United States: CMS Open Door Forum on the Revised HCPCS Coding Process

On October 27, 2004, the Centers for Medicare & Medicaid Services ("CMS") held an "open door forum" to review and obtain public input regarding the agency’s plans to revise the Healthcare Common Procedure Coding System ("HCPCS") coding process. Reed Smith covered this event because of the significant impact the changes to the coding process will have on drug and device manufacturers.

Cindy Hake of CMS reviewed the coding changes CMS intends to make in the upcoming application cycle. As described in an October 6, 2004 CMS announcement ¹, the most critical of these changes are:

• Earlier Application Deadline: The 2005 application deadline will be January 3, 2005 (rather than April 1, 2005). This change will expand opportunities for public comment on preliminary coding decisions;

• Elimination of Requirement for Marketing Data for Drugs: The standard requirement for submission of six months of marketing data will be waived for drug applications, and Food and Drug Administration ("FDA") approval documentation will be accepted after the application deadline, until March 1, 2005;

• Reduction in Marketing Data for Non-drug Items: The marketing data requirement for durable medical equipment ("DME"), prosthetics, orthotics, and supplies ("DMEPOS") will be reduced from six months to three months;

• Public Notice of Decisions: All preliminary coding decisions will be published on the CMS website prior to public meetings, and final decisions will be similarly published;

• Expansion of Public Meetings: Current DME public meetings will be expanded to include all public requests for HCPCS products, supplies and services, thus allowing both applicants and the public to react to preliminary coding decisions at public forums;

• Appeals Process: CMS expects to implement an appeals process in the 2007 coding cycle to enable denied applications to be reconsidered during the same coding cycle; ? Revision of the Application Form: The application format is being revised to be more streamlined and user-friendly; and

• Consideration of National Medicaid Program Operating Needs: CMS is working with State Medicaid Directors to establish a process to consider coding changes needed for national Medicaid program operations.

Hake reviewed CMS’s flow chart describing the new 2005-2006 coding application process, which has been posted on the internet at http://www.cms.hhs.gov/medicare/hcpcs/hcpcs_process.pdf. The new process will include publication of expanded summaries of applications, preliminary coding decisions, and payment methodologies on the HCPCS web site. Public meetings will be followed by CMS work group reconsideration for each of the new external applications CMS receives in 2005.

Several attendees expressed concern that CMS has moved the application deadline (previously the first Monday in April) to January 3, 2005, but Hake was firm in defending this decision. She indicated that a variety of alternatives (including mid, late, or rolling January deadlines; quarterly or twice-yearly application deadlines; and parallel but separate processes for drug versus equipment and supply applications) were thoroughly considered, but CMS ultimately determined that the early January deadline is needed to accommodate the expanded public comment opportunities it is providing. In addition, Hake’s office has only 35 staff to work on over 300 anticipated new coding applications. While the January 3 deadline shortened the time for filing, CMS hopes it has made up for this with its other improvements to the process. Hake maintained that even new applicants, about whom CMS was most concerned, will be able to meet the new deadline because of other changes in the application process.

One such change, Hake noted, eliminates the six month marketing data requirement completely for drugs and reduces the marketing data requirement to three months for non-drug products. CMS will rely on the FDA’s rigorous pre-approval review of new drug products and will allow coding applications to be submitted prior to FDA approval, as long as FDA approval is obtained by March 1, 2005. The new coding applications still must be submitted by January 3, 2005 and be made in good faith. The new three month marketing data requirement for non-drug products still will allow products that received October 2004 FDA approval to meet the January deadline for the upcoming cycle, Hake stated. She also noted that while CMS did not want to eliminate the marketing requirement completely, it is open to comments on the issue. Overall, Hake maintained, these reductions in marketing data requirements should help to accommodate the earlier application deadline.

In addition, the application form itself has been shortened, which Hake observed should make it easier to comply with the earlier application deadline. The revised form combines some questions and eliminates others. The new form and instructions are posted on the HCPCS web site at http://www.cms.hhs.gov/medicare/hcpcs/hcpcsreform.pdf. 

Hake also mentioned that CMS is working with state Medicaid agencies to identify national program operating needs. In addition, the relationship between CMS and the national panel has been restructured, with CMS maintaining the code set and private insurers serving in a consulting/advisory capacity. Decisions will now be made at the work group level rather than by the national panel (although the same players will be involved).

Finally, Hake noted that the changes are part of an incremental process, with CMS doing as much as it can in the upcoming cycle given the resources available at the HCPCS office. She maintained that CMS is interested in being flexible, wants the best interest for all stakeholders, and is open to suggestions for additional changes that could be made over time. In 2007, for example, CMS intends to introduce an appeals process, and the agency welcomes comments in this regard. Many of the current changes were suggested by stakeholders, Hake noted, who were surveyed by CMS on the issue a bit over a year ago. While the survey results have not been released due to promises of confidentiality for participants, CMS is negotiating with contracting representatives to publish at least a summary of the input.

Forum attendees asked a variety of questions, often expressing concern over the January 3 deadline, with some urging CMS to issue codes more frequently than yearly. Others recommended a variety of alternative deadlines, all of which Hake maintained CMS had looked at and rejected. Other commenters recommended adding additional stakeholders (such as provider, suppliers, and other clinician representatives) as advisors to the working group so that they could become involved in the decision-making process, rather than simply making public comments.

Concerns over duplicate codes were raised by a number of attendees, and others questioned if the change in decision-making from the national panel to the CMS work group would negatively impact codes suggested by the private sector. Hake replied that all segments (Medicare, Medicaid, and private insurers) are treated equally, and CMS will issue temporary codes whenever insurers or Medicaid can identify national coding operating needs, even if the code is not needed by Medicare. In addition, while CMS’s goal is to encourage the use of more specific codes over miscellaneous entries, the agency also does not want to have overlapping codes, Hake stated.

State Medicaid representatives urged CMS to consider their needs and involve them in the decision-making process. They also expressed strong concern that there will be less than 90 days this year between publication of the coding decisions and the beginning of the new year.

In response to additional questioning, Hake pointed out that CMS hopes to have most of the key decision makers at the public meetings. She also expressed concern over one suggestion that CMS provide advance information on what the codes would be if approved, noting that this led to problems in the past.

Hake stated that CMS hopes the new and future coding process changes will lead to better quality decision-making, thereby improving industry acceptance of the process. CMS is anticipating making more changes in the future and welcomes comments from stakeholders. Hake can be reached at chake@cms.hhs.gov.

This article is presented for informational purposes only and is not intended to constitute legal advice.