Health Information Management

Q&A: Understand guidelines for reporting self-administered drugs

APCs Insider, May 9, 2008

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QUESTION: How should we charge for self-administered drugs (SAD)? Should we charge for the drug itself and not for the administration? Also, how should we address this issue with other payers?

ANSWER: Consider the following guidelines when billing SADs to Medicare:

  • If Medicare does not cover the drug, then it will also not cover administration of that drug.
  • Hospitals must decide whether or not to bill noncovered drugs to Medicare beneficiaries. Medicare Program Memorandum, Transmittal No. A-02-129, dated January 3, 2003 states the following:

    Neither the OPPS nor other Medicare payments rules regulate the provision or billing by hospitals of noncovered drugs to Medicare beneficiaries. However, a hospital's decision not to bill the beneficiary for noncovered drugs potentially implicates other statutory and regulatory provisions, including the prohibition on inducement to beneficiaries, section 1128A(a)(5) of the Act, or the anti-kickback statute, section 1128B(b) of the Act. Providers are encouraged to familiarize themselves with the specific provisions cited in these Acts in order to ensure compliance. (Emphasis added)

  • Consider the following cases in which a drug is not directly related to a procedure and for which providers may separately bill beneficiaries:
    • Drugs are given to a patient for his or her continued use at home after leaving the hospital. When this is the case, the medication would not be treated as a packaged supply.
    • A patient who receives outpatient chemotherapy treatment develops a headache. Any medication that the patient receives for the headache would not meet the conditions necessary to be treated as a packaged supply.
    • A patient who undergoes surgery needs his or her daily insulin or hypertension medication. When this is the case, the medication would not be treated as a packaged supply.
  • According to Medicare, SAD coverage policies apply to both PPS facilities and critical access hospitals.
  • According to Medicare, in the inpatient setting, all SADs should be reported using revenue code 0250. SADs are not excluded under Part A inpatient benefits. In the outpatient setting, SADs that are integral to a treatment or procedure should be reported with revenue code 0250. SADs not directly related to a treatment or procedure will be reported with revenue code 0637.
  • According to Medicare, CMS mandates that contractors describe the process used in determining whether a drug is typically self-administered (and therefore not a covered item under Medicare). Contractors must publish lists of drugs they consider self-administered on their website and also on the CMS website.

Billing SADs to either the commercial payer or the beneficiary is based on the contract with that payer or the terms of that program. Because a Medicare contractor deems a medication SAD—and therefore nonbillable to the program—doesn’t imply the same noncoverage for other payers. Some payers may have a more expansive list of noncovered medications, while others have no list at all. Evaluate each program individually for coverage of medications under SAD.

To view the SAD Exclusion List Report on the CMS Web site, click
here.



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