Reimbursement for Re-Processing "Single-Use" Devices

A smart user asked for help researching this subject, and I’d like to share what we found.

This was a fun one for me to research, as it illustrates the increasing complexity of compliance where FDA and CMS have joint jurisdiction. I think we’ve gotten off in the right direction with this research, but FEEDBACK FROM OUR COMMUNITY Click the “leave a comment link” will really help flesh out a solid understanding of this issue.

Short Answer: reprocessed devices are approved for reimbursement exactly like new devices, as long as the reprocessing was done in compliance of FDA standards.

Long Answer: [Background: In the hospital, the only devices CMS generally pays for are those granted “pass-through” status or implanatable durable medical equipment; otherwise the cost of the device is already built into the device-dependent APC relative weight/payment rate or the surgical MS-DRG inpatient payment. I’m hard-pressed to imagine a reprocessed implantable DME device, so I think we can narrow our scope to Pass-throughs only.]

The problem is, of course, the word “reprocessed” appears so often in Medicare literature referring to the reprocessing of claims, not devices, that the search is really frustrating. Instead, I browsed to the CMS Manual section regarding payment for devices, and quickly found a helpful citation.

In the Claims Processing Manual Chapter 4 Section 60, CMS specifies:

Reprocessed devices - Hospitals may bill for transitional pass-through payments only for those devices that are “single use.” Reprocessed devices may be considered “single use”if they are reprocessed in compliance with enforcement guidance of the Food and Drug Administration (FDA) relating to the reprocessing of devices applicable at the time the service is delivered. The FDA phased in new enforcement guidance relating to reprocessing during 2001 and 2002. For further information, see FDA’s guidance document entitled “Enforcement Priorities for Single-Use Devices Reprocessed by Third Parties and Hospitals,” published August 14, 2000, or any later FDA guidance or enforcement documents currently in effect. For a complete list of currently and previously payable device categories related to pass-through payments and specific definitions of such device categories, refer to http://www.cms.hhs.gov/HospitalOutpatientPPS/Downloads/DeviceCats_OPPSUp....

Now, don’t trust that DeviceCats_OPPSUpdate.pdf link because it is out of date (Jan 20007 !!). Instead, you’ll want to refer to the latest OPPS Addenda files to determine which HCPCS codes are considered pass-through. There is a list of these, updated quarterly, in the HCPCS & CPT CodeBook (entitled “APC Pass Through Code-Finder”). You can also find industry lists of commonly reprocessed devices to compare to this list.

I also found a rich discussion of this topic in the CY 2002 OPPS Proposed Rule. The official title and section you are looking for is:

Proposed Rule- Changes to OPPS and CY 2002 Payment Rates - 08/24/2001 VI. Other Policy Decisions and Proposed Changes

It seems to me that all other reusable/reprocessable devices would be supplies that are already built into the total payment for services. That means that you won’t get additional reimbursement for the specific device, but you will see cost savings if the cost of reprocessing is less than the cost of new.

Of course, using these devices requires that you comply with all FDA rules to ensure that the reprocessed devices are safe and effective. You’ll need to refer to the reprocessing guidance published by FDA.

The main page http://www.fda.gov/cdrh/reprocessing/, points to an often cited guidance document http://www.fda.gov/cdrh/ohip/guidance/1333.html which specifically addresses Third-Party and Hospital Reprocessors.

The GAO has studied the safety of reprocessed devices and is keeping an eye on the FDA regs: There are a few GAO Studies regarding reused devices:

Reprocessed Single-Use Medical Devices: FDA Oversight Has Increased, and Available Information Does Not Indicate That Use Presents an Elevated Health Risk GAO-08-147, January 31, 2008 Single-Use Medical Devices: Little Available Evidence of Harm From Reuse, but Oversight Warranted. HEHS-00-123 June 20, 2000 Medical Devices: Reprocessing and Reuse of Devices Labeled Single-Use. T-HEHS-00-143 June 27, 2000 This testimony is also useful: www.gao.gov/archive/2000/he00143t.pdf</li> Finally, I found this presentation that takes more of a workflow, compliance and environmental approach to this subject. I think it is really worth a look:

www.h2e-online.org/docs/AHRMM_Presentation_2004_Final.ppt