There is often confusion between the national HCPCS coding process and the Pricing, Data Analysis and Coding (PDAC) code verification process from the Centers for Medicare & Medicaid Services (CMS). In this article, we’ll explain the different roles and responsibilities of each of these processes and how they relate to each other.
If a manufacturer wants to sell a product to durable medical equipment (DME) suppliers who will then sell or rent the product to Medicare patients, the manufacturer will want the item to either fit within an established HCPCS code or be awarded a new HCPCS code. If neither of these happen, it will be difficult for the DME supplier to sell or rent the product to Medicare patients because Medicare will likely not pay for the product, which means that the Medicare patient will have to pay for the product out of pocket. If it will be hard for the DME supplier to sell or rent the product to Medicare patients, then the supplier won’t be inclined to buy it from the manufacturer or carry it.
In order for Medicare to cover and pay for equipment, the product must fit within an established Medicare billing code, known as a HCPCS code, or it may be billed using the miscellaneous DME HCPCS code (E1399). If the miscellaneous code option is used, the Medicare Administrative Contractors that process the claims will individually review the claim and determine whether Medicare will cover and pay for the item; this can be a time consuming and predictable process.
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’s Level II HCPCS code process. CMS’s recent DME, prosthetics, orthotics and supplies (DMEPOS) proposed rule proposes to codify many of the long-standing Level II HCPCS code application processes, including evaluation criteria, re-application and other processes.
With the above in mind, we will now address how a manufacturer can either obtain verification that a product fits within an existing HCPCS code or apply for a new HCPCS code.
PDAC Code Verification
Code verification is handled by the PDAC, a Medicare contractor (Palmetto GBA holds the contract). The PDAC can be accessed through dmepdac.com, which lists all of the 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 or amend an existing HCPCS code description. Code verification is mandatory for some products, but not for others. The PDAC maintains a list of which DMEPOS items are subject to mandatory code verification.
When code verification is not mandatory, the manufacturer may nevertheless seek it in order to get certainty regarding the correct HCPCS code to be used when billing Medicare. 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 generally follow the PDAC’s code verification decisions, not just Medicare.
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’s 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’s website at: cms.gov/medicare/coding/medhcpcsgeninfo.
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 in which applicants can present more information. CMS then makes a final decision to either grant a new HCPCS code or not. The HCPCS code application process occurs when the manufacturer requests a new HCPCS code, requests an amendment to an existing HCPCS code description or requests that a HCPCS code be deleted.
It is extremely difficult to obtain a new HCPCS code, because CMS grants very few requests for new codes. In recent years, CMS has instead made many existing HCPCS codes more generic. All payers, not just Medicare, generally follow CMS’s HCPCS code decisions.
This article originally appeared in Medtrade Monday.