Setting up a supply item in a charge description master

March 15, 2019 / By Camille Ruiz, RHIA

On January 17, 2019, CMS issued Transmittal 4204, which states HCPCS Q4122-Dermacell per square centimeter can be assigned either revenue code (RC) 278-Implant or RC 636-Drugs requiring detailed coding. I appreciate CMS clarifying which revenue codes are applicable to HCPCS Q4122., but the decision is still up to the providers to make the correct selection. “How do I determine a revenue code?” is the most frequently asked question from clients when setting up a supply item in a charge description master (CDM), especially for biologics. Right after the question, “How do I know if this service or supply is covered?” but that requires a much longer answer. Traditionally, the CDM is setup to follow CMS guidelines. Today, hospital billing systems are able to provide payer-specific mapping in the background. Most hospitals have an established CDM request form, but there are a few decisions to consider.

Let’s walk through a CDM supply setup with this example. Dermacell is a high-cost skin substitute used for skin graft application. This item is typically under Central Supply in the CDM. The item could be used for both outpatient and inpatient, in day surgery or operating room departments. Dermacell is FDA approved per the manufacturer and FDA website. An HCPCS code exists for Dermacell, but this does not necessarily mean the item is covered. CMS does cover Q4122 when medical necessity is met. Coverage for commercial payers can be determined as well.  Most hospital billing systems accommodate multiple payers. 

CMS identified Dermacell and other skin substitutes as high-cost skin substitute products which should only be utilized in combination with skin application procedures CPT codes 15271-15278. CMS also suggests Q4122 with modifier JC-Skin substitute used as graft, or modifier JD-Skin substitute not used as a graft to determine. The modifier JC can be assigned in the CDM if it is determined that the implant will only be used as a graft. Otherwise, it would be up to the hospital’s charge policy to determine whether HIM or the clinical department would assign these modifiers.

Two additional modifiers to consider are modifier JW-Drug amount discarded and modifier KX-Requirements in the medical policy have been met. Commercial payers consider both revenue codes 278 and 636 for additional carve-out payments. RC278 does not require a HCPCS code for CMS, but it is highly recommended to assign HCPCS codes when applicable on outpatient claims. For this item, CMS does reimburse the Q4122 in addition to the procedure code. RC636 does require an HCPCS code. In some circumstances, RC636 requires an 11-character National Drug Code (NDC) number on the claim such as for the CMS 340B Drug Discount Program. The NDC number is usually provided in the manufacturer or supplier product information, but it can be looked up on the FDA website. Note: RC278 supply HCPCS codes have been removed from inpatient claims but not RC636. For this item, I would assign RC278 with Q4122.  With the following basic steps in mind, the supply CDM build process may go more smoothly.

CDM Supply Decisions

  1. Item is patient chargeable
    • Meets NUBC non-routine item definition
    • Food and Drug Administration (FDA)-approved or
    • Clinical Research requiring the National Clinical Trial (NCT) identifier on claim for FDA Investigational Device Exemption (IDE) study
  2. CMS covered
  3. Assign CDM revenue department
  4. Determine Inpatient, Outpatient or both status
  5. Assign CPT/HCPCS
  6. Assign revenue code
  7. Determine applicable modifiers
  8. Calculate Units of Service or assign charge capture responsibility (clinical department, HIM or CDM supply item master)
  9. Determine modifiers assignment responsibility (clinical department, HIM or CDM)
  10. Determine CDM charge rate
  11. Determine payer specific requirements for reimbursement
  12. Review documentation requirements

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