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Category B Device
Trials: Looking
backward and forward
Editor’s note: Sumathy Sundarababu is Clinical
Trial Manager in the Office of Clinical Trials,
New York University Medical Center, Veterans Administration
Hospital in New York City. Sumathy
may be reached by e-mail at sumathy.sundarababu@nyumc.org
or by phone at 212-263-4206.
Today we are witnessing a significant
increase in the number of device trials
all over the country. Device trials
unlock a variety of compliance and regulatory
issues, leaving many hospitals and healthcare
providers wondering if they should ever take
a risk and run a device trial at their site.
Medicare guidelines specify that a bill may
be submitted for services related to use of
a Category B device, but only if specific
information has been previously submitted
to Medicare and if Medicare has provided
a billing authorization. In some instances,
vendors may chose to provide a device free
of charge to the site. Under those circumstances,
institutional providers have an obligation
to report the no cost item by placing a
token charge in the charge field. By doing so,
hospitals/providers are making sure they are
transparent to the eyes of Medicare, compliant
with Medicare billing regulations, and
accomplishing the following four things:
1. Communicating to the contractor that
the provider is not seeking reimbursement
for the no cost item,
2. Reflecting with completeness and accuracy
all services provided to the patient,
3. Preventing the claim from being rejected/
denied by system edits that require an
item to be billed in conjunction with an
associative procedure, and
By Sumathy Sundarababu, PhD
4. Assuring that patient and provider are not
held liable for any charges for the no cost
item.
Although many institutional healthcare
providers have developed their own comprehensive
process of auditing, reconciliation,
and monitoring to ensure that billing for
research services is accurate, device trials
continue to be a challenge, even for the most
compliant site. Many sites fear that they
would jeopardize their billing compliance by
receiving reimbursement from Medicare for
the diagnosis-related group (DRG) expenses,
including the cost of the device, for devices
that are already paid by another source.
In the CY 2007 Outpatient Prospective Payment
System (OPPS) Final Rule, a policy was
adopted to pay a hospital less when a device is
provided to them at no cost. CMS expanded
this policy to the Inpatient Prospective Payment
System (IPPS) in the FY 2008 rule.
Under the rule, hospitals will be required
to identify when they receive a replacement
device and CMS will reduce the DRG
payment to reflect the hospital’s lower cost.
However, CMS does not believe that the
IPPS policy should apply to all DRGs and all
situations in which a device is replaced without
cost to the hospital for the device or with
full or partial credit for the removed device.
For this reason, CMS is applying the policy
only to those DRGs under the IPPS where
the implantation of the device determines the
base DRG assignment and situations where
the hospital received a credit equal to 50% or
more of the cost of the device. Heart rhythmrelated
Medicare-severity DRGs (MS-DRGs)
are subject to the final policy.
Although, CMS acknowledges the fact that
institutional providers are allowed to seek
devices free of charge from the vendors,
Medicare DRG payment doesn’t actually
distinguish devices provided free of charge
from those that are not. In addition, the FY
2008 IPPS rule seems to apply for “replacement
devices” only.
Until CMS comes up with ways to carve out
appropriate charges from the DRG payment
for the “free” devices, the sites have no choice
but continue following the current Medicare
billing guidelines on the UBO4 form:
1. To place the IDE # of the category B
device in form locator 43 (along with a
description of the investigational device)
on the CMS-1450 paper form, or the
electronic equivalent.
2. For part A, the revenue code 624 (IDE)
must be entered in the form locator 42, or
the electronic equivalent
3. To place a token charge of $”1”or $”0”on
the claim form for devices provided free
of charge.
4. Physicians must place the IDE # in item
23 of the CMS-1500 claim form, or the
electronic equivalent
5. Appropriate ICD-9 and CPT/HCPCS
codes that relate to IDE must be reported
on the claim.
6. The modifier Q0 / Q1 must be appended
to the CPT/HCPCS codes.
Furthermore, if CMS is utilizing the annual
cost reports submitted by Institutions to calculate
payment adjustment/carve out device
charges to sites, how do they determine how
much to carve out How is the implantable
device distinguished from other disposable
surgical supplies (for example, ablation
probes & catheters) that are not integral
October 2008
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Health Care Compliance Association • 888-580-8373 • www.hcca-info.org