Health Information Management

CMS adds three new modifiers for outpatient never events

JustCoding News: Outpatient, September 8, 2009

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CMS introduced new modifiers for use with the occurrence of three never events in its July quarterly update to the Integrated/Outpatient Code Editor (I/OCE).

The new modifiers are:

  • -PA (Surgical or invasive procedure on the wrong body part)
  • -PB (Surgical or invasive procedure on the wrong patient)
  • -PC (Wrong surgery or invasive procedure on a patient)

CMS added the modifiers, which apply to never events identified by the National Quality Forum, to the list of valid modifiers, effective January 15, 2009, meaning they are retroactive to this date. Learn more about these changes by accessing Transmittal 1739 in the Medicare Claims Processing Manual.

This change has created many questions for healthcare facilities, says Dave Fee, MBA, product marketing manager of outpatient products at 3M Health Information Systems in Murray, UT. However, CMS’ Transmittal 1755 in the Medicare Claims Processing Manual, released June 12, answers some of these questions. In the transmittal, CMS clarifies that effective January 15, 2009, it will not cover these three never events. The implementation date is July 6, 2009 for Part B Medicare Administrative Contractors (MAC) and carriers and October 5, 2009 for Part A MACs and Fiscal Intermediaries.

Under new national coverage determinations released by CMS, effective for services performed on and after January 15, Medicare will not cover surgical or other invasive procedures performed in error, including the following:

  • Wrong surgery or invasive procedure on a patient
  • Surgical or invasive procedure on the wrong body part
  • Surgical or invasive procedure on the wrong patient

Medicare will also not cover hospitalizations and other procedures related to these services listed above.

CMS plans to treat these as noncovered services, Fee says. This means that when healthcare facilities submit claims, they must put the charges for these services in the noncovered charge field, he says. The three new HCPCS modifiers are available for facilities to use for processing these claims, CMS said in the transmittal. The FIs and MACs are instructed to line-item deny any of these services, which gives providers the right to appeal the decision.

The other issue for facilities is that CMS made the modifiers effective retroactive to January. This raises the question of whether hospitals must review historical claims and resubmit those that may include these never events. Although the transmittal does not provide specific direction for hospitals, it does give the following guidance to FIs and MACs:

Effective for claims with dates of service between January 15, 2009, and July 6, 2009 (for B MACs and carriers), and October 5, 2009 (for A MACs and FIs), contractors shall not go back and search for erroneously processed claims but shall adjust any claims brought to their attention.

This implies that facilities’ top priority going forward should be correct reporting, Fee says.

Note additional changes

Other changes made in the I/OCE update include the following:

  • Two additional new modifiers. Along with the three modifiers related to never events, CMS added modifiers -PI and -PS, effective April 1, for PET tumor scans.
  • New HCPCS codes. CMS added 17 new HCPCS codes in the update. Twelve of the 17 new codes relate to drugs that are paid separately. Nine of these codes have pass-through status, and three are paid separately. The American Medical Association (AMA) introduced five of the codes; four are Category III codes, and three are assigned APCs. CMS does not pay for or cover two.
  • New APCs and code pairs. CMS added 12 new APCs that relate to the drug codes discussed above. It also added additional code pairs to the National Correct Coding Initiative lists for mutually exclusive and column 1/column 2 edits.
  • Hospice services. CMS made a change to OCE edit 72 so it does not apply to physician services provided to hospice patients.
  • Correction on payment rates. CMS made a change to correct payment rates for four drugs. The payment rates were incorrect in the January 2009 OPPS Pricer. Healthcare facilities have been receiving the wrong payment for the first half of the year, Fee says. “But the differences are so, so minimal. It’s a penny here, a penny there—a couple of dollars here and there. I don’t see it as a big issue for hospitals,” he says.

CMS corrected the payment rate on the following four HCPCS codes, effective January 1–June 30:

  • J1441 (Filgrastim 480 mcg injection)
  • J1740 (Ibanddronate)
  • J2505 (Injection, pegfilgrasti, 6 mg)
  • J7513 (Daclizumab, parenteral)

Although hospitals can resubmit claims if they choose to get the higher payment on these drugs, Fee isn’t sure whether it’s worth their time. It may be more costly to go through the paperwork to resubmit the claims, he says.

  • CAP program. CMS noted that the Part B Drug Competitive Acquisition Program (CAP) was suspended January 1. Drugs and biologicals with pass-through status will not be paid at CAP rates for this year unless the program is reinstated, Fee says.
  • Billing for drugs and biologicals used as implantable devices. CMS provided clarification on billing for drugs and biologicals when they are used as implantable devices. Hospitals should always code separately for drugs and biologicals only implanted or inserted surgically. This is the case regardless of whether the HCPCS code for the product has pass-through status. If the biological has pass-through status, it will be paid separately. When the drug or biological can be provided surgically or applied in some other way for the patient’s care, facilities only need to bill it separately if it has pass-through status. Otherwise, facilities must include the charges for it within the charges for the surgical procedure.
  • Billing for new drugs. CMS provided clarification on the appropriate use of HCPCS code C9399, which facilities use when billing a new drug or biological approved by the FDA on or after January 1, 2004, but for which a product-specific HCPCS code has not been assigned. Healthcare facilities may bill for the drug or biological using code C9399, unclassified drug or biological. The C9399 indicates to the FI or MAC that it must price the drug manually, Fee says.

In these cases, healthcare facilities should submit the following information in the remarks section of the ANSI ASC X-12 837 I form:

  • The National Drug Code, which is a 12- or 13-digit number
  • The quantity of the drug given to the patient
  • The date the drug was given to the patient

Contractors price the drug or biological at 95% of the average wholesale price. They will pay healthcare facilities 80% of the calculated price, allowing the facility to bill the beneficiary 20% after the deductible is met. These drugs and biologicals are not eligible for outlier payment.

Editor’s note: This story was published in the August issue of Briefings on APCs.

E-mail Fee at

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