Are Your Charge Description Masters Ready for January 1st?

Nuclear Medicine Departments have a lot to do to ready their charge description masters by January 1st. As mentioned in the November MHCCC tip of the month, we told you about the significant number of HCPCS level II code and description changes effective in CY 2006 for nuclear medicine. Well, not only do Hospitals have to implement these changes into their systems, but CMS also significantly changed the payment policy for radiopharmaceuticals billed in the Hospital Outpatient setting. Are you ready?

Effective January 1, 2006 CMS will pay hospitals for outpatient radiopharmaceuticals with status indicator "H" based on the charge on the claim times the overall hospital specific cost-to-charge ratio (CCR). CMS states on Federal Register page 68654, "that hospitals have the ability to set charges for items properly so that charges converted to costs can appropriately account fully for their acquisition and overhead costs….Specifically, it is appropriate for hospitals to set charges for these agents in CY 2006 based on all costs associated with the acquisition, preparation, and handling of these products so that their payments under the OPPS can accurately reflect all of the actual costs associated with providing these products to hospital outpatients."

CMS will implement this temporary-one-year policy for payment of radiopharmaceuticals in CY 2006. This payment policy is implemented by CMS in an effort, to maintain consistency between the payment rates for these agents from CY 2005 to CY 2006. CMS also states, the temporary policy is needed as there is no ASP data for radiopharmaceuticals and the CY 2004 mean and median cost from the hospital claims data was substantially lower than CY 2005 radiopharmaceutical payment rates.

The nuclear medicine community expressed concerns to CMS in that hospitals may not consistently and uniformly account for all acquisition, transportation, preparation, handling and overhead cost of radiopharmaceuticals in their current pricing on the hospital charge masters. Specifically, the preparation, distribution, administration, and safe disposal of radiopharmaceuticals, along with labor costs and necessary patient and hospital staff protection costs, are not uniformly and accurately reflected in hospital charges. CMS did acknowledge these concerns and provided clearer guidance to hospitals quoted above.

To assist hospitals, see the attached, Hospital Analysis of Radiopharmaceutical Cost and Charge Spreadsheet which includes formulas and three sample hospitals showing the new 2006 radiopharmaceutical payment methodology and potential impact to hospitals. Use the sample template applying your hospitals CCR, charges and costs and perform your own analysis to update your facility 2006 radiopharmaceutical charges.

This 2006 HOPPS final rule and details are located on the CMS web site under the Hospital Outpatient Prospective Payment System page.