Government Update: Medicare Drug Policy Simplifies APC System

Medicares pass-through drug policy has proven to be one of the simpler aspects of the new ambulatory payment classification (APC) system. After publishing its first list of covered drugs effective Aug. 1 (Program Memorandum A-00-42), Medicare introduced a revised list effective Oct. 1 (Program Memorandum A-00-61). A revised version is expected every quarter.

The program memos, which can be found at www.hcfa.gov/pubforms/transmit/memos/comm_date_dsc.htm, contain individual HCPCS codes for each pharmaceutical. The appropriate APC number is printed on the remittance advice. In addition, on Sept. 28 the Health Care Financing Administration (HCFA) released a list of technical changes to the pass-through payment system. That document can be found at www.hcfa.gov/medlearn/ refopps.htm.

HCFA plans to publish a complete list of HCPCS codes, APC codes, APC payment amounts and co-insurance for drug and biotech pass-throughs. In the interim, coders should refer to the first two program memos to find out whats covered. Among the classes of drugs often covered are cancer drugs, radiopharmaceuticals, drugs that recently received FDA approval and orphan drugs (those that treat very small disease classes).

To make the most of the pass-through payments, facilities should:

1. Scrutinize the pass-through list and ensure that every HCPCS code is in the charge master.

2. Update the charge master every quarter after the update comes out.

Although HCFA has voiced concern about reducing drug prices on the physician side, it has made no such statement regarding APCs. The law now allows for the traditional reimbursement of 95 percent of the actual wholesale price.

The biggest problem hospitals have run into regarding the drug-reimbursement policy involves interdepartmental communication. Nurses must communicate with the coding department about the drugs administered. The key here is documentation. Because most drugs are bundled into the APCs, nurses may not realize that they must keep track of certain drugs that get paid separately. Nurses should have copies of the current pass-through drug list and know that the drugs get reimbursed in addition to the related procedure and visit codes.

Coders and other hospital clinicians or administrators interested in pass-through drug policies should check the HCFA Web site at www.hcfa.gov and follow either the Whats New or Medicare links.

- Published on 2000-11-01