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'J Codes' Become Part of Pharmacy Vocabulary

Kate Traynor

Once mainly the province of a hospital’s financial department, the language of "J codes" is working its way into pharmacy practice.

This change results from the government’s launch last August of the hospital outpatient prospective pricing system (PPS) for Medicare Part B.

Hospitals must report each drug’s correct J code—more properly, the Health Care Financing Administration (HCFA) common procedures coding system code—when submitting Medicare claims for reimbursement of outpatient care. HCFA has linked each J code with a specific drug dose, with imperfect results.

"The billing…units used by HCFA for the J codes do not match up with the packaging sizes of some of the medications," says Steven L. Sheaffer, Pharm.D., FASHP, ASHP president-elect and pharmacy director at Philadelphia’s Mercy Fitzgerald Hospital.

Melsen M. Kwong, Pharm.D., pharmacy manager at Cedars-Sinai Medical Center in Los Angeles, agrees. The HCFA-assigned dose, she says, sometimes differs from "what is either commercially available or the usual dose that we dispense to patients."

Although HCFA now bundles payments for nearly all drugs into a single payment for the specific outpatient procedure, the agency will reimburse hospitals extra for certain new or expensive drugs. Correct coding of these "pass-through" drugs is essential to maximizing a hospital’s revenue.

At Cedars-Sinai, says Kwong, the pharmacy billing staff adjusts the claims paperwork to make the dispensed quantities correspond with HCFA-defined units. "Basically, it’s a manual process," she says.

For Sheaffer, helping his hospital comply with the regulations has meant working closely with the facility’s financial staff, trying to make the charging system compatible with the PPS for Medicare. "The biggest thing is getting your financial people to understand pharmacy and vice versa," he says.

Kwong, who began in January 2000 to prepare her pharmacy for the outpatient PPS, spends a lot of time incorporating each HCFA revision into her hospital’s billing system. "Every few days you get more information…new codes and new drugs…clarifications, corrections, deletions, additions," she says. Keeping up-to-date is an "ongoing process every day."

Sheaffer worries about HCFA’s promptness in adding newly marketed drugs to the list of items eligible for pass-through payment. Although HCFA updates the list each quarter, this does not necessarily mean that every new drug on the market will be added at the first opportunity, he says.

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