Billing and Coding: Hospital Outpatient Drugs and Biologicals Under the Outpatient Prospective Payment System (OPPS)

This A/B Medicare Administrative Contractor (MAC) for JM and JJ has identified a pattern of incorrect billing of Part A hospital claims for unclassified drugs and biologicals under OPPS using HCPCS code C9399. Based on data analysis there have been numerous claims submitted listing C9399 for unclassified drugs and biologicals that do not meet the definition of a “new drug or biological”. Only new FDA approved drugs and biologicals, on or after January 1, 2004, that have not yet been assigned a specific HCPCS code are to be billed with the C9399 HCPCS code. C-codes are for new drugs and biologicals and are generally replaced or expire after a year. After the year, if a drug or biological does not have an established or valid HCPCS code, then it should be billed with a NOC code. NOC codes are for “Unclassified drugs” or “Not Otherwise Classified” drugs (J3490) and biologics (J3590). Drugs and biologicals appropriately billed using C9399 are separately payable and are priced by this A/B MAC using Average Wholesale Price (AWP) and CMS pricing methodology. NOC coded drugs and biologics (J3490 and J3590) are not separately paid and are considered inclusive of both the acquisition cost and the associated pharmacy overhead or nuclear medicine handling cost. The CMS Internet-Only Manual, Pub 100-04, Medicare Claims Processing Manual, Chapter 17, §90.2 provides the following instructions regarding hospital outpatient billing of Drugs and Biologicals: “ Hospitals should report charges for all drugs, biologicals, and radiopharmaceuticals, regardless of whether the items are paid separately or packaged, using the correct HCPCS codes for the items used.” “HCPCS code C9399, Unclassified drug or biological, is for new drugs and biologicals that are approved by FDA on or after January 1, 2004, for which a specific HCPCS code has not been assigned.” Inappropriately using C9399 when a NOC code (J3490 or J3590) should be used is a billing error and may result in a claims payment error or overpayment. CMS has tasked all A/B MACs, including Palmetto GBA, to assist with reducing the national claims payment error rate. The following are examples of drugs inappropriately billed using C9399 that should have been billed using J3490, J3590 or the specific assigned “J” HCPCS codes: Sugammadex- J3490-Unclassified drug Diltiazem HCL- J3490 – Unclassified drug Propofol - J3490 – Unclassified drug Hospitals are encouraged to provide or improve quality assurance oversight of OPPS claims for drugs and biologicals in order to use the most current HCPCS code for the drug and/or biological on the claim submitted. Please refer to the HCPCS Level II updates at CMS.gov for the most recent information on appropriate HCPCS codes to use for drugs and biologicals. Hospital OPPS claims for drugs and biologicals should be billed with the appropriate HCPCS codes under revenue code 0636 (whether they are separately payable or packaged). This is consistent with the National Uniform Billing Committee (NUBC) billing guidelines, providing CMS and this A/B MAC with the most complete and detailed information for accurate rate setting and claims payment. Hospital OPPS claims for “Self Administered Drugs (SAD),” that are listed and posted on this A/B MAC JM and JJ websites, should be billed with the appropriate HCPCS code. This A/B MAC has identified a pattern of incorrect billing for the total quantity administered and billed for unclassified drugs and biologicals under OPPS using C9399. Some providers have billed each unit dose of the drug or biological on separate claim lines. The quantity of a C9399 drug or biological administered should be billed on “1” claim line for “1” unit dose for the date of service given. The total dose quantity administered needs to be indicated in the remarks field (Field Locator 80) on the UB-04 (CMS 1450 form) or the equivalent 5010 electronic claims field. The CMS Internet-Only Manual, Pub 100-04, Medicare Claims Processing Manual, Chapter 17, §90.3 instructs, that on the claim, “providers must report: the National Drug Code (NDC), total quantity of the drug that was administered, expressed in the unit of measure applicable to the drug or biological, and the date the drug was administered.”