Health Information Management

Q/A: Charging for wound care supplies

APCs Insider, October 7, 2011

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Q. We would like to charge for the wound and ostomy supplies used in our hospital outpatient wound care department. For Medicare, can we submit the HCPCS A codes for supplies such as 4x4 gauze, sterile saline, or ostomy pouches?

A. First, it is essential to recognize that all patients should be billed the same way. Reporting charges for supplies is important in order to reflect the cost of resources utilized for an individual patient. Accurate cost plays a significant role in future APC reimbursement as well as affects the information available for negotiating non-Medicare payer contracts. Non-Medicare payers may not accept A codes for supplies, so you need to check them for their individual requirements.

Under OPPS, CMS includes payment for supplies as part of the payment for procedures, tests, and services unless the supply item is assigned a pass-through status (status indicator H). Most pass through items are assigned a C code for OPPS reporting. CMS addressed this in Transmittal 1599 CR6196, published in September 2008:

When medical and surgical supplies 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. Claims containing charges for medical and surgical supplies used in providing hospital outpatient services are submitted to the Medicare contractor providing OPPS payment for the services in which they are used. The hospital should include charges associated with these medical and surgical supplies on claims so their costs are incorporated in ratesetting, and payment for the supplies is packaged into payment for the associated procedures under the OPPS in accordance with 42 CFR 419.2(b)(4).

Many A codes for supplies are assigned status indicator A, which provides payment for the code under the DME fee schedule. Reporting these codes under OPPS provides duplicate payment because the procedure payment includes supplies.

You have some options for reporting supplies. Your hospital can include the cost/charge for supplies in the charge for the service provided (e.g. debridement, Unna boot application) or establish a process for tracking and charging individual supplies used for each patient. In order to accomplish this, you would need to create individual line items in the chargemaster for the supplies and a method for tracking what product(s) you used for each patient in order to ensure correct charging to the individual patient.

Editor’s note: Denise Williams, RN, CPC-H, director of revenue integrity services at Health Revenue Assurance Associates, Inc., in Plantation, FL, answered this question.

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