Practice Management Alert

Question: We perform many in-office procedures, as well as injections. Is there a way for us to bill for the supplies we use in the office, or do we have to always assume the carrier includes the surgical and drug supplies in the procedure code so we cannot separately bill for them?

Knowing whether or not to bill for procedure supplies, such as surgical trays, and drug supplies can be a challenge. Because payers won't reimburse you for many supplies, the easy solution might be to not bill for any and avoid the hassle of denials. But if you don't bill for supplies when appropriate, you could be shortchanging your practice.

If you perform office-based (non-hospital) procedures, most insurers include payment in the procedure's fee for supplies, such as needles, surgical trays, catheters, dressings, sutures, guides, scalpels and puncture sets. And even when a carrier doesn't bundle the supplies in the procedure's surgical package, the policy may not pay on the supplies, says Catherine Brink, CMM, CPC, CMSCS, president of Healthcare Resource Management in Spring Lake, NJ.

Payers normally reimburse facilities (such as hospitals or ambulatory surgical centers) directly for these costs when your physician performs the procedure at the facility. But even though HCPCS codes exist for many of these items (such as A4550 for a surgical tray), most insurers will not pay for the supplies separately when the physician performs the surgical procedure in an office.

How it works for Medicare: The Medicare Physician Fee Schedule usually reimburses more for nonfacility (office-based) procedures than those performed in a facility. Medicare reasons that the office procedures include payment for the drugs, supplies and equipment that the physician uses during the in-office service. Because hospitals bill for these supplies independently, physicians who perform hospital-based procedures will collect reimbursement for the professional procedure only and not the supplies.

Example: If your physician administers a nebulizer treatment for an asthma patient, you wouldn't bill for the tubing and mask. Because a nebulizer treatment always uses the tubing (A4616, Tubing [oxygen], per foot]) and mask (A7015, Aerosol mask, used with DME nebulizer), code 94640 (Pressurized or nonpressurized inhalation treatment for acute airway obstruction or for sputum induction for diagnostic purposes [e.g., with an aerosol generator, nebulizer, metered dose inhaler or intermittent positive pressure breathing (IPPB) device]) includes these supplies, and carriers won't pay you separately for them.

Don't forget to bill for the drug if your office supplied it. In this example, if your physician used Albuterol in the nebulizer, J7602 (Albuterol, all formulations including separated isomers, inhalation solution, FDA-approved final product, noncompounded, administered through DME, concentrated form, per 1 mg [Albuterol] or per 0.5 mg [Levalbuterol]) or J7603 (Albuterol, all formulations including separated isomers, inhalation solution, FDA-approved final product, noncompounded, administered through DME, unit dose, per 1 mg [Albuterol] or per 0.5 mg [Levalbuterol]) would be appropriate depending on whether the drug was concentrated.

Although Medicare and private payers consider most supply costs associated with procedures to be covered under the procedure's payment, private payers- reimbursement policies vary, so applying Medicare rules across-the-board could leave money on the table.

"Medicare will not reimburse these supplies in most cases, but many commercial (non-Medicare) and workers- comp carriers will," says Jennifer Evensen, a billing manager for a podiatry clinic in Vernon Hills, Ill. "You many need to file appeals, but there are several carriers that will reconsider with proper documentation."

Practices may find that commercial payers will reimburse items, such as needles and syringes (A4206-A4209) for chemotherapy administration, for example. Surgical trays are perhaps the most common item you can negotiate for payment, experts say.

Commercial payers, especially managed-care organizations, may provide less reimbursement than Medicare for the same procedures. So, with practices getting less money but incurring the same costs, even small items such as individual supplies used during procedures can take their toll on your practice's bottom line.

First step: You should include the supply items you hope to get paid for in the contract between the payer and your provider. Some commercial payers may acquiesce. For example, many commercial payers will reimburse for surgical trays, which may include needles, slides, tubing, syringes, dressing, gauze and other items. Medicare, on the other hand, clearly says these items are not reimbursable.

Good advice: "I would advise against billing Medicare for noncovered supplies. Otherwise, as long as the use of supplies is well documented, I see no problem with billing for them (unless a procedure code specifically indicates that the supply is included with the service)," Evensen says.

If a payer keeps denying your supply claim, you should contact your payer representative to negotiate fees rather than keep going through denials and appeals, which takes too much time, Brink says. Your best bet is to clarify the supply fees before you sign yearly contract, she adds.

Caution: Avoid the temptation to automatically bill 99070 (Supplies and materials, provided by the physician over and above those usually included with the office visit or other services rendered). This code was not intended to be a blanket code for all supplies. Instead, it should be used when a practice can show that it was required to use more supplies than normal.

Billing for drugs your practice administers seems particularly straightforward. After all, you have HCPCS codes for billing individual drugs. Sometimes, however, you-ll have a situation when the patient provides the supplies for a service, such as an injection in which the patient brings the drug.

While you should report medication administration, regardless of who supplies the medication, you cannot bill for the drug supply when your office didn't provide the medication. Billing for the administration reimburses you for your staff's time and the supplies (such as syringes) inherent in the procedure. "It would be fraudulent for the provider to bill for the drug because they did not purchase it," Evensen says.

Additionally: Similarly, if you did not purchase the drug but received it as a sample from the pharmaceutical company, you cannot bill for the drug. Billing for the drug implies that the practice incurred an acquisition cost.

Key: The administration codes do not include the supply of the drugs themselves. So when a patient supplies the medication, you omit billing the related supply J code.

Tip: To help ensure payment from the carrier, note on the CMS-1500 form in box #19 (or in an electronic note pad) that the patient supplied the drug. Also note the name of the drug your physician or nurse administered and its dosage. In many cases, carriers require this before they-ll pay for an administration code when you have not also submitted a drug charge.