Health Information Management

Billing replacement devices provided at no cost

APCs Insider, January 9, 2009

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Q. I understand that when billing for a replacement/new device (C895) provided to a facility at no cost after October 1, 2008,  we should append condition code 50 to indicate that the replaced/old device was recalled.


However, should we:

  • Bill the full charge of $14,289 for C1895  and value code -FD with a value of $14,289, or
  • Submit a $1 charge for C1895 and no value code, or
  • Submit $1 charge for C1895 and the value code with value of $14,289?

A. The Provider Reimbursement Manual, Section 2202.4, defines requirements for hospital charges. Transmittal R321OTN, released February 29, 2008, addresses this matter. The requirements appear more recently in preamble discussions of both the OPPS and IPPS 2009 Final Rules.

2202.4 Charges.--Charges refer to the regular rates established by the provider for services rendered to both beneficiaries and to other paying patients. Charges should be related consistently to the cost of the services and uniformly applied to all patients whether inpatient or outpatient [Emphasis added]

Therefore, billing a patient the regular cost for a replacement/new device that a facility obtained at no cost is illogical. This guidance regarding billing for replacement devices under IPPS indicates that the third option you describe is the only logical choice for compliance with instructions of Transmittal 1509 for a replacement device provided at no charge to the facility and with Section 2202.4 of The Provider Reimbursement Manual.

The actual methodology for reporting a no-cost item varies depending on whether the claim is inpatient or outpatient. The Medicare Claims Processing Manual, Publication 100-04, Chapter 4, section 61.31.1 includes instructions for reporting devices provided at no cost to the provider under OPPS. Append modifier -FB to the HCPCS procedure code and report a $1 charge for the device.  To be consistent, report a $1 charge for the no-cost device on an inpatient account. The inpatient claim should not include the HCPCS code.

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