NATIONAL COMMITTEE ON VITAL AND HEALTH STATISTICS
Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191)
Use of NDC in Professional and Institutional Health Care Claims
February 1, 2001
By: Donald L. Bechtel
Strategic Advisor for
Healthcare Data Exchange Corporation (HDX), a Siemens Company
Representing
HDX and Siemens Health Services Corporation
Mr. Chairman and members of the committee, I am Don Bechtel, an Advisory Analyst for HDX, a wholly owned subsidiary of Siemens Corporation, where I am currently focused on strategic issues related to HIPAA compliance and the implementation of new requirements for Administrative Simplification. In addition to my HDX responsibilities, I co-chair the Eligibility Work Group within the Insurance Subcommittee of the ANSI Accredited Standards Committee X12, I co-chair the Transactions Work Group within WEDI/SNIP, and I am a board member of AFEHCT (Association For Electronic Health Care Transactions). On behalf of HDX and Siemens Health Services Corporation, I want to thank you for the opportunity to testify today on issues related to using National Drug Codes (NDC) with institutional and professional health care claims.
HDX and Siemens Health Services Corporation have been analyzing the impact of Administrative Simplification on our services and products since the initial NPRM was issued for Transactions and Code Sets. Generally speaking, we are very pleased with these rules and look forward to their full implementation, as we believe these changes will greatly improve our efficiency and effectiveness at handling the associated business functions. We were also pleased that the final rules for the transactions did not change that significantly. However, there do remain a number of issues regarding how the industry will implement the required changes in an efficient and orderly way. One of these issues is the concern for using the NDC in place of J-codes when reporting drug charges on an institutional or professional claim.
The HCPCS J-Codes provide a simple way to report high cost drugs and biologics generically, without reference to manufacture or package size, but specifically to administered dosage. In the institutional and professional settings, this is a simple, efficient, and effective way to report this information.
The National Drug Codes were not designed to accommodate reporting of drugs administered. These codes lack specific information related to dosage, and the X12 transactions that will utilize these codes lack instructions for how to specify dosage amounts administered or dispensed as they relate to a package. The NDC is much more appropriate for supply chain functions to track and order inventory. As I’m sure this committee knows, these codes are assigned with reference to manufacturer, drug, and packaging characteristics, which are not always equivalent to dosage or prescriptive orders. Although the NDC can be referenced when filling an order, packages may be broken or subdivided to fill an order when dispensing a drug.
There are other issues related to these codes, that have been widely publicized, such as, the field length differences between NDC and J-Codes, frequency of changes to these codes, and code reuse. These are all valid concerns, which will require changes to many systems. Storing codes that are double the current size will impact storage requirements, require application file enhancements to accommodate the field length and granularity of information. Maintaining these files will require more frequent updates to the code set to stay current with coding additions and deletions. These are not difficult vendor or developer problems, but they may inadvertently increase operational costs to the provider.
These things being said, there are advantages to using the NDC codes, especially in the pharmacy environment. We see advantages to some payers who may be better able to determine more accurate reimbursement to providers based on drugs dispensed or administered. However, for the institutional and professional settings we see little benefit, for the changes that will be required to support these in terms of application enhancements and operational procedures that will need to be implemented. The following examines these issues from the perspective of each environment.
Most hospital enterprises are a complex environment composed of multiple applications and systems each focused on specific functions within a hospital unit or area of business and often many are supported by different vendors. Examples are patient care, laboratory, radiology, pharmacy, patient accounting, and patient billing applications, to name a few. These systems and applications normally exchange information based on certain processing or “trigger” events, (e.g., when a physician’s medication order is entered into the patient care system it generates a message to the pharmacy system to fill the drug order). When the order is completed, information about the drug dispensed may be sent to the nursing station or the patient accounting financial applications or both. These data exchanges normally occur within a hospital enterprise by way of HL7 and/or proprietary messages. Unfortunately, in many cases these are still proprietary messages or proprietary implementations of HL7 that are being used to accomplish this processing.
I’m sure this committee is very familiar with the process I’ve just described and I only note this to help define the issue and how problems begin to occur. Notably, there are HL7 messages that accommodate the above processing between applications and they can support the use of NDC to report what drugs were dispensed and/or administered.
In most hospital environments there are many vendors supporting these various systems, but not every vendor is using HL7 for all of these communications, leaving proprietary messages to be changed or HL7 to be implemented to accommodate the use of NDC. Neither one will be a simple task and more importantly this is not a single vendor issue, it will require cooperation between multiple systems and vendors, who may choose to solve these interface solutions differently as there are no governing implementation guides for this purpose. The key point is the above will require application changes, time, and a lot of coordination by the provider to implement. On the other hand, it can be done.
There are several processing flows to capture drug charges that are utilized by different providers, depending on the level of sophistication they have implemented with their interfaces. Examples of these would include:
3.In some systems, when the clinician enters the medication order into the Patient Care Order Entry system, both an order is sent to the Pharmacy System and a charge record is sent to the Patient Accounting system. In this example, the NDC information for the drug used to fill the order is not available to the Patient Care Order Entry system, so no NDC information can be included on the charge record which is sent to the Patient Accounting system.
To get the NDC information in this third case, some other method will need to be created. For example, the pharmacy system could send the NDC information to the patient accounting system when it fills the order. Then the patient accounting system would have to associate the NDC information from the pharmacy system to the charge record that was sent from the Patient Care Order Entry system. This would be a significant task. Alternatively, this third approach would be eliminated, which would require procedural and interface re-engineering within the enterprise. This may also require application enhancements somewhere else in the environment.
When an institutional pharmacy system dispenses a drug for a physician’s order, the system would know the NDC for a drug, and this information can be sent to the patient accounting system when the drug is dispensed. But the patient accounting system will have problems when the package has been subdivided. Further, the pharmacy system will have a problem reporting when an order is split between two packages, when the supply of one package is diminished and another is opened of a different package size or manufacturer, it’s not clear how this information should be reported.
Another point that needs clarification, which drugs must we capture the NDC information for? Is this limited only to the drugs that would normally have had a J-code or is it for all drugs? The rule is not clear on this, but since in an institutional setting we only report J-coded drugs, is it reasonable to assume we only need to capture NDC for equivalent drugs? Clarification in the rules on this point would be helpful.
Application changes to support NDC information with ordered, dispensed, or administered medicines, will require changes to HL7 implementations or proprietary systems, which could be expensive, complicated to implement, and will probably require some processing re-engineering.
From a pharmacy system perspective, NDC codes are used for other purposes so supporting this code set should not be a problem. Use of the NDC could be beneficial for auditing purposes, if we could have consensus on how dosage information, and split packaging is accomplished. This needs to be understood with implementation guidelines, such that the patient billing applications can correctly itemize the charges and pharmacy systems can send the appropriate details.
For the purpose of this testimony, I’m defining this to be where the patient billing applications are maintained and run. Charges for patient bills are accumulated by the patient accounting application, which track number of days, room charges by room type, and other ancillary charges. Charges for drugs administered to the patient are captured by either proprietary charge transactions or by a combination of HL7 messages sent from the pharmacy and/or patient care systems.
The patient billing applications capture and accumulate charges, then based on the type of bill (inpatient, outpatient, or professional) and payer it determines how to present those charges on the claim form (paper or electronic). In the institutional setting, most charges are summarized into a revenue code assigned for a DRG or APC, which would include medications. J-codes are used to report certain high cost injectible drugs for chemotherapy on outpatient bills.
Today, most HIS patient accounting systems are not capturing NDC codes. To do this will require changes to the interfacing systems to send the NDC information, (e.g., from the pharmacy where the drugs are dispensed). The patient accounting systems will require modification to handle these new messages.
The NDC cannot easily be captured at the nurse station, often the packaging is unavailable and generic brands may have been substituted. Therefore, more extensive use of HL7 or proprietary messages may need to be implemented between the pharmacy, patient care, and patient accounting applications to capture meaningful data.
Algorithms will need to be developed in the patient billing applications to determine unit pricing from this information based on dose administered versus package information based on the NDC.
It should be noted, there are no “standard” implementation guidelines on how these HL7 or proprietary records should be implemented by these various systems and vendors. But, application changes will be needed in several systems to implement the needed changes for the HL7 messaging or proprietary messages that would be used. This can become very complicated, and many of the implementation specifications might not be known for sometime, while the vendors develop their solutions.
There are several problems associated with this. First, currently with DRG and APC administered drugs are not normally listed as a line item, rather they are part of a summary charge, which is rolled into a revenue code. Although, some high cost drugs are itemized using J-Codes. The dilemma is when to use the NDC, is it only for these high cost drugs as we do with the J-Codes or is it for all drugs?
The other problem is reporting partially used drug packages. As noted above, its possible that drugs dispensed from the pharmacy are taken from a larger package then subdivided into the dosage amount that is administered. It is not clear how to capture this partial unit.
Practice Management systems will have the same issues just described for patient accounting applications, except many of these are not interfacing with an institutional pharmacy system, so in many case the NDC information will need to be entered at the practice management system. Using NDC codes will be awkward, at best, for billing injectible and/or intravenous drugs in the physician's setting. This is for several reasons:
1.What problems would arise if we revise the standard to allow J codes to be used for institutional and professional identification of drugs instead of NDC?
For both institutional and professional settings, there would be no problems or expenses incurred if the J codes were used in place of the NDC, since we support J codes today. However, a quick decision will be helpful, as we are now in the process of making our system modifications. If this change is not needed, it would be good if we could stop the development before too much time is spent on this activity.
2.Are there drugs and biologics without HCPCS codes, which are included in transactions?
The HCPCS coding system does not support all types of drugs. The J code only addresses chemotherapy and injectible drugs, not all drugs that might be administered to the patient. In the institutional environment currently, it is only necessary to identify the chemotherapy and injectible drugs (primarily for Medicare) due to their high cost and the need for separate reimbursement consideration. No other drugs require coding in today’s institutional billing environment. If the NDC is implemented in the institutional billing environment, the question becomes – Will it now be necessary to identify the NDC code for every drug administered? The rule says specifically J codes will be replaced with NDC, but does this mandate a requirement to provide these codes for all drugs? This would have implications on the number of line items currently supported on the paper form (UB92) if every drug will require an NDC.
3.What are the costs of converting to NDC codes versus staying with J codes?
The changes to support NDC codes will be significant, because of the new data lengths, and files to support, the changes become quite expansive and expensive. This cost could impact charges to our customers. On the other hand, there is no cost to remaining with the J codes as we already support this.
4.Do hospital pharmacies use NDC codes or J codes in their operations today?
The NDC codes are stored and maintained in our institutional pharmacy systems today.
NDC codes can be used, our systems can be modified to support this processing, but at what cost and for what benefit? We’re not sure what the benefits are to capturing this information. We’re not sure we will have consistent implementations to calculate the information needed to produce a bill. We lack adequate instructions for how to report information on the claim when package sizes are not equivalent to dose administered. We’re not clear on what drugs need to be reported and when. Our current plans are to build the necessary support to handle the processing described above. However, we believe their will be implementation issues between different vendors and transaction trading partners. The implementation guides will need to be improved to address these issues.
It is our opinion that J Codes should not be eliminated for institutional or professional claims. We believe these were created to specify high cost drugs that were administered in a generic way, which has already simplified this billing process. To replace the J Codes with NDC codes will make a simple and efficient process more complicated and less efficient.
Mr. Chairman and members of the committee, this concludes my statement and as always, I am available for follow up questions at any time. Again, thank you for this opportunity to share our experiences.
The HCPCS "J" codes for gamma globulin injections are:
J1460 - Injection, Gamma Globulin, Intramuscular, 1cc
J1470 - Injection, Gamma Globulin, Intramuscular, 2cc
J1480 - Injection, Gamma Globulin, Intramuscular, 3cc
J1490 - Injection, Gamma Globulin, Intramuscular, 4cc
J1500 - Injection, Gamma Globulin, Intramuscular, 5cc
J1510 - Injection, Gamma Globulin, Intramuscular, 6cc
J1520 - Injection, Gamma Globulin, Intramuscular, 7cc
J1530 - Injection, Gamma Globulin, Intramuscular, 8cc
J1540 - Injection, Gamma Globulin, Intramuscular, 9cc
J1550 - Injection, Gamma Globulin, Intramuscular, 10cc
J1560 - Injection, Gamma Globulin, Intramuscular, over 10cc
The NDC codes for the drug Gammar (immune globulin, human), by Armour are:
0053-7595-01=2 ml vial
0053-7595-02=10 ml vial
Recommended doses, per the PDR, for treating Hepatitis A, are:
0.01 ml/lb
0.02 ml/lb
0.06 ml/lb
Currently, a physician’s office would bill for an injection of 2cc (same as 2 ml) of gamma globulin by using J1470 as the procedure code.
Under HIPAA, the NDC code corresponding to the package size of the vial in the physician’s office would have to be used in the 837 Professional claim transaction in field in SV101-2 Product/Service ID.
Field SV103 Unit or Basis for Measurement Code would also have to be valued. The options here are to indicate International Unit (but only for drug dosage amounts when the dosage of the drug is variable within a single NDC number, such as for blood factors), minutes, or units. Since cc’s and ml’s are not the same as I.U.’s, and minutes does not apply to the service, it appears that “unit” would be the correct value for this circumstance.
Field SV104 Quantity would also have to be valued with the number of units used. Unfortunately, there is no direction on how to define a unit in this situation.
Further, if a full injection is not completed from the same vial, and the second vial of the drug is from a different size vial, how is the Quantity to be reported?
What, if, instead, the second vial used is from a different manufacturer? Which NDC is to be used?
Although this example refers specifically to a physician’s office, the issues raised would also apply in the hospital outpatient setting. The effort involved in maintaining the NDC information for billing purposes, when packages may come in different sizes and/or from different manufacturers does not increase “administrative simplification” for the physician or institutional environment.