Health Information Management

Quarterly OPPS update has important supply billing changes

APCs Insider, April 10, 2009

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Q. What changes appear in the second quarter OPPS update regarding supply billing?

A. Below is the critical quote from the update, Transmittal 1702—note the important parenthetical (emphasis added):

When medical and surgical supplies (other than prosthetic and orthotic devices as described in the Medicare Benefit Policy Manual, Pub. 100-02, Chapter 15, §120 and §130, and take-home surgical dressings) described by HCPCS codes with status indicators other than "H" or "N," are provided incident to a physician's service by a hospital outpatient department, the HCPCS codes for these items should not be reported because these items represent supplies.

This change means that orthotics and prosthetics, usually with HCPCS Level II codes beginning with L and status indicator A are separately billable with the exception of supplies applied during surgical procedures.

For example, the guidance would apply to the first ostomy bag and tube setup connected during ostomy surgery. You must bill these as packaged supplies under revenue code 0272.

However, when a patient presents for exchange of orthotics and there is no procedure to which the orthotic is integral, you can bill the supplies with the HCPCS Level II L code under revenue code 0274. You will receive separate payment under the DMEPOS fee schedule along with the other OPPS services for that encounter.

Not all encounters have to be incident to a physician's service if there is another basis of coverage under the Social Security Act. Other areas of coverage include cardiac rehab, some radiation therapy, diagnostics, diabetic education, physical therapy, occupational therapy, and speech therapy.

The guidance seems imprecise in its use of "incident to," so watch for future clarification.

Transmittal 1702 also contains further instructions on orthotic devices used in physical and occupational therapy, along with emergency services:

When hospital outpatient staff provide a prosthetic or orthotic device, and the HCPCS code that describes that device includes the fitting, adjustment, or other services necessary for the patient's use of the item, the hospital should not bill a visit or procedure HCPCS code to report the charges associated with the fitting, adjustment, or other related services. Instead, the HCPCS code for the device already includes the fitting, adjustment or other similar services. For example, if the hospital outpatient staff provides the orthotic device described by HCPCS code L1830 (KO, immobilizer, canvas longitudinal, prefabricated, includes fitting and adjustment), the hospital should only bill HCPCS code L1830 and should not bill a visit or procedure HCPCS code to describe the fitting and adjustment.

The hospital does not have to have a DME number, and you can bill the HCPCS II code on the UB04 along with all other OPPS charges. The same is true of take-home surgical dressings, which are usually HCPCS II A codes with status indicator A.

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