Practical Advice for Medical Devices Firms | Page 9

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the Blue Cross and Blue Shield Association maintain these codes jointly as
members of the HCPCS National Panel. Decisions regarding changes to
the national permanent codes are only made by unanimous consent of all
three parties.
In the level II HCPCS coding system, products are classified into categories
for the purpose of efficient claims processing. They are so classified on
the basis of function, similarity, and whether they are significantly
different from other products. Level II HCPCS codes are used with many
separate categories of similar items or services encompassing millions of
products from many different manufacturers. Some items in the HCPCS
level II system, such as new technology and some biologics, are eligible
for transitional pass-through payments to hospitals in addition to the
monies those institutions receive under the Ambulatory Payment
Classification. The Statistical Analysis Durable Medical Equipment
Regional Carrier (SADMERC) is under contract to the Center for Medicare
and Medicaid Services and offers guidance to manufacturers and
suppliers on the proper use of the HCPCS level II codes. The submission of
a code verification request to SADMERC is a first step in the
recommendation process for modification to HCPCS level II codes.

Charges made through hospitals
Any product that offers clinical efficacy while reducing costs will be of
interest to hospital administrators. In the past, physicians had a greater
input into products purchased by the hospital. However, with increasing
financial constraints, hospitals often place physician requests under
scrutiny. Healthcare providers may have to demonstrate value of a
product before hospital administrators purchase it.
For submission to the payer, International Classification of Diseases (ICD9) diagnosis and procedure codes are placed on the hospital
ChargeMaster. There are over 13,000 ICD-9 diagnosis codes and 5,000
ICD-9 procedure codes. Also included on the ChargeMaster are
complications and co-morbidities, age, gender, and discharge destination.
Each Medicare patient is then classified into a Medicare Severity
Adjusted Diagnosis Related Group (MS-DRG). Each MS-DRG code is
assigned a weight. More complex procedures and illnesses are assigned
higher weights. Payment to the hospital is based on the DRG weight.

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