Archive May 2018 XIX, No. 5

Coding & Billing

Will You Be Reimbursed for High-Priced Drugs?

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DRUG PAYMENT Medicare won't pay surgical facilities separately for drugs that "function as supplies."

Before you buy the high-priced drugs your surgeons like to use for their cases, make sure your facility will be reimbursed for them. There are a few questions you'll need to ask — as you'll see, the answer isn't always apparent.

1Does the drug function as a supply? If Medicare decides that a drug used during surgery "functions as a supply," you won't be paid separately for it. Under a relatively recent policy, CMS will package payment for drugs that function as supplies during a surgical procedure into the facility fee — regardless of the drug's cost.

2Does it cost more than $120? This next question is confusing to some. A 2018 Medicare ruling states it will pay separately (at cost) if the per-day drug cost exceeds $120 and that it won't make a separate payment if the drug costs $120 or less. The $120 threshold holds true — unless CMS decides that a drug "functions as a supply," in which case it will package the drug into the facility fee, regardless of the cost.

3Is the drug on "pass-through" status? To confuse you further, CMS will continue to reimburse separately for drugs that are on "pass-through" status, regardless of whether the drug functions as a supply. This is great news — for the 24 to 36 months that the drug is on pass-through.

A bit of background: Congress established the pass-through provision in the Medicare law to encourage advances in health care. As an incentive, CMS pays providers above and beyond the usual facility fee to use specifically designated "pass-through" drugs and devices, letting you bill for such products outside of the bundled payment in which they are used.

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