If a manufacturer desires to sell a product to DME suppliers who will then sell or rent the product to Medicare beneficiaries or other patients, the manufacturer will likely want the item to either (i) fit in an established HCPCS code or (ii) have a new HCPCS code created for the product. If neither event occurs, it is difficult for DME suppliers to sell or rent the product to Medicare patients because Medicare will likely not pay for it. (Commercial payers often follow suit.) Patients will then have to pay for the product out-of-pocket. If it is difficult for the DME supplier to sell or rent the product to patients, the supplier will likely not purchase it from the manufacturer.

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 takes time and can be unpredictable. If no HCPCS code describes the product, the manufacturer (or another entity) can apply for a new or revised HCPCS code through CMS’ Level II HCPCS code process.

In short, a manufacturer can either (i) obtain verification that its product fits within an existing HCPCS code or (ii) apply for a new HCPCS code for the product. This article addresses how code verification works.

PDAC Code Verification
The Pricing Data Analysis Contractor (“PDAC”), a Medicare contractor, handles code verification. Its website is accessible through https://www.dmepdac.com/. The PDAC’s website lists all products that have been code verified. A product will only be verified if it meets the definition of an existing HCPCS code, and any related coding guidelines typically in the product category’s Policy Article. The PDAC is unable to create a HCPCS code or amend an existing code description. The PDAC maintains a dynamic list of DMEPOS items that must undergo mandatory code verification.

Code verification is a voluntary process unless otherwise mandated by the DME Medicare Administrative Contractor Policy. If code verification is not mandatory for a product, a manufacturer may still seek it to obtain certainty of the correct HCPCS code to be used when a DME supplier bills Medicare for the product.

The code verification application form and instructions are on the PDAC website. Typically, all payers follow the PDAC’s code verification decisions.

A valid request submission must include:

• A new code verification review application completed by a valid submitter.
• A copy or screenshot of the manufacturer’s Food and Drug Administration (“FDA”) Registration from the FDA website and a copy of the 510k letter, if applicable.
• A sample of the product, if required.
• Detailed product information that explains the structure and function of the item.

A valid submitter is the product manufacturer/distributor point of contact or designated representative.

The PDAC will accept only one product per application, but variations of a product are considered one product for purposes of coding verification review. Variations can include individual sizes, colors, side specifications, and wheelchair options.

A new application is required if an application is rejected for any reason. The requestor may submit a new application for the same product, but it must include the Document Control Number (“DCN”) from the rejection notification letter. The PDAC will keep Product Samples for 60 days on all rejected applications.

The PDAC will review the submitted documentation and determine the validity of the application within 15 days of receiving it. An email will be sent to the submitter acknowledging receipt. It will indicate that the application was received, deemed valid, and will be processed or that it was considered invalid and must be resubmitted.

If a valid application is received, the PDAC Coding Verification review will be completed within 90 days of receipt. The submitter will receive the review results and decision rationale via email. If the submitter disagrees with the PDAC’s coding decision, the PDAC provides a reconsideration process.

Cara C. Bachenheimer, JD, is an attorney with the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas, where she heads up the firm’s Government Affairs Practice. 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 [email protected].

Jacque K. Steelman, JD is a member of the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. She represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Ms. Steelman can be reached at (972) 684-5789 or [email protected].

AAHOMECARE’S EDUCATIONAL WEBINAR

Cash-Only Retail: How to Succeed

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato
Tuesday, April 16, 2024

1:30-2:30 p.m. CENTRAL TIME
The DME industry primarily serves the elderly. This means that most DME suppliers are dependent on traditional Medicare and Medicare Advantage for most of their revenue. But as DME suppliers know from experience, it can be challenging to be so tied to Medicare. This is where retail comes in. There are 78 million Baby Boomers who are retiring at the rate of 10,000 per day. Many Boomers are willing to pay cash for “Cadillac” items rather than being limited to the “Cavalier” items paid for by Medicare. This program will present the legal parameters within which DME suppliers can move into the retail space. The issues to be presented will include the following:

• Whether the retail business should be (i) under the supplier’s existing Tax ID # or (ii) operated by a separate legal entity.
• State DME licensure.
• Selling Medicare-covered items at a discount off the Medicare allowable.
• Obtaining physician prescriptions.
• Collection and payment of sales tax.
• Qualification as a “foreign” corporation.
• Required notification to a Medicare beneficiary even though the supplier does not have a PTAN.

Register for Cash-Only Retail: How to Succeed on Tuesday, April 16, 2024, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq., Brown & Fortunato.

Members:  $99
Non-Members:  $129