Reimbursement Strategy Insight: New Products & HCPCS Codes

Information regarding coding, coverage, and payment is provided as a service to our readers. Every effort has been made to ensure accuracy. However, HMP and the author do not represent, guarantee, or warranty that coding, coverage, and payment information is error-free and/or that payment will be received.

There is one reimbursement subject that rises above all others when it comes to the most common question among wound care stakeholders: Does this product have/need a Healthcare Common Procedure Coding System (HCPCS) code? This edition of Business Briefs will review the thought process that must go into answering this question and provide additional related advice.

WHEN WOUND CARE Health PROFESSIONALS ASK THE QUESTION

When a wound care provider, coder, or program director asks this common question, this author is inclined to begin by asking a few questions in return:

• What is the product? Who is the manufacturer? Is the product available in different sizes and (if so) what are the different sizes being used in the respective clinic?
• What are the product’s indications?
• In what site of care is the product expected to be utilized?
• Will the product only be used in that specific site of care? If not, in which other sites of care will the product be used?
• Will the product be applied in a patient’s home? Will the patient apply the product, or will a home health agency clinician apply the product?

Once the scenario is clear, it can then be determined if a HCPCS code is needed in the respective site(s) of care. If a code is required and if a code has been verified for the product, the work is easy and done. If a code is not required and the product does not have a verified code, the work becomes a bit more challenging because education on HCPCS codes is necessary. For some reason, wound care professionals typically believe they cannot use a product unless it has a verified HCPCS code.

In fact, these codes are typically only necessary when the product is separately billable in a site of care. For example, wound care products applied in the operating room (OR) are usually not separately billable, therefore they do not need a verified HCPCS code. Wound care products that will be reapplied by the patient in the home when a home health agency is not involved with the care typically need verified HCPCS codes. The need for a HCPCS code becomes more complicated if the patient moves to various sites of care. For example, if a wound care product is applied in the hospital (where a HCPCS code is not required) and additional applications of the product are ordered for use by the patient upon discharge to home (where a HCPCS code is required), the wound care professional ordering the product and the durable medical equipment (DME) supplier providing the product must be sure the product has a HCPCS code and the product is covered by the patient’s payer. If a code and coverage do not exist for the product, the patient still can use the product at home but will have to personally pay the DME supplier for the product. Because patients frequently move from one site of care to another, the need for a HCPCS code for a product usually confuses wound care professionals. That is why this author always takes the time to understand each scenario before answering the code question and explaining the “why” behind the answer.   

WHEN WOUND CARE MANUFACTURERS ASK THE QUESTION

This author always encourages manufacturers to think about a HCPCS code when the idea for a new wound care
product is just a “drawing on a napkin.” When manufacturers seek advice during the development stage, that can be a time to build reimbursement considerations into the product’s development, clinical trials, publications, packaging, instructions for use, clearance/approval from the U.S. Food & Drug Administration (FDA), and so forth. If a HCPCS code will be needed for the product, manufacturers can benefit from a consultation to build the code-application process into the product’s launch timeline. Unfortunately, many manufacturers do not follow this approach. Instead, they wait to contact a reimbursement consultant until after the product has FDA clearance/approval. At that point, they are often
anxious to sell the product and are surprised to realize that FDA market clearance/approval is only one piece of the puzzle (and that reimbursement coding, coverage, and payment are other major components). Manufacturer executives typically receive mixed messages from wound care
professionals in different sites of care, as well as from the manufacturer’s sales and marketing personnel.

When a reimbursement consultation occurs at this stage, the consultant must: 1) thoroughly review the product, the FDA clearance/approval, the publications, the packaging, the instructions for use, and the marketing materials; and 2) understand the manufacturer’s target market(s). Then, the consultant must decide if a HCPCS code is needed for the product in the market(s). If the answer is “yes,” the executives involved must be educated on: 1) the work required to obtain the clinical evidence and publications that must be accomplished to support the code application; 2) the timeline to submit the application; and 3) if a HCPCS code is verified for the product. In addition, the consultant must educate executives about any sites of care that do not require a code and that could be
alternative markets until a code can be acquired. The executives must be educated that not all alternative sites of care will be willing to purchase the product, particularly if it has a high cost in comparison to either their lump-sum payments or their budgets. If the answer is “no,” the executives still must be educated that the providers will weigh the cost of the product against their lump-sum payments or their budgets.

As part of this special reimbursement edition of Today’s Wound Clinic (TWC), we have sought the insight and expertise of various industry professionals. Although, at times, this author feels like the “bearer of bad news” when delivering education about HCPCS codes post-FDA clearance/approval, Rafael Mazuz, MBA, managing director of Diligence Wound Care Global LLC, a leading advisory firm that empowers clients to become keener wound care executives, specialists, startups, and investors, has created a helpful comprehensive wound care due diligence checklist resource that includes a “Payer and Reimbursement” section relevant to product firms from the early product development stage and onward. (The Table below highlights key considerations from that document, and the full document is available for download through Diligence Wound Care Global.¹) Mazuz, who also sits on the TWC editorial advisory board, additionally provides the following perspective: “Don’t assume that a reimbursement code is a required component for success. Depending on in which site(s) your product will be primarily used, there may be global reimbursement protocols that bundle the supply costs into the overall care. Many products used in the OR, inpatient units, skilled nursing facilities/long-term acute care centers, and home healthcare will fall into this category. Likewise, getting wound care reimbursement status is a time- and resource-intensive process that involves separate applications to each payer. Most firms report that this process takes longer and is more difficult than receiving regulatory approval (and often with a higher burden of evidence). Keep in mind the prospect of bundled payments, especially if the investment is still years away from commercialization. A deep understanding of where and how the product will be used is the first step to determining reimbursement impact and approach.” 

Kathleen D. Schaum is a founding member of the Today’s Wound Clinic editorial advisory board and oversees a consulting business. She can be reached for consultation and questions by emailing kathleendschaum@bellsouth.net

Reference

1. Mazuz R. The definitive wound care investment and partnership due diligence checklist. Diligence Wound Care Global. 2018. Accessed online: https://diligencewcg.com/the-definitive-wound-care-investment-and-partnership-due-diligence-checklist-ebook