Device-related Billing in the 2017 OPPS Proposed Rule
by Valerie A. Rinkle, MPA
Initially, when CMS packaged devices into APC payments, the definition of device-intensive APCs meant that there was an exact match between the CPT/HCPCS procedure code and the APC to which it was grouped. Furthermore, there was usually only one category C HCPCS code for the implantable device associated with the procedure code. As a result, defining device-intensive procedures at the APC level equated to defining these procedures at the CPT/HCPCS level. Recall that device-intensive APCs include procedures with a device offset greater than 40% due to device costs of procedures within the APC exceeding 40%. However, with the advent of C-APCs, device-intensive APCs include many CPT/HCPCS procedure codes, some of which include several category C HCPCS codes for devices. Therefore, a single APC can contain some procedures with just one category C HCPCS code associated with the implant and other procedures with two, three, or more category C HCPCS codes associated with the different components of the implantable devices. The device offset associated with the C-APCs was an average across all the category C HCPCS codes for the devices, not just the one associated with pass-through status. As a result, payments for pass-through devices were significantly understated where the offset included the cost of many other devices.
CMS has recognized the issues associated with defining device-intensive APCs at the APC level, especially with C-APCs. CMS states that they are acknowledging comments received from providers regarding policies in the 2016 OPPS proposed rule. For 2017, CMS proposes five key changes to better align payment policy with rate setting policy.
Defining device-intensive procedures at the CPT/HCPCS level
As described above, device-intensive C-APCs encompass many procedures, including single procedure codes that require numerous device C-codes and other procedures that require one device C-code. CMS realizes the definition at the APC-level was too broad and the associated offset at the C-APC level was too high. Therefore, CMS proposes to redefine device-intensive procedures at the CPT/HCPCS level instead of the APC level.
Commenters noted that calculating device intensity at the APC level does not take into account device similarity within an APC. For example, some procedures that include high-cost implantable devices are assigned to APCs with procedures that include the cost of significantly less expensive devices or none at all, leading to lower APC geometric mean costs.
The list of device-intensive procedures will be at the CPT/HCPCS level and these codes will map to their APC assigned payment group. Furthermore, each of these CPT/HCPCS procedure codes will be associated with one or more category C HCPCS codes for the implantable devices used during the performance of the procedure.
Defining the device offset at the CPT/HCPCS level
When CMS approves pass-through status for a new device, it ensures there is a category C HCPCS code for that device. Pass-through status is recognized for new devices that provide significant clinical benefit beyond existing devices and also result in significant additional expense for the new device. When CMS grants pass-through status, which results in additional pass-through payment to the provider, it is expected that the additional payments will occur for two, and no more than three, years while CMS obtains claims data to make an APC assignment for the procedure and the device, and ensures the cost of the device is calculated in a manner such that the resulting APC assignment reflects its cost. While the device has pass-through status, by statute, CMS must deduct the cost of any existing or predicate devices built into the APC procedure payment when the pass-through device is used instead. CMS has defined the offset amount at the APC level. As mentioned, the offset can include many devices, not just the specific device which the pass-through device replaces. In general, this results in offsets that greatly exceed the cost of just the single device replaced with the pass-through device.
CMS proposes to define the device offset at the HCPCS level, and not the APC level. This policy proposal aligns the offset with the change in defining device-intensive procedures at the HCPCS level rather than the APC level. Each CPT/HCPCS code will have one or more offsets associated with the procedure that should be defined at the category C HCPCS code.
A HCPCS-level device offset would be calculated using only claims for a single HCPCS code. According to CMS as stated in the 2017 OPPS proposed rule:
We believe that such a methodological change would result in a more accurate representation of the cost attributable to implantation of a high-cost device, which would ensure consistent device-intensive designation of procedures with a significant device cost. Further, we believe a HCPCS code-level device offset would remove inappropriate device-intensive status to procedures without a significant device cost but which are granted such status because of APC assignment.
To read the complete, detailed artcile that appeared on Medicare Compliance Watch, click here.