Article

Glenda J. Motta, RN, MPH, ET
President, GM Associates Inc.

Reimbursement refers to payment for a product, technology or service. U.S. health care insurers process billions of claims for payment each year.

Reimbursement for wound care products and technologies is complex and often confusing. When a clinician asks, “Will this new dressing, technology or service be reimbursed?” several pieces of information are required to answer the question, including the following:

 
• Clinical setting of use, e.g., acute care facility, rehabilitation hospital, skilled nursing facility, home health agency, physician’s office, outpatient clinic, patient at home without services
• Payer type (Medicare, Medicaid, managed care organization, HMO, supplemental insurer, private insurer, Veterans Administration, workers’ compensation, other)
• Specific patient insurer information, including verification of coverage benefits: copayment amounts, deductible
• Coverage policy for the payer for the product or technology in question;
• Medical necessity requirements for coverage
• Patient diagnosis that supports the medical necessity for the dressing, technology or service
• Codes verified by CMS, SADMERC, the AMA or other appropriate source
• Fee schedule, assigned payment amount or procedure for determining the amount reimbursed.

 

HCPCS OVERVIEW

 

The Healthcare Common Procedure Coding System (HCPCS) was established in 1978 to provide a standardized way to describe the specific items and services provided in the delivery of health care. Standardized coding is necessary for Medicare, Medicaid and other health insurance programs to ensure that insurance claims are processed in an orderly and consistent manner. Initially, use of the codes was voluntary, but with the implementation of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), use of the HCPCS for transactions involving health care information became mandatory.

 

The HCPCS is divided into two principal subsystems, referred to as Level I and Level II. Level I is made up of the CPT-4, a numeric coding system maintained by the American Medical Association (AMA) to identify medical services and procedures furnished by physicians and other health care professionals. Level II HCPCS is a standardized coding system that is used primarily to identify products, supplies and services not included in the CPT-4 codes. It is maintained and distributed by CMS (the Centers for Medicare and Medicaid Services), in conjunction with private payer organizations.

 

HCPCS Level I: AMA Physicians’ Current Procedural Terminology

 

The HCPCS Level I contains the AMA Physicians’ Current Procedural Terminology (CPT-4). Each code is five numeric digits with a descriptive term. These codes are used primarily to identify medical services and procedures furnished by physicians and other health care professionals.

 

Professionals use the CPT-4 to bill public or private health insurance programs. The AMA adds, deletes, or modifies these codes annually. Level I of the HCPCS does not include codes needed to bill for medical products or services that are billed by suppliers other than physicians, physical therapists, nurse practitioners, or other professionals.

 

CPT is updated annually to ensure that it reflects the most current and accurate procedural terminology. Revisions occur in response to proposals for revisions, additions or deletions submitted to the AMA from medical specialty and other professional societies. Once a proposal is received, the AMA refines it, requests comments from the CPT Advisory Committee, and then sends it to the CPT Editorial Panel for review and action. Once the panel votes on changes to CPT, the changes are incorporated into the annual edition of CPT.

 

To submit a proposal to change CPT, visit the CPT Web site at http://www.ama-assn.org/ama/pub/category/3866.html for forms.

 

The following is an example of a Level I HCPCS code applicable to wound care:

 

97597 Removal of devitalized tissue from wound(s); selective debridement without anesthesia (e.g., high pressure water jet with/without suction, sharp selective debridement with scissors, scalpel and forceps), with or without topical application(s), wound assessment, and instruction(s) for ongoing care, may include use of a whirlpool, per session; total wound(s) surface area less than or equal to 20 sq. cm.

 

HCPCS Level II

 

HCPCS Level II is a standardized coding system used to identify products, supplies, and services not included in the CPT-4. Level II codes are alphanumeric, consisting of a single letter followed by four numeric digits. For each Level II code, there is a descriptive terminology that identifies a category of like items.

 

Currently, Level II HCPCS codes represent more than 4,000 separate categories of like items or services that encompass millions of products from different manufacturers. To avoid any appearance of endorsement of a particular product, brand or trade names are not used to describe products represented by a code. The exception to this is codes established to describe drugs and certain solutions.

 

Also included in Level II HCPCS are OPPS (Outpatient Prospective Payment System) status indicators, which identify how individual HCPCS Level II codes are paid or not paid under Medicare. This section may include device categories, new technology procedures and drugs, biologicals and radiopharmaceuticals that do not have other HCPCS codes assigned. Some of these items and services are eligible for transitional pass-through payments for OPPS hospitals, have separate APC (Ambulatory Payment Classification) payments or are items that are packaged. Hospitals are encouraged to report appropriate codes in this category regardless of payment status.

 

Some temporary codes are also included in the Level II HCPCS. These may be changed, added or deleted on a quarterly basis. Temporary codes, once established, are usually implemented within 90 days.

 

The following is an example of a Level II HCPCS code applicable to wound care:

 

A6257 Transparent film, 16 sq. in. or less, each dressing

 

Role of SADMERC

 

The Statistical Analysis Durable Medical Equipment Regional Carrier (SADMERC) is a health care insurer under contract to CMS. The role of SADMERC is to offer guidance to manufacturers and suppliers on the proper use of the HCPCS Level II codes used to identify durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) for billing Part B Medicare.

 

Manufacturers and suppliers should contact the HCPCS unit of the SADMERC to obtain proper billing codes for DMEPOS items. Submitting a coding verification request to SADMERC is a preliminary step in the process for recommending a modification to the Level II HCPCS. The SADMERC performs a Coding Verification Review after appropriate documentation is submitted and then notifies the supplier or manufacturer about which code to use for a particular product.

 

You can contact the SADMERC to see if the product (and the manufacturer) is included on a Product Classification List (e.g., Miscellaneous Durable Medical Equipment, Surgical Dressings, Support Surfaces, Therapeutic Shoes for Diabetics). These lists are available at www.pgba.com (under “Quick Links,” select “SADMERC,” then “Product Classification Lists,” then select the desired list). You may also call the help line at 877-735-1326 or 803-736-6809.

 

Notification of Product Changes to the SADMERC

 

If there are any changes to products that have gone through the formal Coding Verification Review process and received a written determination, the manufacturer or the distributor is responsible for notification of those changes to the SADMERC. The following list illustrates types of changes that must be reported to the SADMERC.

 

• When a product has been discontinued, the SADMERC must be notified in writing of the discontinuance and the effective date of the discontinuance.

• When a change in the product name occurs, the manufacturer or the distributor must notify the SADMERC of the name change and verify that the product itself has not been altered.

• If a manufacturer has sold the product line to another company, this information must be submitted to the SADMERC, along with appropriate documentation.

• If any components of a product have been changed, the product must be submitted to the SADMERC for a new verification review to ensure that the product still meets the definition and characteristics of the existing HCPCS code. If the product change alters the product in such a way that it no longer meets the existing HCPCS code, then the SADMERC will determine and assign a current HCPCS code.

 

Requests to Modify the HCPCS Level II

 

Anyone can submit a request to modify the HCPCS Level II national code set. CMS reports that the number of coding applications submitted has increased dramatically over the past 10 years, from 50 to nearly 300 applications per year, and that the complexity of these applications has also been increasing. To accommodate these increases, along with the pending changes in the HCPCS coding system, such as expanded opportunities for public input, CMS recently revised the HCPCS coding process.

 

The first major change in the process was implementing an earlier application deadline of January 3 to be considered for inclusion in the next annual update of the HCPCS (January 1 of the following year). This change was made to permit expanded opportunities for public comment on preliminary coding decisions.

 

Second, CMS expanded public meetings to include all requests for HCPCS products, supplies and services. Agenda items are published in advance, including descriptions of the coding requests, the requestor, and the name of the product or service. This provides an opportunity for the public to become aware of coding changes under consideration and provide input into decision making.

 

The coding review process is continuous. Requests may be submitted at any time throughout the year. Information on the revision process is available on the HCPCS Web site at www.cms.hhs.gov/medicare/hcpcs.

 

Relationship of Codes to Reimbursement

 

The assignment of a HCPCS code to the product(s) should in no way be construed as an approval or endorsement of the product(s) by SADMERC or Medicare, nor does it imply or guarantee claim reimbursement or coverage.

 

Resources
1. American Medical Association. Current Procedural Terminology. Chicago: AMA Press, 2007.

 

2. HCPCS National Level II Codes 2007. Salt Lake City: Ingenix Publishing Group, 2007.

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3. American Medical Association. CPT Web site: www.ama-assn.org/ama/pub/category/3866.html.

 

4. HCPCS Level II Code Modification Request Process. CMS Web site: www.cms.hhs.gov/medicare/hcpcs.

 

5. SADMERC Web site: www.pgba.com.