HHS Watchdog Wants Device Identifiers Added to Medicare Forms

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By Bronwyn Mixter

Unique device identifiers should be added to Medicare claims so the costs of recalled or prematurely failed medical devices can be identified and tracked, a federal watchdog agency said.

The Department of Health and Human Services Office of Inspector General recommended adding the identifiers to Medicare claims in a report issued Oct. 2, because the costs of all recalled or prematurely failed devices can’t be determined using only data on current claims. The lack of information prevents the Centers for Medicare & Medicaid Services from fully understanding and addressing these costs, hindering its and the Food and Drug Administration’s ability to identify poorly performing devices as quickly as possible, the OIG said in the report, dated September 2017. The CMS said it is considering adding UDIs to the next version of claims forms, expected at the earliest in 2021.

“The issue underscores the lack of coordination among federal agencies,” Bloomberg Intelligence analyst Brian Rye said in an Oct. 2 email. The FDA “issued a final rule establishing a UDI system for medical devices four years ago, but it has no oversight of Medicare or Medicaid claims forms.” The FDA in September 2013 issued a final rule creating the UDI system, which requires labels and packages of medical devices distributed in the U.S. to include a unique device identifier unless the agency grants an exception or alternative.

Medicare Costs of Failed Devices

The HHS OIG used claim and other data and auditing procedures to estimate the Medicare costs associated with seven cardiac devices from three manufacturers that were recalled or had high failure rates over a 10-year period. It estimated the cost of Medicare services related to the replacement of these seven devices was $1.5 billion from 2005 through 2014.

Also, the watchdog estimated that beneficiaries had $140 million in copayment and deductible liabilities related to these replacements.

Rep. Bill Pascrell Jr. (D-N.J.) said in a statement the report “confirms what we have known—in addition to advancing patient safety, incorporating unique device identifiers (UDI) into health insurance claims is good for Medicare’s finances and seniors’ pocketbooks.”

The lawmaker urged the CMS to incorporate UDI into the next update of the health insurance claims forms.

Slow Process to Update Claim Forms

Ben Moscovitch, manager of health information technology at the Pew Charitable Trusts, told Bloomberg BNA Oct. 2 the process to update claims forms can take about a decade.

McLean, Va.-based ASC (Accredited Standards Committee) X12, the organization responsible for developing universal data transaction standards for health-care and other industries, opened a public comment period Feb. 1 on changing several aspects of hospital claims forms, including a recommendation to include UDI information. The ASC X12 includes members from the CMS.

Moscovitch said ACS X12 is reviewing those public comments.

“It’s a fairly lengthy process and the next update to claims forms is expected to occur in approximately 2021 or 2022,” Moscovitch said. “Missing that window could delay the addition of device identifiers to claims for another decade or more.”

Moscovitch said “many organizations across the health-care industry support the addition of device identifiers to claims.” He said these include large hospital systems, clinical societies that represent physicians who implant these devices, some device manufacturers, and some health plans such as Aetna.

The Advanced Medical Technology Association (AdvaMed), which represents device makers, supports adding UDI information to electronic health records (EHRs), but didn’t specify whether it supports adding UDIs to claims forms.

JC Scott, AdvaMed’s chief advocacy officer, said in an Oct. 2 statement provided to Bloomberg BNA, “AdvaMed believes that providing a standard and clear way to document device use from information in EHR would facilitate more accurate reporting, review, and analysis of postmarket data for medical devices, including recalls.”

“We support inclusion of UDI information in the EHR as a means to increase the availability of UDI information to health care providers involved in the treatment of a patient as well as to strengthen the reliability of the information for the patient’s implantable device(s),” Scott said.

HHS OIG’s Recommendations

As well as adding UDIs to claims forms, the HHS OIG also recommended the CMS should require hospitals to use specific codes--condition codes 49 or 50--on claims for reporting a device replacement procedure if the procedure resulted from a recall or premature failure, independent of whether there was a device provided at no cost or with a credit.

A condition code is used to identify conditions relating to a claim for services and procedures that may affect payer processing. Currently, hospitals must include condition codes 49 and 50 on claim forms when a replacement device is received without cost or a credit was received for 50 percent or greater of the device’s cost because it is under warranty, was recalled, or was defective.

Response From CMS

The CMS said in the report it is considering including UDIs on the next version of claim forms and it will “carefully evaluate” the burden this policy could impose on physicians.

Also, the CMS said it agreed with the OIG’s recommendation on requiring condition codes 49 or 50 on claims “in cases where payment is impacted.”

The CMS also said in a statement provided to Bloomberg BNA that including UDI on claim forms and expanding the use of conditions codes would help the agency to “more effectively identify and track Medicare’s aggregate costs related to recalled or prematurely failed devices, reduce Medicare costs by identifying poorly performing devices more quickly, facilitate device recipients’ chances of receiving timely follow up care, and protect beneficiaries from unnecessary costs.”

To contact the reporter on this story: Bronwyn Mixter in Washington at bmixter@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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