New HCPCS Code Requirements for Supplies: Managing Your CDM to Avoid Claim Denials

BreAnn Meadows, President of Revenue Integrity Services

In this episode of 1st Talk Compliance, Kevin Chmura and BreAnn Meadows discuss the challenges healthcare providers face due to payers increasingly denying claims for supplies that are missing HCPCS codes. The issue stems from recent payer policy changes, with supplies that were previously chargeable now being rejected if they lack a corresponding HCPCS code. The conversation tackles the complexities providers face in managing their chargemaster (CDM), maintaining accurate HCPCS coding, and addressing claim denials, which can result in lost revenue.

Tune in to equip yourself with actionable strategies to avoid claim denials, as Bre underscores the importance of adopting a strategic, focused approach to managing your CDM, adapting to evolving payer practices, and staying proactive in compliance efforts.

Full transcript available below.

Kevin: Hello, and welcome to a new episode of 1st Talk Compliance, where we dive deep into the pressing issues shaping the healthcare industry. I’m your host, Kevin Chmura, CEO of Panacea Healthcare Solutions. In this episode, I’m joined by BreAnn Meadows, President of the Revenue Integrity Services Division here at Panacea Healthcare Solutions. Today we’ll be talking about some recent developments with payers denying claims due to missing HCPCS codes for supplies.

Thanks for listening and I hope you enjoy the episode. Bre, welcome.

BreAnn: Thank you.

Kevin: I’ll give you more about Bre in a minute, but let me let me lay down what we’re what we’re going to be talking about today. So, many providers are facing line item or full claim denials for supplies billed without HCPCS codes. Payers have recently updated their policies, and items that previously met chargeable item guidelines but lack corresponding HCPCS codes are now being denied.

This shift has raised several important questions for providers, such as, “Have chargeable item guidelines changed? Where should revenue for these items be recorded if they can’t be billed with a 270 or 272 revenue code? Am I potentially losing net revenue?” Probably near and dear to everybody’s heart. “How can I begin cleaning up my supply chargemaster? Do I need to update my supply charge policies?”

These are just a few of the concerns that many of our customers and other providers are grappling with in light of these policy changes. So let me introduce Bre. Bre is the president of Panacea’s Revenue Integrity Services Division. She leads our company’s efforts to deliver chargemaster optimization software and services, coding audits in education, and comprehensive compliance software to hundreds of hospitals, health systems, and physician practices nationwide.

So again, Bre, welcome. Thank you. Let me just start with a question and then I’ll let you talk about it. So, and just for base for everybody, so why is it important to have accurate HCPCS coding for medical supplies?

BreAnn: Thanks, Kevin. Appreciate you having me here today. So, what we’ve seen in the past is in the industry when we talk about charging for supplies, we’ve always given guidance to charge for everything that you do, charge for everything that you provide. And what we’re seeing payers do as recently as the summer of 2024, November of 2024 and now some payers changing their policies January 1st of 2025, is supply items that had met chargeable guidelines before that you would have reported on your claim form that have a 270 or 272 revenue code, but no associated HCPCS code, are now being denied, and it’s causing a lot of confusion for providers to say, well, I have this policy. I’ve already deemed that these supply items are chargeable, and now the payers have changed the rules on me. So now I’m left with claims going out the door and either line-item denials or sometimes we’re hearing from different customers that the payers are completely denying their entire claim because there is a revenue code line item billed without a corresponding HCPCS code.

Kevin: Yeah, so that’s got to be frustrating, right? So, you have a complete claim being denied because of one of the supplies that you were trying to bill, which was not the point of the claim in the first place, right? So I have to imagine that probably creates some complexities for customers or for providers trying to manage their supply CDMs.

BreAnn: So, if you think about a supply CDM for many customers, they have tens of thousands. Some customers have over 100,000 items in their supply CDM from expanding services over time. You never know if you’re going to use a supply every single year, so there’s always hesitancy about deactivating supplies. So you want to keep them there. But now when you have that volume of inventory, going back to try to clean it up to comply with some of these policy changes is extremely difficult for providers.

Kevin: I can imagine; and beyond the maintaining your CDM compliance, I would imagine compliance with HCPCS coding in and of itself is probably pretty challenging as well.

BreAnn: It is. It’s a difficult situation because even going forward, if you were to change your policy and how you approach new supplies coming into your chargemaster, it still originates from the supply area. They may give you a certain description about this item, and now it’s up to a CDM coordinator to pick the right HCPCS code. So, in addition to a missing HCPCS code, you may also have a high degree of usage of not otherwise specified or not otherwise classified HCPCS codes, which can also be problematic.

The payer may pin the claim and ask for more information, and many times there are more reasonable specific HCPCS codes that can be used. So, if your supply CDM has a high degree of those code assignments, you may need to go back and do some rework on those codes as well.

Kevin: Yeah, I can imagine it. Going back to denials for a second, we know this. You can recover a denial, but the fact once you’re denied, you’ve kind of already lost because at best you’re going to recover something that was yours in the first place and has a financial impact on you in terms of lost revenue, potentially, certainly time value of money.

But then the actual cost of somebody revisiting what could be a relatively small claim. So, very, very important issue. What are what are some strategies that the providers can employ to ensure proper HCPCS code assignment?

BreAnn: So, you can go back and clean up your supply CDM. What we’re suggesting first and foremost is go back and try to assign as many HCPCS codes as you can. So, as you can imagine, it’s a twofold issue. You want to go back and try to make these assignments, which is difficult even if you have some tools that you can use, because you really need a way to do a bulk ID. Going through line by line of tens of thousands of items is overwhelming for anybody, even for us to try to do. So, you want to try to leverage any technology and tools which we have for our clients, thankfully.

The second piece is when whatever you’re left with that you cannot assign HCPCS  code to that may be causing an issue, you now have to decide, where does that revenue go? Because there is still a large amount of providers that can’t get paid on a percentage charge on their outpatient claims.

So, if you’re forced to remove that line item charge, you’re going to be looking at a net revenue impact. Might not be a lot of net revenue on an individual claim, but it would certainly add up if you removed all of that charging across the board. And then do you have an opportunity to increase your room and board or your O.R. time, different areas, your ED level where some of these supplies would be used?

So, that is a more complicated process. So, we’re recommending right now, start with doing as many HCPCS assignments as possible. One of the difficulties with this situation is this isn’t an issue that Medicare has established a guideline and now everybody’s following the policies for payers we’re finding are all over the board, and different payers are at different points in putting some of these policies into place.

So, it’s difficult because there’s not a consistent change in the industry around these payer policies.

Kevin: Right. And you’re bound by one CDM, right? And so that’s super challenging, and I’m glad you mentioned technology, but I would assume just bandwidth of staff too is probably a bit of a challenge. And that’s something we always we’ve seen a bunch over the years. Just you can have all the tools in the world if you don’t have the people to operate the tools. That doesn’t help or doesn’t really help you solve your problem.

Interesting stuff. So, catch me up on what we’re doing here at Panacea. We have a suite of tools and services to work with customers. Maybe just touch on that a little bit.

BreAnn: Sure. So here at Panacea, we have a CDM management tool called ChargeAssist that has a really robust supply database in it. So, it has just shy of 1.2 million supplies and items listed in it. And what we track in that as far as an inventory file is something called a global identification number or sometimes referred to as a GUID number, which is a number assigned to items by the FDA.

What’s nice about that number is it is a numeric standard number. If that’s something you have available, we can do an electronic match. You get very good solid results because you’re doing a one-to-one match. That’s not possible for everybody to pull a file with that information. We more often see that providers are able to pull files that have associated manufacture number. It’s not the best because it’s a nonstandard number and it’s a combination of alpha, numeric, dots, dashes, etc.

However, we have piloted this with a number of customers over the last six months, and we’ve gotten very good results from doing that. Found a lot of HCPCS code assignments. But because the manufacturing number isn’t apples to apples all the time, we do have our consultants review and make sure that any of those matches that come back are reasonable HCPCS assignments so that you can have confidence to go ahead and add that to your CDM.

Kevin: Thanks. What would you list as some of the advantages of using an outside firm, Panacea or others?

BreAnn: So, as you mentioned, resource time. Again, it’s even resource-intensive for us, but because we kind of have a standard process, we can duplicate it more cost-effectively over and over again for clients and processing their files. We also provide assistance with looking at your existing supply policy, having a conversation with you about how your payers are acting with these new changes, so that hopefully you don’t continue to put new charges in your CDM that create this issue.

So, we want to make sure that we do some root cause fix with you as well. Make sure that you don’t constantly contribute to the problem and then have to go back and cleanup work.

Kevin: No, that’s great. And I think I would guess that for the for most providers, the cost of engaging somebody from the outside tools people or both are probably less than the potential lost revenue from denials, missed denials. Then the opportunity cost of taking your team and focusing in this area when in reality your CDM has so much more to, has so much bigger an impact on your overall financials.

BreAnn: Yeah. And we try to take a strategic approach. So, really guide providers that if we’re going to look at this for you, let’s have an approach that makes sense so we can minimize [your] cost and ours. So, we normally recommend to start with the electronic match to see what kind of results we get. And based on that, whatever is left over really focus on your revenue and usage. There’s no point in reviewing 100,000 lines in your supply CDM if you only have recent activity on 30,000 of those lines. So, we really want to be thoughtful in how we approach that to minimize it and really focus it on where you’re going to get immediate impact.

Kevin: No that’s great, a kind of a thoughtful approach to the whole thing. So that’s great. So, one of the one of the big takeaways for me is something that I learned in this conversation is really the inconsistency of payer practices and how challenging that can be and definitely opens up this discussion to a need for a review and level of focus here. So any closing thoughts?

BreAnn: Just one. I would want to recommend anybody in the audience who is experiencing this or starting to experience it to still try to reach out to your provider reps, to get clarity, to have them provide the specific policy that backs up how they’re adjudicating your claims and try to have a discussion and some pushback if you can. I know in this day and age it’s harder and harder to have that contact and conversation with your payer. But how we’re seeing these rolled out and implemented not consistently, that the claims processing isn’t consistent, we would recommend that you have conversations with your payers, because it is a really difficult issue to manage. So, you want to fully understand what’s going on with your claims from their standpoint.

Kevin: That’s great advice. Great, great advice. Perhaps we close with that, which is great. So, Bre, thank you very much. That was very, very helpful. Insightful. Appreciate it. We’ll love to have you back on another episode.

BreAnn: Thank you.

Kevin: You are a wealth of knowledge in a number of areas. So, we will, we’ll bring you back and cover some other things. So, to everyone tuning in on 1st Talk Compliance, thanks for joining, listening in on the conversation today. Again, I want to extend my sincere thanks to Bre Meadows for coming on the show and discussing this topic.

If you have any questions or want to continue the conversation, please visit Panacea’s website or reach out to us on social media. We’d love to hear from you. Stay tuned for more thought-provoking episodes on 1st Talk Compliance and until next time, take care and stay informed.