Health Information Management

Q/A: Reporting HCPCS codes for drugs

APCs Insider, February 24, 2012

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Q. Our chief financial officer wants us to restructure our pharmacy chargemaster to report HCPCS code for drugs not separately paid under OPPS. He “read something somewhere” that this will improve hospital revenue. I thought it doesn’t matter whether you report a HCPCS code if the drug is not separately payable. At one time, we had to remove the code if it was no longer separately payable. What are the benefits of adding HCPCs codes to the chargemaster?

A. In the early days of OPPS, HCPCS codes were reported to reflect pass-through status for supplies and drugs under the OPPS. When pass-through status expired, the code was deleted and was no longer reportable under the OPPS.

However, as claims data became the basis for payment calculation, CMS had no specific information to identify items that facilities reported on a claim. All supplies would be reported with a supply revenue code without specifically identifying any items. A similar situation occurred with pharmacy items being reported with revenue code 025x.

Over the past few years, CMS has realized that many drugs are lumped into revenue code 0250 when facilities don’t report a HCPCS code. CMS has noted in past OPPS final rules that HCPCS codes reported as line items with revenue code 0250 are not recognized in the data used for rate setting.

Therefore, information related to drugs and biologicals reported without a HCPCS codes is not identified and not included in APC payment calculations.

Again for CY 2012, CMS strongly encourages hospital providers to report HCPCs codes for all drugs if a specific HCPCs code is available. CMS states in Transmittal 2386:

More complete data from hospitals on the drugs and biological provided during an encounter would help improve payment accuracy for separately payable drugs and biologicals in the future….CMS realizes that this may require hospitals to change longstanding reporting practices….CMS notes that it makes packaging determinations for drugs and biological annually based on charge information reported with specific HCPCS codes on claims, so the accuracy of OPPS payment rates for drugs and biological improves when hospitals report charges for all items and services that have HCPCS codes under those HCPCS codes, whether or not payment for the items and services is packaged or not. It is CMS’ standard ratesetting methodology to rely on hospital cost and charge information as it is reported to CMS by hospitals through the claims data and cost reports. Precise billing and cost reporting by hospitals allow CMS to most accurately estimate the hospital costs for items and services upon which OPPS payments are based.

Review and update your chargemaster to include HCPCS codes for all drugs and biologicals, whether separately payable or not, to ensure that CMS can calculate correct and specific cost from claims data. Otherwise, this cost may not be allocated to the procedure in which the cost is supposedly bundled. This will lead to more accurate payment for specific procedures and services.

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

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