AHA Coding Clinic® for HCPCS - 2005 Issue 4; FOR your INFORMATION
Payment for pharmacy handling costs in hospital outpatient departments
In the calendar year (CY) 2006 Outpatient Prospective Payment System (OPPS) proposed rule, CMS discussed the APC payment rates for separately payable drugs and their relationship to pharmacy overhead and drug handling costs. CMS proposed to implement the use of three distinct HCPCS C-codes, along with corresponding APCs, for drug handling categories. Normally, hospitals do not charge for their pharmacy overhead costs, nor their device handling costs, separately. Instead, broad overhead and handling costs are typically built into the charges for the drugs or devices themselves. CMS felt that use of the HCPCS C-codes would allow hospitals to differentiate...
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Article Overview
This article reviews a CMS discussion in the outpatient prospective payment system about pharmacy overhead and handling costs in hospital outpatient departments. It is relevant to hospital outpatient billing, OPPS stakeholders, and coding professionals tracking CMS payment policy updates, especially where drug and biological payment methodology intersects with operational charging practices. The article focuses on the proposed use of HCPCS C-codes, CMS’s decision not to implement them for the referenced year, and the broader effort to identify methods for capturing pharmacy-related costs.
Why This Topic Matters
Understanding this policy discussion helps hospitals and coders follow changes in outpatient payment methodology and avoid mismatches between charging practices and CMS payment expectations. It also highlights why coding, billing, and cost capture issues can affect reimbursement policy in the hospital outpatient setting.
Article Sections
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CY 2006 OPPS proposed rule discussion
Introduces CMS’s outpatient payment policy discussion for the referenced calendar year and frames the topic around separately payable drugs and related hospital cost components.
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Proposed HCPCS C-code approach for drug handling categories
Summarizes the proposed coding-based method CMS considered for distinguishing categories related to drug handling and pharmacy overhead in hospital outpatient billing.
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Public comments and CMS decision
Describes the comment process CMS received and the agency’s decision not to proceed with the proposed implementation at that time.
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CY 2006 payment approach and future policy review
Covers the resulting payment approach for the referenced year and CMS’s continued interest in evaluating alternative ways to capture pharmacy-related costs.
What You Will Learn
- How CMS framed pharmacy overhead and handling costs in the OPPS setting
- What broad category of coding proposal CMS discussed for hospital outpatient drug handling
- Why the proposed approach was not implemented for the referenced year
- How CMS described its ongoing interest in future payment methodology updates
Who Should Read This
- Hospital outpatient billing staff
- Coding professionals
- Revenue cycle teams
- OPPS stakeholders
- Compliance and reimbursement analysts
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