Hospital Radiopharmaceutical Reimbursement Changes

February 2, 2006

<I>Hospital</I> Radiopharmaceutical Reimbursement Changes

Nuclear Medicine Departments had a lot to do to ready their charge description masters for CY 2006. As mentioned in the November 9th SNM web posting, we told you about the significant number of HCPCS level II code and description changes effective in CY 2006 for nuclear medicine. We also provided you with SNM Hospital Educational Materials in the form of a chart with cross-references to the 2005 codes and the new 2006 HCPCS codes. Well, not only did Hospitals have to implement these changes into their systems, but they also needed to be aware that CMS significantly changed the payment policy for radiopharmaceuticals billed in the Hospital Outpatient setting beginning January 1, 2006.

On January 1, 2006, CMS implemented a temporary, one-year policy for payment of radiopharmaceuticals in CY 2006. During this year, 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 stated 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.

This new radiopharmaceutical payment policy was implemented by CMS in an effort to maintain consistency between the payment rates for these agents from CY 2005 to CY 2006. CMS also stated that the temporary policy was needed as there was 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 have been consistently and uniformly accounting for all acquisition, transportation, preparation, handling and overhead costs of radiopharmaceuticals in their previous 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, were not uniformly and accurately reflected in hospital charges.

In a analysis using 2004 hospital claims data provided by The Council on Radionuclides and Radiopharmaceuticals (CORAR), they projected 33% of hospitals could have been underreporting the cost for at least one radiopharmaceutical product using the hospital overall CCR, and 13% are likely to be over charging. These preliminary statistics are concerning to the nuclear medicine community.

For this reason, the SNM has created Hospital Analysis of Radiopharmaceutical Cost and Charge Spreadsheet Calculation & Elements to Consider in Setting Hospital Radiopharmaceutical Charges. Hospital Analysis of Radiopharmaceutical Cost and Charge Spreadsheet 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 keep your facility’s 2006 radiopharmaceutical charges up-to-date.

In addition to SNM web educational materials, we encourage you to join one of the two SNM Coding Road Shows to take the mystery out of HCPCS Level II coding and billing. If you are looking for more educational materials, the Society of Nuclear Medicine wrote an article for the American Hospital Association Coding Clinic Volume 5 Number 4 Fourth Quarter 2005. You can obtain a copy of this by subscribing or contacting the AHA at 800-621-6902.

The 2006 HOPPS final rule and details are located on the CMS web site under the Hospital Outpatient Prospective Payment System or at 2006 HOPPS FINAL RULE published by the Federal Register.

Hospital Analysis of Radiopharmaceutical Cost and Charge Spreadsheet