AMARILLO, TX – There is often confusion between the Centers for Medicare and Medicaid Services’ (“CMS”) national HCPCS coding process and the Pricing, Data Analysis and Coding (“PDAC”) code verification process. This article explains the different roles and responsibilities of each of these processes, and how they relate to each other.
If a manufacturer desires to sell a product to DME suppliers that will, in turn, sell or rent the product to Medicare patients, then the manufacturer will want the item to either (i) fit within an established HCPCS code or (ii) be awarded a new HCPCS code. If neither of these events happen, then it will be difficult for the DME supplier to sell/rent the product to Medicare patients because (i) Medicare will likely not pay for the product…meaning that (ii) the Medicare patient will have to pay for the product out-of-pocket. If it will be difficult for the DME supplier to sell or rent the product to Medicare patients, then the supplier will not be inclined to purchase the product from the manufacturer.
In order for Medicare to cover and pay for an item of DME (“product”), (i) the product must fit within an established Medicare billing code known as a HCPCS code, or (ii) the product may be billed using the miscellaneous DME HCPCS code (E1399). If option (ii) is used, the DME MACs that process the claims will individually review the claim and determine whether Medicare will cover and pay for the item; this is time consuming and unpredictable. If there is no existing HCPCS code that describes the product, the manufacturer (or another entity) can apply for a new or revised HCPCS code through CMS’ Level II HCPCS code process. CMS’ recent DMEPOS proposed rule proposes to codify many of the longstanding Level II HCPCS code application processes, including evaluation criteria, re-application issues and other processes.
With the above in mind, we will now address how a manufacturer can (i) obtain verification that a product fits within an existing HCPCS code or (ii) can apply for a new HCPCS code.
PDAC Code Verification
Code verification is handled by the PDAC, a Medicare contractor. The PDAC can be accessed through www.dmepdac.com. This website lists all products that have been code verified. The PDAC can only verify that a product meets the definition of an existing HCPCS code. The PDAC does not have the authority to create a HCPCS code nor amend an existing HCPCS code description. Code verification is mandatory for some products, but not mandatory for other products. The PDAC maintains a list of which DMEPOS items are subject to mandatory code verification
When code verification is not mandatory for a product, the manufacturer may nevertheless seek code verification to obtain certainty regarding the correct HCPCS code to be used when billing Medicare for the product. The manufacturer can then inform customers of the correct HCPCS code that can be used to bill for the product, and that code will drive the coverage and payment rules for the product.
Code verification takes about 65 days. The application form and accompanying instructions are on the PDAC website. As a matter of practice, all payers, not just Medicare, generally follow the PDAC’s code verification decisions.
Application for a New HCPCS Code
If a manufacturer (or another entity) wishes to seek a new or revised HCPCS code for an item that does not fit into an existing HCPCS code, there is a process called the HCPCS Level II Process. CMS’ recent DMEPOS proposed rule includes a number of proposed regulations that would codify the HCPCS code application process, including application requirements and evaluation criteria. That rule is expected to be finalized early in 2021.
The application and its process are on CMS’ website at: www.cms.gov/Medicare/Coding/MedHCPCSGenInfo.gov.
The application process for DMEPOS items occurs twice a year. Applications are generally due around January 1 and July 1 every year. Once CMS makes a preliminary decision, it holds a public meeting where applicants can present more information. CMS then makes a final HCPCS code decision to either grant a new HCPCS code or not. The HCPCS code application process occurs when the manufacturer (i) requests a new HCPCS code; (ii) requests an amendment to an existing HCPCS code description; or (iii) requests that a HCPCS code be deleted.
It is very difficult to obtain a new HCPCS code. CMS grants very few requests for new HCPCS codes. In recent years, CMS has instead made many existing HCPCS codes more generic. All payers, not just Medicare, generally follow CMS’ HCPCS code decisions.
AAHOMECARE’S EDUCATIONAL WEBINAR
When it is Proper to Re-Start the 36 Month Oxygen Rental Period
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Lisa K. Smith, Esq., Brown & Fortunato, P.C.
Tuesday, December 1, 2020
2:30-3:30 p.m. EASTERN TIME
COVID is a game changer. It affects all components of American life, including the DME industry. The importance of DME suppliers has come to the forefront during the pandemic. In short, DME suppliers (particularly oxygen equipment suppliers) are instrumental in keeping patients out of the hospital. This program focuses on those suppliers that provide oxygen concentrators … and in particular on when it is proper for the supplier to re-start the 36 month oxygen rental period. When a DME supplier provides an oxygen concentrator to a Medicare beneficiary, Medicare will pay the supplier for the first 36 months and then the supplier will be obligated to service the beneficiary’s oxygen needs, for very little compensation, for the next 24 months. The beneficiary’s continuous use of the concentrator may be interrupted by one of the following events: (i) the concentrator is lost, stolen, or damaged beyond repair; (ii) there is an extended break in need of greater than 60 days; (iii) the supplier sells its assets to another supplier; (iv) the supplier goes out of business; (v) the supplier files bankruptcy; or (vi) the beneficiary relocates outside the supplier’s service area. This program will discuss whether the 36 month rental period will start over when one of these interruptions occur.
Registration will be posted soon for When it is Proper to Re-Start the 36 Month Oxygen Rental Period on Tuesday, December 1, 2020, 2:30-3:30 p.m. ET, with Jeffrey S. Baird, Esq. and Lisa K. Smith, Esq., of Brown & Fortunato, PC.
AAHomecare’s Retail Work Group
The Retail Work Group is a vibrant network of DME industry stakeholders (suppliers, manufacturers, consultants) that meets once a month via video conference during which (i) an expert guest will present a topic on an aspect of selling products at retail, and (ii) a question and answer period will follow. The next Retail Work Group video conference is scheduled for December 10, 2020, at 11:00 a.m. Central. Jeffrey S. Baird of Brown & Fortunato, P.C. will address “Advertising & MAP Pricing.” Participation in the Retail Work Group is free to AAHomecare members. For more information, contact Ashley Plauché, Manager of Member & Public Relations, AAHomecare ( email@example.com).
Cara C. Bachenheimer, JD, is an attorney with the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas, where she heads up the firm’s Government Affairs Practice. Ms. Bachenheimer’s practice focuses on federal lobbying activities with Congress, the Administration, and federal regulatory agencies, such as CMS, FDA, IRS, and FAA. She can be reached at (806) 345-6321 or firstname.lastname@example.org.
Jeffrey S. Baird, JD, is Chairman of the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or email@example.com.