Module Two Supplies and Equipment

1. Strategies for Revenue Cycle Management Focusing on the Charge Description Master Module Two Supplies and Equipment

2. What is the CDM? • The CDM is a list of supplies and services with corresponding charges for each of those items. • Items are grouped together by the departments and nursing units of the healthcare facility.

3. Specific Issues • Routine Supplies • Not separately billable • Ancillary Medical Supplies • Separately billable • Equipment • Durable Medical Equipment • Prosthetics/Orthotics

4. Routine Supplies • Not specifically ordered by a physician AND are normally expected to be available. • Allowed as “covered” services • Cost can be reported in the hospital cost report • Usually are NOT separately billed on the UB

5. Not Separately Billable Supplies • Charges are usually included in the room cost or the procedure cost. • No specific hospital regulations regarding separate billing • Medicare Fraud and Abuse look to Skilled Nursing Facility regulations • Also refer to http://www.cms.hhs.gov/providers/default.asp

6. Not Separately Billable Supplies • Items furnished routinely and relatively uniformly to all patients. • Patient gowns • Paper tissues • Water pitchers • Basins • Bed pans • Deodorants • Mouthwashes

7. Not Separately Billable Supplies • Items stocked at nursing stations or on the floor in gross supply and distributed in small quantities • Alcohol • Applicators • Cotton Balls • Band-Aids • Aspirin (non-legend drugs) • Suppositories

8. Supplies in the OR • Do not bill for drapes, gowns, linens etc. • Do not bill for instruments used such as scopes or lasers. • Do not bill for reusable trays. • Do not bill for oxygen or pulse oximetry.

9. Separately Billable Supplies • Services are considered as ancillary AND therefore, are separately billable. • Following conditions must be met • Directly identifiable to a specific patient • Furnished at the direction of a physician because of specific medical needs • Not reusable or representing a cost for preparation • Not routinely furnished to all patients within a setting • Not a reusable item • Meet a specific medical need • Charged to Medicare and non-Medicare patients similarly • Commonly charged as ancillary by providers within the State

10. Separately Billable Supplies • Disposable and separately billable items should always be charged. • Do not use estimates • Ancillary charges should be directly identifiable to a specific patient.

11. Equipment • Reusable equipment is considered as capital cost. • Equipment charge should be included in facility or room charge of the department. • Equipment should not be separately charged to the patient.

12. Equipment • Equipment commonly available to patients in a particular setting is routine and not separately billable. • Supplies routinely used with the equipment is also not separately billable, unless considered a disposable supply item that meets ancillary criteria.

13. Equipment • Examples of not separately billable equipment • Cardiac monitors • OR lights • Traction devices • Specialty beds • Suction devices

14. Durable Medical Equipment • Hospital must have a DME supplier number • Generally reusable and suited for home use • Medicare will pay separately. • Examples: Wheelchairs, crutches, braces

15. Prosthetics / Orthotics • Prosthetics / Orthotics are billed on the UB-92 to the Fiscal Intermediary • Use revenue code 274 • Use appropriate HCPCS code for the device • Paid under the fee schedule on bill types 12X (inpatient) or 13X (outpatient)

16. Prosthetics / Orthotics • Certain HCPCS codes are considered supplies and should be billed under the 272 revenue code. • A4310-A4330, A4338-A4359, A5102-A5114 • A5119-A5131 will not be paid unless submitted with ostomy related procedures

17. Prosthetics / Orthotics • Generic names cause difficulty in assigning HCPCS codes for billing • Identify item on shelf • Locate vendor and item number • Look in vendor catalog • Most vendors now publish the HCPCS for each item in their catalog

18. Summary • If an item is routinely used for all patients in a certain setting, the item should not be separately billed, but included in the facility/room or procedure charge. • If the item is a bulk supply item that is used in small quantities, such as cotton balls, do not separately bill.

19. Summary • Department managers should identify all supplies used in their respective areas / procedures. • Determine which are routine and which are ancillary • Determine how these are treated in the CDM • Verify detail bills to the medical record to insure all charges are accurately reported.

20. Strategies for Revenue Cycle Management Focusing on the Charge Description Master Module Two: Supplies and Equipment If you have any questions or concerns regarding this course, please contact Mary Askew at maskew@draffin-tucker.com.