Health Information Management

Q&A: Look for device transitional pass-through payments

APCs Insider, July 25, 2008

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QUESTION: Our organization has various thoughts about what items we should report with HCPCS code C1821. In researching this issue, we?ve noted that there are different types of vertebral spacers. Does HCPCS code C1821 cover only the X-stop interspinous process decompression (IPD) systems or does it include items like the VERTE-STACK® CORNERSTONE® PSR PEEK Vertebral Body Spacers? If code C1821 is not appropriate for items like the VERTE-STACK® CORNERSTONE® PSR PEEK Vertebral Body Spacers, is there a more appropriate code that we should use?
ANSWER: CMS implemented HCPCS code C1821 in the 2007 final OPPS rule. Code C1821?interspinous process distraction device (implantable)?does not refer to a specific manufacturer or brand. Since the inception of OPPS, CMS has made transitional pass-through payments on the basis of ?C? codes defined for individual devices (e.g., Acme dual chamber pacemaker). CMS has assigned ?C? codes exclusively for this purpose. Only devices specifically identified in the long descriptions associated with the codes are qualified for transitional pass-through payments.
Section 1833(t)(6)(B) of the Social Security Act (the Act) requires that, under the OPPS, categories of devices will be eligible for transitional pass-through payments for at least two, but not more than three years. Section 1833(t)(6)(B)(ii)(IV) of the Act requires that CMS will create additional categories for transitional pass-through payment of new medical devices not described by existing or previously existing categories of devices.  
HCPCS code C1821 has a status indicator H which translates into the pass-through device category. CMS reimburses code C1821 based on a separate, cost-based pass-through payment. It is not subject to beneficiary co-payments. Currently, there are no device-to-procedure or procedure-to-device edits for this HCPCS code.
Many device manufacturers routinely provide hospital customers with information regarding appropriate coding. We understand that information provided by manufacturers in this manner can significantly simplify the hospitals? task in determining how to bill transitional pass-through payments. Accordingly, when it reviews transitional pass-through items to determine if they are billed appropriately, CMS will generally regard such information as reasonable support for a coding decision with respect to whether payment is appropriate. If hospitals have questions about appropriate coding that they cannot resolve on their own, the appropriate first step is to seek information from the manufacturer.
Eligibility requirements for devices include the following:

A. Identification in the long descriptor of a ?C? code issued by CMS. The device must also meet other definitions and general coding instructions in this or subsequent instructions.

B. Approval or clearance by the Food and Drug Administration (FDA)?if such approval or clearance is required. The device is also subject to the exception for certain investigational devices noted in ?C.?

C. The device must be reasonable and necessary for the diagnosis/treatment of an illness or injury or is needed to improve the functioning of a malformed body part, as required by section 1862(a)(1)(A) of the Act. Some investigational devices are refinements or replications of existing technologies and may be considered reasonable and necessary. Devices that have received an FDA investigational device exemption, (IDE) and are classified by the FDA as Category B devices, are eligible for transitional pass-through payments if they meet all other requirements. 

D. The device must be an integral and subordinate part of the procedure. The devices are used for one patient only, are single use, come in contact with human tissue, and are surgically implanted or inserted. It does not matter whether the device remains with the patient when the patient is released from the hospital outpatient department.

E. The device is not a piece of equipment, an instrument, an apparatus, an implement, or any such item for which CMS recovers depreciation and financing expenses. See depreciable assets, as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1).

F. The device is not a material or a supply (such as a suture, a customized surgical kit, or a clip) furnished incident-to a service or procedure. This does not include radiological site markers. Supplies include pharmacological imaging and stressing agents other than radiopharmaceutical or contrast agents (for which transitional pass-through payments are authorized under section 1833(t)(6)(A) of the Act).

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