Collaboration: The key to successful CDI and coding of replacement devices

Oct. 19, 2018 / By Camille Ruiz, RHIA

We frequently discuss with clients the differences between Inpatient CDI versus Outpatient CDI such as time, volume, coding, regulation, etc. Despite these differences, both require collaboration between departments to be successful. I was reminded of this collaborative effort when reviewing denials, specifically a denied outpatient claim routed to HIM coding to be reviewed for a device-dependent edit.  HIM verified the procedure codes then routed the account to the Surgery department. The Surgery department verified the supplies and routed the account to the CDM analyst. The CDM analyst verified the HCPCS and routed the account back to the business office. The business office routed the account to Revenue Integrity to review. Each department was performing the task assigned, but the desired result was not achieved. In the meantime, more than 30 days passed and this account remained unpaid. 

The claim required a few data elements that had been omitted when reporting recalled devices. I thought this was unusual since this was not a new Medicare requirement. Let’s go back to 2014. Medicare established a new value code FD for hospitals to report manufacturer credits for medical devices for both inpatient and outpatient visits. Medicare was expanding the current process to report replacement devices for either recalls, credits or no cost devices. Condition codes 49, 50 and 53 are required in combination with an FD value code on Medicare claims.  These conditions codes added specificity to the manufacturer device credit:

  • Condition Code 49 (Product Replacement within Product Lifecycle)
  • Condition Code 50 (Product Replacement for Known Recall of a Product) and
  • Condition code 53 (Initial placement of a medical device provided as part of a clinical trial or free sample).

I clearly remember the frustration and confusion each department experienced. The process had been for Surgery to charge the supply, then notify the business office to place a hold on the account for the necessary claims edits, which involved editing the charge to $1 and adding all the Condition Codes and Value Codes required. 

After the initial confusion, we learned a formal process needed to be established to avoid future obstacles. In the past, the surgical departments weren’t always aware when supplies were provided at no cost and central supply wasn’t sure which devices applied to the new requirement. The CDM analyst could not build miscellaneous charge codes per policy due the variable general ledgers, revenue codes and HCPCS codes. Device-dependent edits were routed to HIM coding, but the HIM coders could not view or apply the HCPCS to charge master supply items in their encoder version. The business office could edit dollars, revenue codes, HCPCS, value codes and condition codes, but a reliable notification process was not in place. The accounting system could not automate a solution or work queue. Revenue Integrity and Compliance were concerned about clean claims.

The list of obstacles went on and on. The implementation took some research given all the claim requirements. Luckily, this new requirement did not apply to all devices or all credits. The Federal Register noted the type of devices applicable and set the credit for the replacement device at greater than 50 percent of the cost of the device. 

In the middle of our planning discussion, someone asked, “Why is Medicare requiring this?” Good question! You must remember Medicare only pays for covered services. For example, if a patient receives an IV medication that is considered non-covered then the IV administration of the drug is also considered not a covered service. This same rationale applies for these devices. If the manufacturer recalls a device, it is covered under the manufacturer’s warranty. Medicare will adjust their reimbursement to account for the device discount or credit. 

So, what did we learn when the process was all said and done? We needed to collaborate between departments to successful. We also needed to monitor the processes and provide on-going education. It was my experience when I worked in a hospital that we would see the breakdown in our established processes when someone went on vacation. The back-up person, if there was one, may not have been trained to handle the outlier situations.  It is an opportunity to provide a refresher training and review the process across the board. 

Camille Ruiz is an outpatient CDI consultant at 3M Health Information Systems.

For more information regarding no-cost device coding, refer to the following resources:,