Updated on: January 30, 2013

Durable Medical Equipment Supplier Billing Errors Identified by RACs

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Original story posted on: May 3, 2011

wiitalaRAs reported by RACMonitor on April 27, for Connolly Consulting and Health Data Insights, the respective Region C and D contractors, a top issue has been the billing and reimbursement of durable medical equipment (DME) used during inpatient stays, which is considered a bundled component.

As described below, RACs also are finding issues with DME supplier claims for patients receiving care from hospice providers and well as with improper billing of budesonide.

DMEPOS for Terminal Patients

Suppliers are incorrectly billing and receiving payment for DME, prosthetics, orthotics, and supplies (POS) that the hospice provider should pay. At issue are items or services related to patients with terminal diagnoses provided during a hospice period.

As CMS indicates in its February Medicare Quarterly Compliance Newsletter, DMEPOS provided to hospice patients with terminal illness are not paid separately (that is, they are included in the payment) unless modifier GW has been appended to the claim, which indicates that the services are not related to the hospice patient's terminal condition. Although Medicare covers these items or supplies, it only issues additional reimbursement (in addition to the hospice payment) when they are provided for treatment of a condition or illness that is not related to the patient's terminal illness.

Medicare carriers will deny claims for all other services related to the terminal illness furnished by individu­als or entities other than the desig­nated attending physician, who may be a nurse practitioner. This includes bills for any DME, supplies, or independently practicing speech-language pathologists or physical therapists that are related to the terminal condition. These services are included in the hospice rate and paid through the fiscal intermedi­ary. (See Medicare Claims Processing Manual, Chapter 20, Section 10.2 at http://www.cms.gov/manuals/downloads/clm104c20.pdf.)

Any covered Medicare services not re­lated to the treatment of the terminal hospice condition and which are furnished during a hospice election period may be billed to Medicare for payment. However, these ser­vices must be coded with the GW modifier.

The bottom line: Providers must be sure that any supplies billed outside of the hospice are NOT related to the hospice diagnosis.

Quantities of Budesonide

Another area of confusion for DME suppliers relates to billing budesonide. Providers are billing quantities of this medication that are greater than 62 units of service per month, which is the maximum amount for which Medicare will pay.

Budesonide is adminis­tered through inhalation via a nebu­lizer, and the manufacturer supplies it as Pulmicort Respules®in 0.25, 0.5, and 1 mg unit dose vials. The pharmaceutical should be billed with the following HCPCS level II code:

J7626Budesonide, inhalation solution, FDA-approved final product, noncompounded, administered through DME, unit dose form, up to 0.5 mg

As CMS points out, one unit of service (UOS) equals up to 0.5 mg. For the 0.25 mg or 0.5 mg unit dose forms, suppliers should bill one UOS for each vial dis­pensed. For the 1 mg unit dose form, one vial equals two UOS.

The medical literature does not support the use of budesonide at a frequency greater than twice per day (regardless of whether 0.5 mg or 0.25 mg dose is used) or a cumulative dose greater than 1 mg/day. Therefore, according to the DME Medicare administrative contractors' (MACs) local coverage determinations (LCDs) for nebulizers, the maximum allowed amount is 62 units of service per month. Billing for quantities greater than 62 UOS per month will be denied as not medically necessary.

To avoid these problems, CMS provided the following examples as illustrations of how to bill code J7626.

Example 1: Dispensing 0.5 mg vials

The order is for budesonide 0.5 mg vials, administer 0.5 mg BID. 0.5 mg x 2x/day = 1 mg/day x 31 days = 31 mg/month. 1 vial x 2x/day = 2 vials/day x 31 days = 62 UOS/month. File claim for 62 UOS of code J7626.


Example 2: Dispensing 0.25 mg vials

The order is for budesonide 0.25 mg vials, administer 0.25 mg BID. 0.25 mg x 2x/day = 0.5 mg/day x 31 days = 15.5 mg/month. 1 vial x 2x/day = 2 vials/day x 31 days = 62 UOS/month. File claim for 62 UOS of code J7626.

Example 3: Dispensing 0.25 mg vials

The order is for budesonide 0.25 mg vials, administer 0.25 mg TID. 0.25 mg x 3x/day = 0.75 mg/day x 31 days = 23.25 mg. 1 vial x 3x/day = 3 vials/day x 31 days = 93 UOS/month. Claim filed for 93 UOS of code J7626.

In the above example, explains CMS, even though the total milligrams administered (23.25 mg/mo) is within the policy guidelines (31 mg/ mo), the 93 units of service exceed the guidelines. If 0.75 per day is ordered, there is no medical necessity for administering three times per day. Admin­istration of one 0.5 mg dose and one 0.25 dose per day would be appropri­ate. The excess units of service will be denied as not medically necessary.

Important Resource

All DME MACs publish LCDs (which include details about coverage and proper coding), documen­tation requirements, and contractor articles on Budesonide (J7626) and nebulizers. (For links to DME MACs as well as other web resources on the above, see page 8 of the February issue of CMS's Medicare Quarterly Compliance Newsletter at http://www.cms.gov/MLNProducts/downloads/MedQtrlyComp_Newsletter_ICN905712.pdf.)

About the Author

Randy Wiitala, BS, MT (ASCP) is a senior healthcare consultant with Medical Learning, Inc. (MedLearn), St. Paul, MN. MedLearn is a nationally recognized expert in healthcare compliance and reimbursement. Founded in 1991, MedLearn delivers actionable answers that will equip healthcare organizations with their coding, chargemaster, reimbursement management and RAC solutions.

Contact the Author

rwiitala@medlearn.com

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