CMS Pub. 100-04, ch. 4, § 60.1

Pass-Through Payments Under the Hospital OPPS

(Rev. 3685, Issued: 12-22-16, Effective: 01-01-17, Implementation: 01-03-17)

The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA)

of 2000 requires establishing categories for purposes of determining transitional pass-through payment for devices, effective April 1, 2001. Each category is defined as a

separate code in the C series or occasionally a code in another series (e.g., certain codes

in the L series) of HCPCS. C-codes are assigned by CMS for this purpose when other

HCPCS codes for the eligible item do not exist. Only devices specifically described by

the long descriptions associated with the currently payable pass-through category codes

are qualified for transitional pass-through payments. The complete list of currently and

previously payable pass-through category codes can be viewed and/or downloaded from

the CMS Web site, currently at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html

Each item that qualifies for transitional pass-through payments fits in one of the device

categories currently active for pass-through payments. Devices may be billed using the

currently active category codes for pass-through payments, as long as they:

• Meet the definition of a device that qualifies for transitional pass-through payments

and other requirements and definitions put forth below in §60.3.

• Are described by the long descriptor associated with a currently active pass-through

device category HCPCS code assigned by CMS and

• Are described according to the definitions of terms and other general explanations

issued by CMS to accompany coding assignments in program instructions. The

current definitions and explanations are located with the latest complete list of

currently payable and previously payable pass-through device categories, found at

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html. Please note that this

link may change depending on CMS Web design requirements.

If a device does not meet the description and other coding instructions for currently

payable categories, even though it appears to meet the other requirements in this section,

it may not be billed using one of the HCPCS codes for currently payable categories for

transitional pass-through payments unless an applicable category is established by CMS,

as discussed in section 60.3 below.

Transitional pass-through payment for a device is based on the charge on the individual

provider’s bill, and the amount by which the hospital’s charges for a device, adjusted to

cost (the cost of the device), exceeds the portion of the otherwise applicable Medicare

outpatient department fee schedule amount associated with the device.

The OCE software determines the reduction to cost and the deduction for similar devices.

The eligibility of a device category for transitional pass-through payments is temporary,

lasting for at least 2 but no more than 3 years. (The initial categories expired on January

1, 2003 or on January 1, 2004. The underlying provision is permanent, and categories

established later have expired or will expire in successive years.) At the time of

expiration, APC payment rates are adjusted to reflect the costs of devices (and drugs and

biologicals) that received transitional pass-through payments. These adjustments are

based on claims data that reflect the use of transitional pass-through devices, drugs and

biologicals in conjunction with the associated procedures.