National Drug Code and Institutional Transactions
February 1, 2001
Presented by
George Arges
Chair of NUBC
Senior Director
Health Data Management Group
American Hospital Association
Let me begin by thanking the members of the National Committee on Vital and Health Statistics, for inviting me to be here today to convey the concerns of the National Uniform Billing Committee (NUBC) around the use of the National Drug Code (NDC). For those of you who are not familiar with the NUBC, we are one of the four organizations mentioned in the HIPAA Administrative Simplification provisions for a special consultative role in the development of HIPAA standards. Additionally we are also one of the signatories to the recent memorandum of understanding for the maintenance of the instructional guides on the transaction standards. The NUBC is a data content committee that primarily focuses on the institutional health care setting. As a data content committee, we examine new requests for data along with the business rules that will govern its collection. We examine the purpose of the request, the associated benefits, and how best to capture the data. The examination process includes the entire membership of the NUBC. This includes representatives from major organizations who represent government programs - such as, Medicare, Medicaid and TRICARE (formerly known as OCHAMPUS). Other representatives come from the payer, institutional provider, and public health & health research sector. There are also representatives from the standard development organizations like ANSI ASC X12N and data content committees like the National Uniform Claim Committee.
It was the final rule on Transaction Standards and Code Sets as published on August 17, 2000 that called for the adoption of the NDC code set for the reporting of drugs and biologic items within the transaction standards. When learning of this requirement, the NUBC was concerned about the intended use of the NDC and sought immediate clarification from the Department of Health and Human Services. As a result, the NUBC submitted a letter, dated September 22, 2000 (see attached), voicing its concern about the ambiguity of the final rule around the intended use of the NDC. At a joint meeting of the NUBC and NUCC, similar concerns were voiced by the NUCC concerning the adoption of the NDC in lieu of the HCPCS “J” codes.
What problems would arise if we revised the standard to allow “J” codes to be used for institutional and professional identification of drugs instead of NDC? And, what are the costs of converting to NDC codes versus staying with the HCPCS “J” codes?
Today, the institutional and professional providers are reliant on HCPCS “J” codes to report drugs. Therefore, allowing the continuation of the “J” code for use among the institutional and professional provider sector would not pose any major problems. From our perspective, it is the change from HCPCS “J” codes to NDC that would impose significant hardships for providers and payers alike.
The primary reason for our concern is the significant costs associated with the widespread adoption of a brand new code set – like the NDC. The adoption of the NDC will require extensive conversion and replacement of existing information systems as well as associated training costs in working with a new code set. Cost estimates indicate that adopting the NDC alone could easily exceed the conversion costs of adopting the new transaction standards. The costs would vary depending on size of facility. Hospital estimates put the minimum price at a $200,000 per facility. We also noted that neither the proposed rule nor the final rule included a cost/benefit analysis for adopting the NDC outside of retail pharmacy
Do hospital pharmacies use NDC codes or HCPCS “J” codes in their operations?
During the course of our investigations, we also found that the NDC has very limited use within hospital pharmacy departments. Its use is primarily for the purchase of the drug, but, even here, it has a very narrow application. In other words, it begins and ends simply as a reference to the purchase order and is used mostly for inventory control. However, another important issue brought to our attention centers on the potential harm that could occur to patients as hospital pharmacies transition their systems to the NDC. Pharmacy departments told us they would need to build new interfaces with their dispensing systems. The concern is whether the dispensing systems would capture the right NDC. A failure of referencing the correct NDC could cause a medication error.
Furthermore, hospitals often repackage and provide unit dosages that differ from the purchased drug. Hospitals also provide drugs that are compounds of different drugs.
Under these circumstances, the NDC may not be readily available or even exist. Trying to implement NDC on a claim based on the NDC number provided at the time of purchase would not correspond to the drug dispensed to the patient. Consequently, the NDC would only add new operational burdens to caregivers without corresponding savings.
Are there drugs and biologics without HCPCS codes, which are included in transactions?
Payer representatives on our committee have also told us that they have no particular use for the NDC and feel comfortable in their continued use of the existing HCPCS “J” codes. Generally, payers are satisfied with the current reporting of HCPCS “J” codes and pharmacy revenue codes. There are instances where the HCPCS codes are not used to report drugs and biologics. Most inpatient claims only report the pharmacy revenue codes without a corresponding HCPCS “J” code. The revenue code captures like services of a particular category; in this case, it would capture all of the drugs furnished to the patient during their inpatient stay. The reasoning is that payers, like Medicare, rely upon prospective payment systems to reimburse providers for inpatient services. Such payment methods are primarily based on the ICD-9-CM diagnosis codes to drive payment – for Medicare it would result in one of the predefined DRGs.
Other payer representatives also indicated that their bill review and payment process would not benefit from the adoption of the NDC. Their review is similar in nature and is based on the entire set of resources used to treat a disease or illness, so for inpatient hospitalization, the ICD-9-CM codes are key. The only time payers would need greater specificity is if a particular type of drug or biologic is furnished under special circumstances. Generally, for these situations the trading partner agreements define what is reported. Here again it is the HCPC “J” codes that are used for this purpose. In the event that a HCPCS “J” code is not available, it is important to work the new code through the HCPCS process in order to get assignment of a new HCPCS “J” code.
In summary, the NDC was never intended for hospital use -- it was designed for the out-of-hospital setting, primarily retail pharmacy. We are asking the NCHVS to make a recommendation for a correction to the final rule. For institutional and professional claims we would recommend the continued use of the HCPCS “J” for the reporting of outpatient pharmaceuticals and biologics, and that the NDC should only apply to retail pharmacy claims.
Again thank you for allowing me to address this issue. I look forward to working with the NCVHS on this important endeavor as well as any other related matters.