Wound Care Product Reimbursement: A Guide to HCPCS

Glenda J. Motta, RN, MPH, ET*
President/CEO 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 technologies, products, and services is complex and often confusing with no simple answers. When a clinician asks, “Is this new dressing, technology, or service reimbursed?” several pieces of information are required, including the following:

--Clinical setting of use; e.g., acute care, rehabilitation hospital, skilled nursing facility, home health agency, physician office, outpatient clinic, patient at home without services;
--Payer type (Medicare, Medicaid, managed care organization, HMO, supplemental insurer, private insurer, veterans administration, workman’s compensation, other);
--Specific patient insurer information, including verification of coverage benefits: co-payment 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 the Centers for Medicare & Medicaid Services (CMS), Pricing, Data Analysis Contractor (PDAC), the American Medical Association (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 coding system for describing the specific items and services provided in the delivery of health care. Such 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 comprised of the CPT-4, a numeric coding system maintained by the AMA to identify medical services and procedures furnished by physicians and other health care professionals. The 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, in conjunction with private payer organizations.

Level I HCPCS: American Medical Association (AMA) Physicians’ Current Procedural Terminology

The Level I HCPCS contains the AMA Physicians’ Current Procedural Terminology (CPT-4). Each code is 5 numeric digits with a descriptive term. These codes are used primarily to identify medical services and procedures furnished by physicians and other healthcare 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 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 by 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 and 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.

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 waterjet 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 square centimeters.

Level II HCPCS:

Level II HCPCS 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 alphabetical letter followed by 4 numeric digits. For each code, there is a descriptive terminology that identifies a category of like items.

Currently, there are Level II HCPCS codes representing over 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 Outpatient Prospective Payment System (OPPS) status indicators which identify how individual codes are paid or not paid under the Medicare outpatient prospective payment system. 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 payments, or are items that are packaged. Hospitals are encouraged to report appropriate codes in this category regardless of payment status.

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

There are temporary “G” codes for procedures/professional services that would otherwise be coded in CPT but for which there are no CPT codes. There are temporary “K” codes established for use by the Durable Medical Equipment Medicare Administrative Contractors (DME MACs). These are developed when the current existing permanent national codes for supplies and certain product categories do not include the codes needed to implement a DME MAC medical review policy under Medicare Part B.

Level II HCPCS also includes temporary “Q” and “S” codes. The temporary national codes (non-Medicare) “S” codes are used by the Blue Cross/Blue Shield Association and the Health Insurance Association of America (HIAA) to report drugs, services, and supplies for which there are no national codes but for which codes are needed by the private sector. These are also used by the Medicaid program but are not payable by Medicare.

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 THE PRICING, DATA ANALYSIS AND CODING (PDAC) CONTRACTOR

The PDAC is a health care insurer under contract to CMS. The PDAC functions to offer manufacturers and suppliers guidance on the proper use of the Level II HCPCS codes used to identify durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) for billing Part B Medicare.

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

You can search the PDAC database for products and manufacturers by specific Product Classification List (e.g., Miscellaneous Durable Medical Equipment, Surgical Dressings, Support Surfaces, Therapeutic Shoes for Diabetics). The website is www.dmepdac.com [1] or you can contact the contractor at 1-877-735-1326.

Notifying the PDAC of Product Changes:

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

Product discontinued: the manufacturer must notify the PDAC in writing of the discontinuance and effective date.

Change in product name: the manufacturer or the distributor must notify the PDAC of the name change and verify that the product itself has not been altered.

Product sold to another company: this information must be submitted to the PDAC along with appropriate documentation that the acquisition has been accomplished.

Change in any product components: the product must be submitted to the PDAC for a new verification review to ensure that it 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 PDAC will assign a different HCPCS code.

REQUESTS TO MODIFY THE LEVEL II HCPCS:

Anyone can submit a request to modify the Level II HCPCS national code set. CMS reports that the number and complexity of coding applications submitted has increased dramatically over the past 10 years from 50 to nearly 300 applications per year. As a result, 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 1st 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 ongoing and continuous. Requests may be submitted at any time throughout the year. Information on the revision process and forms are available on the HCPCS website at http://www.cms.hhs.gov/medicare/hcpcs [2].

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 PDAC or Medicare, nor does it imply or guarantee claim reimbursement or coverage.

*Glenda Motta founded GM Associates in 1987. The firm has completed HCPCS coding verification requests, new Level II HCPCS codes, and CPT Level I HCPCS codes for all types of procedures, durable medical equipment, prosthetics, orthotics, and supplies. More information is available at www.gmassocinc.com [3].