This second clarification may mean that hospitals will need to have more than one charge line for these items: one charge line without the HCPCS code when used as part of a procedure or as a medical supply to a service, and a second line with the HCPCS code in the event the item is furnished as DME. 

Hospitals should review the transmittal and MLN Matters article for more details on supply billing and coding. In particular, the advice regarding pass-through device kits should be retained for future reference in years when CMS does adopt pass-through devices.


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