Medical Devices: Billing Pitfalls to Avoid

Hospital pharmacies often carry and dispense medical devices in order to administer medications, or as part of a package for operating room cases.

 

Pharmacies may determine which medical devices they carry based upon patient needs, but they can’t be billed as a drug. What does that mean?

The National Uniform Billing Committee (NUBC) was formed in 1975 to develop and maintain a single billing form and standard data set to be used nationwide by institutional, private and public providers and payers for handling health care claims. Therefore, the Committee is responsible for establishing revenue codes that are used on hospital claims.

Drugs and biologicals are billed with revenue codes 25x (250-259) and 63x (631-637). Special revenue codes have been developed for diagnostic and therapeutic radiopharmaceuticals (343/344) and Car T-cell therapy/gene therapy (891/892). Products which are NOT approved under the FDA’s drug and biological pathways are typically billed as a supply with revenue code 27x. 

 

Drugs and Biologics

The pharmacy revenue codes are used to bill for drugs and biologics and include both prescription drugs and O-T-C drugs that have approval from the FDA and are listed in the National Drug Code Directory (which is updated daily). They also can be distinguished as entries often include an NDA/ANDA/BLA tag which indicates under which drug or biological pathway the products were approved. Often package inserts are available on the DAILYMED website that contains the necessary information.

 

Medical Devices

Medical Devices may include drugs within the device, but if the primary action of the product is due to the device and not the drug, it is labelled as a device rather than a drug. One common example is pre-filled heparin flush syringes of 1ml, 2 ml and 5 ml which are labelled as devices. However, products from Fresenius Kabi, Hospira, Baxter, and B. Braun which contain 200 units of heparin per 100 ml are all labeled as drugs (and approved under NDA/ANDAs). Other medical devices that may be dispensed by the hospital pharmacy include viscoelastics (Viscoat OVD, DuoVisc, DisCoVisc and Healon), Gelfilm and Gelfoam, and Aerochamber Plus.

 

Other items that are used in the OR may appear similar but are approved as drugs or biologicals: Sterile Talc, Vistaseal, and Tisseel.

 

By now you are probably asking: “So, I can go to the FDA NDC Directory, or DAILYMED to verify a product was approved under an NDA/ANDA or BLA, but where is a comprehensive list of all products labelled as a “device”?

Unfortunately, the answer is, “There isn’t a list.” Medical Devices have a limited approval pathway and range from simple tongue depressors and hospital gowns to complex programmable pacemakers and robotic surgical systems. The FDA maintains the Medical Device Product Classification database which lists over 6,000 types of medical devices regulated by FDA's Center for Medical Devices and Radiological Health (CDRH) and the classification assigned to each type. You can search the FDA Releasable 510(k) Database, but it often doesn’t return information unless the exact product name is searched. One of the best sources of information is the product itself where the package or package insert will often identify that it is a “device”.

Why is this important? A product that is not a drug or biological cannot have a National Drug Code (NDC) number assigned. Payers who require an NDC number will often examine claim lines in revenue code 250 or 636 and require an NDC number. If non-drugs are reported in these revenue codes, 11-digit numbers reported are flagged as “invalid” and the entire claim may be rejected.

 

Conversely, products labeled as drugs or biological should be reported in revenue codes 25x or 63x as managed care contracts often contain language for additional reimbursement for products appropriately reported in revenue code 636. Reporting these drugs/biologicals in a supply revenue code such as 270 may result in loss of revenue.

SHOUT-OUTS!

1. Pharmacy Chargemasters should be reviewed to ensure that only products labelled as drugs or biologicals are reported in pharmacy revenue codes, i.e. 25x and 63x. Products which are dispensed from the pharmacy, but labelled as devices should be reported in a supply revenue code such as 27x. 

 

2. Claim rejections or line item rejections with a reason of “invalid NDC” should be reviewed to determine if the charges being rejected are for products labelled as medical devices. If so, the revenue code should be corrected to reflect that they are not drugs.

3. As products are reviewed or new products received, the FDA NDC Directory can be used to verify the product by the “11-digit” number. Package inserts in DAILYMED can also be used to determine the approval status. If not found in the FDA NDC Directory or DAILYMED, the FDA 501(k) Database should be consulted. Once received, the product or product insert will also contain the information distinguishing between drugs, biologicals, and medical devices.

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Until our next edition, this is Maxie Friemel and Agatha Nolen providing you with tips for increasing your Pharmacy Revenue.