FAQ's for Level I, II, III HCPCS Codes, SADMERC Coding, DMERC Code explained by the Reimbursement Consultants at GM Associates

1. How do we utilize GM Associates services?
The best way to contact us is via email at info@gm-associatesinc.com or by phone at 301-390-4445. Please provide a brief description of your service needs in addition to your contact information and the best date and time to respond.

2. What are your fees and how are they determined?
Our fees vary by each client-specific project, with consideration to the time allotment, necessary personnel, and any budgetary constraints. Please contact us and we will design a fee schedule to fit your needs.

3. What is HCPCS?
TheHCPCS (pronounced “hick-picks”) is a standardized coding system established in 1978 to ensure that the billions of claims submitted to third-party payers are processed in an orderly and consistent manner. The codes identify items and services provided in the delivery of healthcare. It is not a method for making coverage or payment determinations.

4. What are HCPCS codes?
HCPCS (pronounced “hick-picks) codes are descriptive terms with letters and/or numbers used to report medical, surgical, and diagnostic services and procedures, durable medical equipment, orthotics, prosthetics, and medical supplies for reimbursement. The existence of a code does not determine if any third-party payer covers or reimburses for an item or service.

5. Why are HCPCS codes used?
HCPCS codes are used to report procedures and services to government and private health insurance programs. Payment to facilities and healthcare providers is based on the codes reported. A code, rather than a narrative description, summarizes the services or supplies provided when billing any third-party payer.

6. Does a HCPCS code guarantee reimbursement?
No, a code is only a uniform method of billing. The policy for each third-party payer (e.g., Medicare, Medicaid, private insurer, HMO) must also cover the service or product if it is medically necessary or it will not be reimbursed.

7. What are the levels of HCPCS codes?
There are two principal subsystems, Level I and Level II.

Level I contains the American Medical Association (AMA) Physicians’ Current Procedural Terminology (CPT). CPT includes nearly 8,000 five-digit codes, each assigned to a short and long description of a service or procedure. It is a system of documenting services performed by physicians and other healthcare professionals. Professionals use the CPT to bill public or private health insurance programs and to track charges for services internally. Level I does not include codes needed to bill for medical items or services that are billed by suppliers other than physicians, physical therapists, nurse practitioners, or other professionals.

Level II consists of the HCPCS is a standardized coding system used to identify products, supplies, and services not included in the CPT codes. These codes begin with a single letter, followed by 4 numeric digits. For each Level II code, there is a descriptive terminology that identifies a category of like items. Currently, there are over 4,000 separate categories of like items or services that encompass millions of products from different manufactures. To avoid any appearance of endorsement of a particular product, brand or trade names are not represented by a code. The exception is codes that describe drugs and certain solutions.

8. Who creates HCPCS codes?
Level I codes: The American Medical Association adds, deletes, or modifies these codes annually.

Level II codes: The Centers for Medicare & Medicaid Services, America’s Health Insurance Plans, and the Blue Cross and Blue Shield Association maintain these codes jointly as members of the HCPCS National Panel. Decisions regarding changes to the national permanent codes are only made by unanimous consent of all three parties.

9. What are some examples of HCPCS codes?
Level I code: 97597--- Removal of devitalized tissue from wound(s); selective debridement, without anesthesia (e.g., high pressure water jet with/without suction, sharp selective debridement with scissors, scalpel and forceps), with or without topical application(s), wound assessment, and instruction(s) for ongoing care, may include use of a whirlpool, per session; total wound(s) surface area less than or equal to 20 square centimeters.
Level II code: A6257---Transparent film, 16 sq. in. or less, each dressing.

10. How does a medical, surgical, or diagnostic service get a Level I CPT code?
If a medical, surgical, or diagnostic service has never been assigned a code, it is critical to complete a coding analysis. Such an analysis will determine if an existing CPT code describes the service and if it will meet coverage requirements for payment. After the coding analysis is completed, it is necessary to complete a coding verification. Detailed documentation must be developed and submitted to the AMA for review and determination if the service fits under a current CPT. If no existing code is available to describe the service, a proposal to change CPT may be submitted.

11. What is involved in submitting a proposal to revise, add, or delete to CPT?
The AMA has a specific process, including a set of forms that must be submitted. Some of the information required includes peer-reviewed published literature, clinical vignettes, rationale, and statistics. Generally, a medical specialty society should support the submission and make the request for change.

12. Can GM Associates assist in verification of a Level I CPT code or submitting a proposal to revise or add to CPT?
Yes, we have submitted numerous coding verification requests for medical, surgical, and diagnostic services. In addition, we have developed proposals to request a change to CPT and worked with key members of physician specialty organizations to facilitate consideration of the proposal. Our associates have personal experience serving on AMA panels that assist in CPT development.

13. What is the timeline for verification of a Level I CPT code or a request to add a new code?
The verification process generally takes a minimum of 90 days. To request a new code, the deadlines fall in March, July, and November each year for updates to the CPT in two years. For example, if the March, 2007 deadline is met, any changes will be effective in CPT 2009 and the 2010 Medicare Physician Payment Fee Schedule.

14. How do durable medical equipment, drugs, orthotics, prosthetics, and medical supplies (DMEPOS) get assigned a Level II HCPCS code?
If a product has never been assigned a code, it is critical to complete a coding analysis. Such an analysis will determine if a product could be assigned to an existing code and if it will meet coverage requirements for payment. After the coding analysis is completed, it is necessary to complete a coding verification. The SADMERC HCPCS Unit determines if a product meets the definition of an existing code or if a modification is necessary. The SADMERC performs a Coding Verification Review after receiving the appropriate documentation and then notifies the supplier or manufacturer of the decision. A manufacturer or supplier can obtain information on coding verification from the SADMERC website (www.palettogba.com) or from the SADMERC HCPCS Coordinator, P.O. Box 100143, Columbia, SC 29202-3143.

15. What is the SADMERC?
The SADMERC (Statistical Analysis Durable Medical Equipment Regional Carrier) is an insurance company that contracts with the Centers for Medicare & Medicaid Services. Palmetto GBA, a subsidiary of Blue Cross Blue Shield of South Carolina, is the SADMERC

16. What does the SADMERC do?
The SADMERC is a liaison between medical suppliers, manufacturers, and the Centers for Medicare & Medicaid Services to determine which Level II HCPCS codes work best for Medicare-reimbursed durable medical equipment, drugs, orthotics, prosthetics, and medical supplies (DMEPOS). In addition, the SADMERC provides data analysis support to other Medicare contractors, performs a variety of national pricing functions, assists CMS with the DMEPOS Fee Schedules, and analyzes fees to identify unreasonable or excessive reimbursement amounts.

17. How can GM Associates assist in assignment of a Level II HCPCS code?
GM Associates has been conducting coding analyses and preparing documentation for coding verification submissions since the inception of this process. We successfully obtain favorable results for hundreds of submissions and frequently assist clients who completed submissions and received an undesirable decision. It is critical to complete a coding analysis and reimbursement strategy prior to launching a new product for successful market penetration and to work with a reimbursement consultant to determine reimbursement obstacles and plan strategies to ensure acceptance by payers. Contact us for additional information on coding your product.

18. How long does it take to get a code verified by the SADMERC?
The SADMERC indicates that a decision may be made 90 days after receipt of the supporting documentation and initiation of the review process. The review process usually begins 30 days after the SADMERC receives the submission. However, due to a backlog of submissions, the process may take longer.

19. Why does a manufacturer need to submit a SADMERC Coding Verification Review?
Users of a product will contact the SADMERC to see if the product is included on the Product Classification List and determine which code has been assigned for billing Medicare. If the SADMERC has not reviewed a product, the provider will be informed that no code has been assigned. In that case, the provider accepts financial risk for whatever code is selected for billing purposes. A payer audit can determine that a product has been miscoded and the payer can request a repayment or, at worst case, institute a fraud investigation. If the manufacturer suggests using a particular code for a product without submitting a coding verification review, it accepts liability for miscoding and faces the same risks as a provider. In addition, the SADMERC requires a formal coding verification review for the following products before they can be billed to Medicare: support surfaces to be coded as E0371 or E0373; enteral nutrition products to be coded B4149 – B4162; wheelchair seat and back cushions to be coded E2601 – E2621; diabetic shoe inserts to be coded A5510, A5512, or A5513; walkers to be coded E0147; and TLSO and LSO products to be coded as L0491, L0492, L0621 – L0640 and items in L0450 – L0490.

20. How does a HCPCS code get assigned to a new product?
Following a coding analysis to determine if an existing code is appropriate (see #10) detailed documentation must be prepared and a Coding Verification Review submitted to SADMERC. If the review determines that there is no existing code to describe the product, the SADMERC will recommend that a miscellaneous code be used. After a billing history is established and clinical studies are conducted to demonstrate positive patient outcomes, an application for creation of a new national code may be submitted to the HCPCS National Panel.

21. What is the process for submitting to the HCPCS National Panel for a new code or coding modification?
As a preliminary step in the process for recommending a modification to the alpha-numeric coding system for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), a manufacturer should first complete a SADMERC Coding Verification to determine if a current National HCPCS code exists which describes the product category. If the SADMERC determines that a coding modification is necessary, a supplier or manufacturer can submit a request for coding modification (a new code) to the HCPCS Level II national codes. The detailed format for submitting is available on the website: www.cms.hhs.gov/medicare/hcpcs. In addition to the information requested in this format, a requestor should also submit any additional documentation that would be helpful in furthering the National Panel’s understanding of the medical features of the item. The National Panel is comprised of representatives from America’s Health Insurance Plans, the Blue Cross Blue Shield Association, and the Centers for Medicare & Medicaid Services and is responsible for making decisions about additions, revisions, and deletions to the permanent national alpha-numeric codes. Decisions about changes (creating a new code) are only made by unanimous consent of all three parties.

22. Does the public have access to the HCPCS coding process?
Yes, CMS holds public meetings that include all requests for HCPCS products, supplies, and services. Agenda items are published in advance, including descriptions of the coding requests, the requestor, and the name of the product or service. This allows for the public to become informed about coding changes under consideration and to provide input into decision-making.

23. What is the timeline for the National Panel to review a coding modification request?
The national codes are updated annually, every January 1. To be considered for inclusion in the year 2008 HCPCS update, the complete recommendation packet must be received no later than COB January 2, 2007. Requests may be submitted at any time throughout the year 2006. Early submissions are strongly encouraged. Requests are reviewed and processed on a first come first served basis. Recommendations received or completed on or after January 3, 2007 will be considered for inclusion in a later update.

24. Can GM Associates help with a SADMERC Coding Verification Review or application for a new national code?
Yes. We have submitted nearly 100 coding verification review requests and have a 100% success rate of having the appropriate code assigned. In addition, we assist may clients to prepare the documentation and necessary support materials to submit to the National HCPCS Panel for a coding modification request and prepare appeals of unfavorable decisions. It is extremely difficult to appeal a decision. Conducting a thorough coding analysis and preparing strong supporting documentation is essential before any coding verification or modification request is submitted to ensure the greatest chance of success. Contact us to discuss your coding needs.

25. Can a SADMERC Coding Verification Review decision be appealed?
Yes. In fact, GM Associates has prepared several appeals after clients did the original submission. We have a 100% success rate of having the appropriate coding determination made upon appeal. Here is a testimonial from one of our clients, Tyco Healthcare Group LP Product Manager, Stephen Sullivan: “When the SADMERC coding verification decision was unsatisfactory, the GM Associates team prepared the documentation to appeal the decision. The end result was a successful coding assignment accurately reflecting our product, which played a critical role in cementing sales and expanding into the outpatient wound care market.”

26. How does Medicare pay for durable medical equipment, prosthetics, orthotics, and medical supplies under Part B?
Each year, Medicare publishes a fee schedule for these products which corresponds to the Level II HCPCS codes. In addition, Medicare publishes quarterly updates. Medicare pays 80% of the fee schedule amount (known as the allowable) and the patient pays the remaining 20%. These items are reimbursed according to policies established by insurance companies under contract to the Centers for Medicare and Medicaid Services to process Part B claims..

27. Who are the insurance companies under contract to the Centers for Medicare and Medicaid Services to process Part B claims for durable medical equipment, prosthetics, orthotics, and medical supplies?
DME Medicare Administrative Contractors (MACs) are responsible for conducting prepayment reviews, tracking supplier inquiries, processing and paying claims, and hearing appeals under Medicare Part B for durable medical equipment, prosthetics, orthotics, and medical supplies. Prior to July 31, 2006, claims were processed by four insurance companies known as DMERCs. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 requires that CMS replace all of its contractors, including the DMERCs, with Medicare Administrative Contractors (MACs). Their areas are known as jurisdictions rather than regions.

28. How are the MAC jurisdictions different from the DMERCs?
There are four MACs that replaced the DMERCs. The difference applies to just a few states. Maryland and D.C. moved from Region B to Jurisdiction A; Virginia and West Virginia moved from Region B to Jurisdiction C; and Kentucky moved from Region C to Jurisdiction B. For more information, the final regulation is available at: www.access.gpo.gov/su_docs/fedreg/frcont05.html.

29. How do I find a code or pricing information for durable medical equipment, prosthetics/orthotics or supplies?
The SADMERC operates DMECS (Durable Medical Equipment Coding System) online that provides HCPCS coding assistance and national pricing information 24 hours a day. DMECS contains HCPCS codes beginning with the letters A, B, E, G, J, K, L, Q, and V that are valid for submission to the MACs. DMERCS has four interactive components: search by HCPCS information; search for modifier; search for fee schedule; and search DMEPOS Classification List. The SADMERC website is: http://www.palmettogba.com. .

30. What is the DMEPOS Classification List?
Results of product review coding decisions are posted by the SADMERC in a list known as the DMEPOS Classification List. It includes the manufacturer/distributor; product name; model number; HCPCS code; and classification.

31. How do I document medical supplies and their codes in a home health agency under Medicare prospective payment?
The code assigned by the SADMERC should be used for all medical supplies and documented in line items 14 or 21 of the HCFA 485. Medical supplies used as part of the home health agency plan of treatment do not require approval of the Center for Medicare and Medicaid Services. However, documentation must include the medical necessity documentation and include the patient’s diagnosis and an appropriate ICD-9-CM code.

32. How is wound care reimbursed?
Reimbursement refers to payment for a product, technology, or service. Reimbursement for wound care products, technology and services is complex and often confusing with no simple answers. Several pieces of information are required to answer this question, including:

clinical setting of care, e.g., acute care hospital, rehabilitation center, skilled nursing facility, home health agency, physician office, outpatient clinic, patient at home;

payer type (Medicare, Medicaid, managed care organization, HMO, supplemental insurer, private insurer, Veteran’s Administration, workman’s compensation, other);

coverage policy for the specific payer;

medical necessity requirements for coverage for the product, technology, or service;

patient diagnosis that supports the medical necessity for the product, technology, or service;

codes assigned for billing the product, technology, or service;

fee schedule, assigned payment amount, or procedure for determining the amount reimbursed;

payment system, e.g., prospective payment, capitated payment.

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