CMS Pub. 100-04, ch. 4, § 240.3

Under 42 CFR 419.2(b)(11), implantable prosthetic devices (other than dental) which

replace all or part of an internal body organ (including colostomy bags and supplies

directly related to colostomy care), including replacement of these devices, are paid under

the OPPS, and are therefore packaged with the surgical implantation procedure unless

the device has pass-through payment status. This payment provision applies when such a

device is billed as a Part B outpatient service, or as a Part B inpatient service when the

inpatient admission is determined not reasonable and necessary and the beneficiary

should have been treated as a hospital outpatient (see Pub. 100-02, Medicare Benefit

Policy Manual, chapter 6, §10.1). In these circumstances, hospitals should submit the

usual HCPCS code for Part B payment of the device.

In the other circumstances in which a beneficiary does not have Part A coverage of

inpatient services on the date that such a device is implanted (that is, when furnished by a

participating hospital to an inpatient who is not entitled to benefits under Part A, has

exhausted his or her Part A benefits, or receives services not covered under Part A),

hospitals paid under the OPPS should report HCPCS code, C9899, Implanted Prosthetic

Device, Payable Only for Inpatients who do not Have Inpatient Coverage, that is

effective for services furnished on or after January 1, 2009. This code allows an

alternative Part B inpatient payment methodology for the device as discussed in this

section, and may be reported only on claims with TOB 12X when the prosthetic device is

implanted on a day on which the beneficiary does not have coverage under Part A

because he or she is not entitled to Part A benefits, has exhausted his or her Part A

benefits, or receives services not covered under Part A. The line containing this new

code will be rejected if it is reported on a claim that is not a TOB 12X or if it is reported

with a line item date of service on which the beneficiary has coverage of inpatient

hospital services. By reporting C9899, the hospital is reporting that the item is eligible

for separate OPPS payment because the primary procedure is not a payable Part B

inpatient service under Pub. 100-02, Medicare Benefit Policy Manual, Chapter 6, §10.2

(“Other Circumstances in Which Payment Cannot Be Made under Part A”).

If C9899 is a separately payable Part B inpatient service, the contractor shall determine

the payment amount as follows. If the device has pass through status under the OPPS,

the contractor shall establish the payment amount for the device at the product of the

charge for the device and the hospital specific cost to charge ratio. Where the device

does not have pass through status under the OPPS, the contractor shall establish the

payment amount for the device at the amount for a comparable device in the DMEPOS

fee schedule where there is such an amount. Payment under the DMEPOS fee schedule

is made at the lesser of charges or the fee schedule amount and therefore if there is a fee

for the specific item on the DMEPOS fee schedule, the payment amount for the item will

be set at the lesser of the actual charges or the DMEPOS fee schedule amount. Where the

item does not have pass through payment status and where there is no amount for a

comparable device in the DMEPOS fee schedule, the contractor shall establish a payment

amount that is specific to the particular implanted prosthetic device for the applicable

calendar year. This amount (less applicable unpaid deductible and coinsurance) will be

paid for that specific device for services furnished in the applicable calendar year unless

the actual charge for the item is less than the established amount). Where the actual

charge is less than the established amount, the contractor will pay the actual charge for

the item (less applicable unpaid deductible and coinsurance).

In setting a contractor established payment rate for the specific device, the contractor

takes into account the cost information available at the time the payment rate is

established. This information may include, but is not limited to, the amount of device

cost that would be removed from an applicable APC payment for implantation of the

device if the provider received a device without cost or a full credit for the cost of the

device.

If the contractor chooses to use this amount, see

www.cms.hhs.gov/HospitalOutpatientPPS/ for the amount of reduction to the APC

payment that would apply in these cases. From the OPPS webpage, select “Device,

Radiolabeled Product, and Procedure Edits” from the list on the left side of the page.

Open the file “Procedure to Device edits” to determine the HCPCS code that best

describes the procedure in which the device would be used. Then identify the APC to

which that procedure code maps from the most recent Addenda B on the OPPS webpage

and open the file “FB/FC Modifier Procedures and Devices”. Select the applicable year’s

file of APCs subject to full and partial credit reductions (for example: CY 2008 APCs

Subject to Full and Partial Credit Reduction Policy”). Select the “Full offset reduction

amount” that pertains to the APC that is most applicable to the device described by

C9899. It would be reasonable to set this amount as payment for the device.

For example, if C9899 is reporting insertion of a single chamber pacemaker (C1786 or

equivalent narrative description on the claim in “remarks”) the file of procedure to device

edits shows that a single chamber pacemaker is the dominant device for APC 0090 (APC

0089 is for insertion of both pacemaker and electrodes and therefore would not apply if

electrodes are not also billed). The table of offset reduction amounts for CY 2008 shows

that the estimated cost of a single chamber pacemaker for APC 0090 is $4881.77. It

would therefore be reasonable for the contractor/MAC to set the payment rate for a single

chamber pacemaker to $4881.77. In this case the coinsurance would be $936.75 (20

percent of $4881.77, which is less than the inpatient deductible).

The beneficiary coinsurance is 20 percent of the payment amount for the device (i.e. the

pass through payment amount, the DMEPOS fee schedule amount, the contractor

established amount, or the actual charge if less than the DMEPOS fee schedule amount or

the contractor established amount for the specific device), not to exceed the Medicare

inpatient deductible that is applicable to the year in which the implanted prosthetic device

is furnished.

When a hospital that is not paid under the OPPS furnishes an implantable prosthetic

device other than dental), which replaces all or part of an internal body organ (including

colostomy bags and supplies directly related to colostomy care), including replacement of

such a device, to an inpatient who has coverage under Part B but does not have Part A

coverage, and the primary procedure is not a payable Part B inpatient service under Pub.

100-02, Medicare Benefit Policy Manual, chapter 6, §10.2 (“Other Circumstances in

Which Payment Cannot Be Made under Part A”), payment for the implantable prosthetic

device is made under the payment mechanism that applies to other hospital outpatient

services (e.g., reasonable cost, all inclusive rate, waiver).