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Note from the instructor: OIG report on usage of financial liability “G” modifiers

This week’s note from the instructor is written by Kimberly Hoy, JD, regulatory specialist for HCPro, Inc.

The OIG recently released a report on problems with how Medicare contractors process claims with “G” modifiers indicating provision of an advanced beneficiary notice or ABN (GA and GX) and indicating Medicare non-coverage (GY and GZ).  The report, entitled Medicare Payments for Part B Claims with G Modifiers, highlights $744 million of claims paid with one of these “G” modifiers.

The OIG report seems to imply that the $744 million was paid in error because it was for claims providers “expected to be denied as not reasonable and necessary or as not covered by Medicare”.  However, this is misleading because the vast majority of these claims (97.7%) were for services with the GA modifier, which in fact simply indicates that an (advance beneficiary notice of noncoverage) ABN was given, but does not necessarily indicate the service isn’t covered.

An ABN may be given for a covered service if the provider initially believes it is non-covered, but later discovers information (e.g., additional diagnostic information from the physician or even results from the test the ABN was given for) indicating it is covered.  In many cases, the provider would continue to include the GA modifier on their claim because they did in fact give the patient an ABN, even though the service turns out to be covered based on information obtained after provision of the ABN.

Arguably, based on the definition of the GA modifier (“Waiver of liability statement issued, as required by payer policy”), an ABN isn’t required, and therefore the GA is inapplicable and shouldn’t be reported.  However, many providers think that because they believed it was required at the time it was given and they did give the ABN, it would be incomplete reporting to not indicate they provided the ABN.

Additionally, it is operationally very difficult to verify every case where an ABN was provided to ensure no additional information was obtained.  Trying to do so would mean the provider would have to essentially run ABN software to evaluate whether to give the ABN, and then run it again with final bill information to determine whether it was in fact necessary.  Most providers do not have a process to re-run the ABN software to verify the ABN was needed and simply leave the GA modifier on the line if an ABN was given at the time of service.

Equally troubling, though, are the 2.3% of claims paid with modifiers that clearly indicate that the service is not a benefit of Medicare (GX and GY) or clearly indicate that it’s not medically necessary and no ABN was provided, which should result in hospital liability.   These modifiers are used by providers to indicate instances where they are not seeking payment from Medicare, but need to bill the service for some other reason (e.g., coverage by another payer), and yet Medicare contractors inexplicably paid them.

This could mean that a provider billed a service correctly indicating it as non-covered, but the contractor in fact paid them, causing the provider to have an overpayment. The provider may not even be aware they have the overpayment, because of automatic posting from the remittance advice.

I would recommend that providers take a look at this report as well as their own use of these modifiers to be sure they are using them correctly.  I would expect that CMS may issue additional guidance to contractors on proper processing of these modifiers in upcoming transmittals that may affect provider use of these modifiers.

New! Revenue Cycle Institute releases ICD-10-PCS Procedure Guidelines White Paper

The Revenue Cycle Institute has released a new white paper, “ICD-10-PCS Introduces Procedure Guidelines and Coder Confusion,” by Jennifer Avery, CCS, CPC-H, CPC, CPC-I , regulatory specialist for HCPro, Inc.

To download the white paper, click here. Additional white papers can be accessed by clicking here.

Audio conference: Three-day payment window

How does your facility determine which services are directly related to the admission and fall into the three-day payment window?

On January 4th, CMS updated the three-day payment window section of the inpatient chapter of the Claims Processing Manual creating new logistical problems carrying significant compliance risks- let our experts review the new guidance and offer operational solutions and options to meet these challenges efficiently.

Following this 90-minute audio conference you will be able to:

  • Explain the changes CMS made to the three-day payment window
  • Evaluate operational solutions to incorporate the changes to the three-day payment window for observation, self-administered drugs, and non-covered inpatient admission
  • Determine whether your facility should rebill services affected by CMS’ new guidance

Learn more about this webcast, which features Kimberly Anderwood Hoy, JD, CPC and Valerie A. Rinkle, MPA, by clicking here.

NCCI updates

An updated version of the National Correct Coding Initiative (NCCI) manual was recently posted to the CMS NCCI website which included changes identified in red text and will be effective with dates of service January 1, 2013. In addition to two new modifiers, CMS will also be implementing a third edit for add-on codes and has provided some perplexing language regarding reporting unbundled codes.

Reporting services

One of the interesting changes noted in red in chapter one is the following statement:

“Providers reporting services under Medicare’s outpatient hospital prospective payment system (OPPS) must report all services performed including those that are not separately payable. This requirement applies to services not payable due to NCCI edits. Providers should be careful to avoid inappropriately appending NCCI-associated modifiers to codes to improperly bypass an NCCI edit.”

This is rather confusing and could be interpreted in a few different ways. If the NCCI manual instruction states to report the “bundled” code in addition to the separately payable code, providers will hit an NCCI edit and that specific line will be rejected. The question is why CMS would want this information – it would most likely not be appropriate to use the charges attached to the bundled code for rate setting because providers should not be reporting an unbundled procedure code anyway. In the past, CMS has instructed providers to report the costs of care (i.e. charges) by not reporting the CPT code – in instances where a CPT code was not required with a specific revenue code. However, the statement above does not specifically state that. Providers will want to ask for clarification from their MACs and consider asking this question on the next CMS Hospital Open Door Forum call.


According to the NCCI manual, a modifier should not be appended to a HCPCS/CPT code solely to bypass an NCCI edit if the clinical circumstances do not justify its use. There are two modifiers that will be added to the anatomical modifiers that may be used under appropriate clinical circumstances to bypass an NCCI edit:

  • LM – Left main coronary artery;
  • RI – Ramus intermedius coronary artery.

A variety of staff should be aware of the addition of these two modifiers – coders, department managers, auditors, billers, chargemaster coordinators to name a few – so that when appropriate, an NCCI edit can be bypassed and the hospital appropriately reimbursed for the second procedure.

Add-on codes

Some codes in the CPT Manual are identified as “add-on” codes which describe a service that can only be reported in addition to a primary procedure. The CPT Manual instructions specify the primary procedure code for most add-on codes; however, for others, the primary procedure is not specified.

Add-on codes allow reporting of significant supplemental services commonly performed in addition to the primary procedure. They should not be confused with incidental services that are necessary to accomplish the primary procedure (e.g., lysis of adhesions in the course of an open cholecystectomy) or complications that occur during the procedure that are inherent in an invasive procedure (e.g. control of bleeding during an invasive procedure is considered part of the procedure), both which are not separately reportable with an add-on code.

In general, NCCI procedure to procedure edits do not include edits with most add-on codes because CMS considers edits related to the primary procedure to be adequate to prevent inappropriate payment for an add-on coded procedure. However, NCCI does include edits for some add-on codes when coding edits related to the primary procedure must be supplemented.

There are three “types” of add-on codes with the associated edit table. Each table lists the add-on code which is eligible for payment when reported with the primary code, the exception being 99291 critical care evaluation and management, first 3-74 minutes and 99292 each additional 30 minutes critical care. Transmittal 2607 goes into detail regarding the three different edit tables:

  • “Type I Add-on Code Edit Table” lists add-on codes for which the CPT Manual or HCPCS tables define all acceptable primary codes.
  • “Type II Add-on Code Edit Table” lists add-on codes for which the CPT Manual and HCPCS tables do not define any primary codes.
  • “Type III Add-on Code Edit Table” lists add-on codes for which the CPT Manual or HCPCS tables define some, but not all, acceptable primary codes.

Although the add-on code and primary code are normally reported for the same date of service, there are unusual circumstances where the two services may be reported for different dates of service. For example, when critical care (99291) begins on one date of service and rolls over into the following day and the additional critical care time (99292) is provided on that following day.

All providers should take the time to review each chapter of the new NCCI manual to identify any areas that may need clarification with CMS, your MAC and specific staff. Although the changes don’t appear to be that significant on first glance, providers have been stung by that in the past with clarifications that completely changed what we thought to have been true.

CMS publishes the 2013 OPPS and MPFS final rules

Right on cue, CMS released the 2013 OPPS Final Rule on November 1 and then followed up with the MPFS Final Rule. In a breaking news story, HCPro summarized the changes – the good, the bad and the ugly – that will impact hospitals across the country. I wanted to take this time to review several changes that will impact two high volume departments in the hospital outpatient setting – therapy services and laboratory.

Many laboratory departments have been struggling with the complexity and the number of CPT codes for molecular pathology – now at 115 codes in two different tiers – and how to implement the new codes, even though CMS had allowed hospitals to bill the “stacked codes” instead for 2012. That will all change with dates of service on January 1, 2013 when the stacked codes will be invalid and the CPT codes for the actual molecular pathology services will need to be reported and will be paid under the clinical Laboratory Fee Schedule (CLFS).

In 2012 when these codes first came into play, CMS stated they were not valid of payment and hospitals should still report combinations of “regular” CPT codes for payment that described various steps to perform a specific test – referred to as stacking because different groups of codes are billed depending on the components of the actual test. CMS also clarified in a Hospital Open Door Forum call that hospitals should also report the new molecular pathology codes with the stacked codes so that CMS could use that information for setting rates for implementation in 2013.

Hospitals need to begin now to get ready to implement the new codes as this has the potential to be a major project. This includes updating chargemasters, order entry and charge tickets so there will not be a delay in billing and reimbursement. Physicians, laboratory staff and coders may want to review the AMA CPT Assistant May 2012 and June 2012 for guidance on how to select the appropriate code. Keep in mind that hospitals will be responsible for creating their own pricing based on their current methodology and the CLFS as there is not a one-to-one crosswalk from the current CPT codes over to the molecular pathology codes.

Another major change for hospitals will be reporting functional limitation indicators and outcomes for outpatient rehabilitation therapy. This information will be found in the MPFS Final Rule and not under OPPS because therapy services are paid under the MPFS.

The MCTRJCA, the same Act that implemented the therapy caps and manual medical review for hospital outpatient services from October through December 2012, also required a claims-based data collection process to help reform the Medicare payment system. Of concern to Congress and CMS is that between 1998–2008, Medicare expenditures for outpatient therapy services increased at a rate of 10.1% per year while the number of Medicare beneficiaries receiving therapy services only increased by 2.9% per year. Beginning on page 221 of the display copy of the MPFS Final Rule, a thorough explanation is provided regarding what data CMS will be looking for under the five-year CMS project titled “Development of Outpatient Therapy Payment Alternatives” (DOTPA).

In summary, because current ICD-9 diagnosis codes cannot provide the data needed, specific G-codes will be used to identify what type of functional limitation is being reported and whether the report is on the current status, projected goal status or discharge status. Modifiers will also be used to indicate the severity/complexity of the functional limitation being tracked. The difference between the reported functional status at the start of therapy and projected goal status will represent any progress the therapist anticipates the beneficiary would make during the course of treatment. This reporting will apply to all therapy claims, including those for services above the therapy caps and those that include the -KX modifier.

Again, this will be a major undertaking to update the charge master, order entry systems and charge tickets with new G-codes for services that occur on January 1, 2013. Although this is not a change in the current reimbursement structure and hospitals will be given a six-month testing period to implement no later than July 1, 2013, therapists and billers, as well as other involved in coding and billing of therapy services should become familiar with the new data reporting requirement prior to January 1.

CMS policies and conversion from ICD-9 to ICD-10

It was a rather quiet week last week as CMS and the Medicare contractors, including providers, get ready to implement the IPPS final rule on October 1, 2012. A transmittal was published last week that I thought was worthy of a little more discussion.

As we all know the implementation deadline for ICD-10 was officially changed from October 1, 2013 to October 1, 2014 for all providers and suppliers. Although this may seem like a long way off with all of the other items that need more immediate attention, keep in mind that it takes a lot of work behind the scenes to convert ICD-9 data to ICD-10 data – especially when there is not a one-to-one match for many of the code conversions.

CMS is announcing in transmittal R1122OTN that it is beginning the process of converting the ICD-9 diagnosis and procedure codes over to “comparable” ICD-10 codes including any related denial messages, frequency edits, and other claims processing logic. We know what a huge operational task our own data conversion will be; however, CMS must also convert national coverage determinations as well as make other system changes well in advance to prevent unnecessary denials and delays in payment to its providers.

One item of interest in this transmittal is that CMS has stated that they will not only be updating but also creating national coverage determination (NCD) hard-coded shared system edits as they relate to the coding conversion. At first glance, the statement that they would be creating new NCD edits set me back and sounded a little opportunistic and outside of the current policy making procedures. However, CMS included the following “disclaimer” in the transmittal:


If the purpose is to create only edits to match the current policies and/or policies that are created between now and October 1, 2014, that makes sense in an effort to have efficient conversion processes and ultimately kill two birds with one stone. One new edit that will be created in the Common Working File (CWF) is for frequency restrictions when billing the HCPCS codes for bone density to be 1 X per 23 month period. This edit will not be a change in current coverage policy but rather will put into place front end processes to streamline claims payment systems.

Usually, providers will see in the transmittal an effective date that is on or before the implementation date that the Medicare contractors have to comply with. In this rare case, we see the reverse where their implementation date is January 7, 2013 and the providers’ effective date is October 1, 2014.

Going forward, providers should monitor these types of transmittals and share with their ICD-10 implementation committees. Both local and national coverage determinations will be converted and if facilities have created their own internal edits, these will also need to be updated to prevent delays inadvertently caused by the providers themselves.


CMS Releases October OPPS Update

CMS released the October OPPS update this week with a smattering of unrelated, but important updates.  There were also two corrections to the claim manual in this update.

One of the manual corrections appears to be aimed at removing a barrier to payment for bariatric surgery in hospital outpatient departments.  Although CPT code 43770 (laparoscopic placement of adjustable gastric band), was removed from the inpatient only list effective January 1 of this year, there remained a notation in the claims processing manual that the procedure was only payable on a type of bill 11X, an inpatient type of bill.   CMS corrected this to indicate that the procedure is also payable on 13X, outpatient hospital, and 85X, critical access hospital outpatient, types of bills.

There is some confusion about when this change is effective.  The text of the transmittal, as well as the “Business Requirements” instructions to the MACs, indicate this change related to the type of bill is retroactively effective back to January 1, 2012 when the procedure was removed from the inpatient only list.  However, the transmittal has an effective date of October 1, 2012 and the actual manual section header also repeats this October 1, 2012 effective date.

On a related note, the IOCE indicates that code 43775 (laparoscopic sleeve gastrectomy) was added to the inpatient only list following its approval for coverage, retroactively effective April 1, 2012.

Also included in the update were codes for two new drugs approved for pass through payment, effective October 1, 2012.  The drugs are pertuzumab injection, 10mg (C9292) and glucarpidase injection, 10 units (C9293)

There was also one new HCPCS code added for October: G9157 (Short descriptor:  “Transesophageal Doppler mon”). This new code has a status indicator of “M” indicating it is not reportable by a hospital to a MAC.  Generally, codes with a status indicator “M” are codes that are not reportable because they represent professional services or there is an alternative code available for reporting the service.

Finally, CMS made updates to manual sections on Transitional Outpatient Payments (TOP) to certain rural and Sole Community Hospitals (SCH) to account for recent legislative activity extending these payments.  The additional payments were only extended to February 29, 2012 for SCHs and Essential Access Community Hospitals (EACH) with more than 100 beds.  However, for rural hospitals, as well as SCHs and EACHs with 100 or fewer beds the additional TOPs payments were extended through the end of this calendar year.

Lastly, on an unrelated note, I want to remind everyone that the comment period for comments to the CY2013 OPPS proposed rule, including CMS’ solicitation of comments on patient status issues, is open until September 4 at 5 p.m.  I encourage you all to comment.

CMS posts questions and answers on three-day window

Slipping by somewhat unnoticed, CMS posted a set of Q&As on their Three-Day Window website a few weeks ago.  The questions focus on the more recent guidance for freestanding entities, such as physician offices and ASCs that are wholly-owned or wholly-operated by a hospital.  The questions also contain some information more broadly applicable to other service settings.

One interesting answer related to what is considered a diagnostic service.  In the hospital setting, this has always been defined by diagnostic revenue code and in some instance HCPCS code.  CMS had published a list of these revenue codes and HCPCS codes in Medicare Claims Processing Manual, Chapter 3 § 40.3.

This list has a couple of problems though.  First, the list has not been updated since the major change to the payment window in 2010.   This has resulted in the list containing outdated HCPCS codes that have been replaced by the CPT.  Second, defining diagnostic services by revenue code is not helpful in the physician environment because their claims are submitted on a CMS 1500 and do not use revenue codes.

The new Q&As state that the term diagnostic is defined more broadly as it is defined in the Benefit Policy Manual:  An examination or procedure to which the patient is subjected, or which is performed on materials derived from a hospital outpatient, to obtain information to aid in the assessment of a medical condition or the identification of a disease.  This means providers need to evaluate services beyond the traditional diagnostic laboratory and x-ray services, to determine if they would be considered diagnostic and therefore subject to bundling under the rule.  This would include surgical procedures that could be considered diagnostic in nature, similar to the list of HCPCS codes CMS currently lists in § 40.3.

There is also a helpful Q&A related to critical access hospitals (CAHs) and the payment window.  They make clear that it is true that if the admitting hospital is a CAH, the payment window does not apply.  However, they also clarify that if the admitting hospital wholly owns or operates a CAH, the outpatient services at the CAH are subject to bundling under the payment window.  This is helpful because many CAH providers are under the mistaken impression the payment window never applies to their services.

As to services provided at a freestanding entity, interestingly CMS states it is the hospital’s responsibility to determine which non-diagnostic services are related to an admission at the hospital and therefore subject to bundling.  Operationally, however, this responsibility is likely to fall on the physician’s office or ASC because, as they note in another answer, the decision will require knowledge of the specific clinical circumstances of the patient.

One thing the Q&As do well is make clear the exact portions of the freestanding practice’s claim that are subject to bundling.  They clarified that the technical portion of diagnostic services and the non-facility practice expense relative value units for related non-diagnostic services are paid through the IPPS under the payment window and must be bundled to the hospital claim.   As a result, it is easy to see that the practice would still be paid for the professional portion of diagnostic services and for non-diagnostic services, the facility rate which does not include practice office expense

In order to operationalize this, CMS adopted the -PD modifier (Diagnostic or related non-diagnostic item or service provided in a wholly owned or operated entity to a patient who is admitted as an inpatient within three days or one day).  CMS clarified that modifier -PD should be used by both wholly-owned and operated freestanding physician practices and ASCs as appropriate, but should not be used for services performed in the hospital (i.e. at provider-based clinics and outpatient departments).  Hospitals and freestanding entities were to have coordinated billing practices in place to ensure the proper application of the -PD modifier by July 1, 2012.

Codes with the -PD modifier pay at the professional rate for those codes with a -26/-TC split, however the Q&As specify that the -26 professional-services-only modifier should also be appended to these codes.  Codes that do not have a -26/-TC split reported with the -PD modifier will pay at the facility rate to ensure the non-facility practice office expense is not paid to the freestanding entity.

CMS also makes note of the fact that because the practice office expenses (the direct costs of clinic staff, equipment and supplies) of non-diagnostic related services are paid through the IPPS payment, the costs should be billed on the claim for the inpatient stay and be included in the hospital’s cost report.  They do not indicate exactly how the hospital should operationalize this, but they do indicate that the freestanding entity may, but is not required to, adjust its charge for these related non-diagnostic services on its claim.

All in all the Q&As are worth a read, although there are no new significant changes contained in them.

Lastly, I’d like to take the opportunity to encourage you to comment on CMS’ request for comments related to patient status.  I am currently working on an article on the proposals and request for comments for HCPro’s Revenue Cycle Institute which should come out later this week.  The details are in the section titled “XI.  Outpatient Status: Solicitation of Public Comments” beginning on page 95-97 of the OPPS Proposed Rule.   It is a short read and I believe almost every provider has strong opinions on this issue which they now have the opportunity to express to CMS by submitting comments by September 4 either by mail or through this website:!submitComment;D=CMS-2012-0084-0001

Changes to device edits for July 2012

It was relatively quiet for CMS last week so I thought it would be a good idea to revisit one particular issue from the July OPPS Update transmittal on device-to-procedure edits.  There appears to have been an inadvertent “error” in the January and April OCE files that may have created problems for some providers trying to get reimbursed for the device HCPCS code C1882 – cardioverter defibrillator, other than single or dual chamber (implantable) when billed with CPT code 33249 – insertion or replacement of permanent pacing cardioverter-defibrillator system with transvenous lead(s), single or dual chamber.

A quick review of how the device edits came to be: Since January 1, 2007, CMS has required that devices contained in the device-to-procedure or procedure-to-device edit list cannot be correctly reported without one of the specified procedure codes also being reported on the same claim. Prior to 2007, when devices were billed without an appropriate procedure code, the cost of the device was being packaged into the median cost for an incorrect procedure code which was inflating the payment for the incorrect procedure code.  Hospitals that billed devices without the appropriate procedure code were being incorrectly paid as well. The device-to-procedure edits were created to ensure that the costs of specific devices were assigned to the appropriate APC for rate setting.  Under the current system, failure to pass these edits will result in the claim being returned to the provider (RTP) for correction.

The January 2012 OCE Summary of Data Changes file deleted the device-to-procedure edit for C1882 reported with 33249 but added C1882 for reporting with other CPT codes. Unfortunately, provider claims were being returned for correction when in fact, this code pair was appropriate based on the CPT coding descriptions and guidelines.  In addition, the April 2012 OCE Summary of Data Changes file announced that the procedure-to-device edit for 33249 with C1882 was removed and would be effective back to January 1, 2012.

CMS announced in the July transmittal that based on clinical input from hospitals and other interested stakeholders, HCPCS code C1882 is being reinstated as a device code that can satisfy the edit for CPT code 33249, retroactive to January 1, 2012.  Some providers have reported that their Medicare contractors have held their claims for reprocessing once the revised edits have been implemented on July 2. However, other providers have reported that their MACs have continued to RTP their claims and that their claims have not been held claims for reprocessing. According to the transmittal, CMS has instructed the Medicare contractors to “adjust claims brought to their attention” with dates of service January 1 through June 30, 2012.

There appears to be a lack of communication and some confusion between CMS, the MACs, and providers who are providing this outpatient service. It would be wise for hospitals who tried to bill C1882 with 33249 since January 1 identify those claims within their own internal reporting systems.  Because of the confusion, I would not rely solely on your MAC to correctly reprocess all of these claims and hospitals should verify that their claims with this code pair have been appropriately billed and paid.


July 2012 quarterly update contains multiple significant updates and clarifications

There were a number of interesting items in the July 2012 Update to the Hospital Outpatient Prospective Payment System. The Claims Processing Manual transmittal had several new and replacement codes that hospitals should take note of and make appropriate chargemaster changes. The quarterly update also included a Benefit Policy Manual transmittal with three clarifications, including a new section on packaged self-administered drugs.

There were seven new Category III CPT codes adopted for July 2012, including new codes related to intracardiac ischemia monitoring systems (0302T-0307T) and a replacement code for insertion of ocular telescopic prosthesis (0308T), which should be used to replace deleted code C9732 effective July 1, 2012.  Also effective July 1, 2012, the pass-through code C1840 formerly billed with deleted code C9732 must be billed with new code 0308T to receive pass through payment.

There were also two new biologicals approved for pass through payment effective July 1: C9368 (Grafix Core, per square centimeter) and C9369 (Grafix Prime, per square centimeter).  CMS also adopt six new drug codes, three of which are replacement codes for existing drug codes that will no longer be billable effective July 1, 2012.

Human fibrinogen concentrate will now be billed with new code Q2045 in 1 mg units rather than J1680 which was billed in 100 mg units.  Similarly, aflibercept will be billed with new code Q2046 in 1 mg units rather than C9291 which was formerly used for a 2mg vial. Providers should take care to ensure that they properly adjust the units billed in addition to replacing the code in the chargemaster in order to avoid underpayments.

Code Q2048 (Injection, doxorubicin hydrochloride, liposomal, doxil, 10mg) is being created to replace J9001(Injection, doxorubicin hydrochloride, all lipid formulation, 10mg) and an additional code Q2049 is being adopted for doxorubicin hydrochloride, liposomal, imported lipodox, 10mg. In addition to new and replacement codes, CMS is changing the status indicator to payable for eight drugs and biological effective retrospectively to April 1, 2012.

CMS is also publishing new payment Addenda related to a correction notice published April 24th. The July Addendum A and B will contain corrected payment rates that are retroactive to January 1, 2012. Providers must request reprocessing if they believe they have been underpaid due to a change in the payment rates.

The Claims Processing Manual transmittal also had a policy clarification related to inpatient-only procedures. A statement was added to the manual to clarify that removal from the inpatient-only list does not mean the procedure must be provided on an outpatient basis. The clarification specifically emphasizes that procedures removed from the list are still payable on an inpatient basis.

The Benefit Policy Manual had two clarifications related to coverage and supervision and an additional important addition related to self-administered drugs. CMS updated the section on coverage of hospital outpatient services to specifically exclude physical therapy, occupational therapy and speech language pathology. This is in line with commentary in the OPPS final rule for 2012 that indicated these services were exempt from these requirements, including the supervision requirements, because they were not paid under the OPPS.  Additionally, CMS published the notice regarding services that only require general supervision as discussed in this blog on June 5.

Lastly, CMS has finally manualized language from Program Memorandum A-02-129 that discussed coverage of self-administered drugs when they are packaged supplies to a procedure. The original language in A-02-129 specified that self-administered drugs were covered if they were integral to a treatment or procedure, but the new language added to the manual appears to be limiting this coverage to drugs integral to procedures only. Specifically they state that the policy applies to drugs that are “an integral component of a procedure or are directly related to it, i.e., when they facilitate the performance of or recovery from a particular procedure.”

Additionally, CMS changed the bullet point examples of what is included and excluded from this policy. They eliminated the bullet point mentioning local anesthetics on the list of items integral to procedures and added language to the bullet point on eye drops making clear it would not include “the patient’s eye drops” that they use pre and post-operatively.

They also added two examples to the list of items not covered by this exception: pain medication for an outpatient presenting with pain and laxatives for constipation.  These examples appear to be aimed at explaining new language indicating that if the drug itself is the treatment it is not considered a packaged supply and therefore is not covered. This is also in line with their removal of “treatment” from the section discussing integral drugs that are covered, mentioned above.

Providers should take note of this new section on packaged self-administered drugs because it may affect their current policies on drugs they consider integral to procedures. As discussed, there are subtle but important changes to the language from the original program memorandum published in 2002.