Reimbursement Guide: Hernia and Abdominal Wall Repair

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1 For more information Ask your Covidien sales representative how procedural solutions for hernia repair can enhance your specialty. Call today to order product brochures, DVDs or detailed Instructions for Use for any of the products described in this guide. Reimbursement Guide: Hernia and Abdominal Wall Repair COVIDIEN and COVIDIEN with Logo are trademarks of Covidien AG Covidien. All rights reserved. MO Middletown Avenue North Haven, CT [t] [f]

2 I Covidien: Your partner in navigating reimbursement Covidien is committed to providing value added resources to our customers. To that end, we have developed this comprehensive reimbursement overview for hernia and abdominal repair to help our customers sort through the complexities of reimbursement as it relates to these procedures. The information contained in this document is provided to help you understand the reimbursement process. It is not intended to increase or maximize reimbursement by any payor. We strongly recommend that providers consult their payor organization with regard to local reimbursement policies. The information contained in this document is provided for information purposes only and represents no statement, promise or guarantee by Covidien concerning levels of reimbursement, payment or charge. Similarly, all CPT HCPCS and ICD-9 codes are supplied for information purposes only and represent no statement, promise or guarantee by Covidien that these codes will be appropriate or that reimbursement will be made. ICD-9 is based on the official version of the World Health Organization s Ninth Revision, International of Diseases. CPT codes and descriptions only are copyright 2008 American Medical Association. All rights reserved. CPT does not include fee schedules, relative values or related listings. The source for this information is the Center for Medicare and Medicaid Services and various commercial payors. The content provided by the Center for Medicare and Medicaid Services is updated frequently. It is the responsibility of the health services provider to confirm the appropriate coding required by their local Medicare Carriers, Fiscal Intermediaries and commercial payors. All Current Procedural Terminology (CPT) five-digit numeric codes, descriptions, numeric modifiers, instructions, guidelines and other material are copyright 2008 American Medical Association. All rights reserved. Table of Contents 1 Femoral Hernia 1 Incisional (Ventral) Hernia 1 Inguinal Hernia 2 Umbilical Hernia 2 Other Hernia 2 Miscellaneous 3 Component Separation Trunk 3 TRAM Flap 3 Implantation of Xenograft (Ambulatory Surgical Center) 5 Femoral Hernia 5 Incisional (Ventral) Hernia 6 Inguinal Hernia 6 Umbilical Hernia 6 Other Hernia 6 Miscellaneous 7 Component Separation Trunk 7 TRAM Flap 7 Implantation of Xenograft 7 HCPCS Outpatient 9 Femoral Hernia 9 Incisional (Ventral) Hernia 10 Inguinal Hernia 11 Umbilical Hernia 11 Other Hernia 12 Miscellaneous 13 Component Separation Trunk 13 TRAM Flap 13 Implantation of Xenograft 13 HCPCS Inpatient 15 Diaphragmatic Hernia 15 Femoral Hernia 16 Incisional (Ventral) Hernia 16 Inguinal Laparoscopic 17 Inguinal Open 18 Umbilical Hernia 18 Other Hernia 19 Component Separation Trunk 20 Tram Flap Medical Severity Diagnostic Related Groups methodology Sample reimbursement cases 23 Case Study 1 23 Case Study 2 24 Case Study 3 24 Case Study 4 II

3 Femoral Hernia Umbilical Hernia Repair initial femoral hernia; any age; reducible $ Repair initial femoral hernia; incarcerated or strangulated $ Repair recurrent femoral hernia; reducible $ Repair recurrent femoral hernia; incarcerated or strangulated $ Repair umbilical hernia, reducible < 5 yrs. $ Repair umbilical hernia, incarcerated or strangulated < 5 yrs. $ Repair umbilical hernia, reducible > 5 yrs. $ Repair umbilical hernia, incarcerated or strangulated > 5 yrs. $464 Incisional (Ventral) Hernia CPT Code Repair initial incisional or ventral hernia; reducible $ Repair initial incisional or ventral hernia; incarcerated or strangulated $ Repair recurrent incisional or ventral hernia; reducible $ Repair recurrent incisional or ventral hernia; incarcerated or strangulated $ ***, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); reducible 49653***, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); incarcerated or strangulated 49654***, surgical, repair, incisional hernia (includes mesh insertion, when performed); reducible 49655***, surgical, repair, incisional hernia (includes mesh insertion, when performed); incarcerated or strangulated 49656***, surgical, repair, recurrent incisional hernia (includes mesh insertion, when performed); reducible 49657***, surgical, repair, recurrent incisional hernia (includes mesh insertion, when performed); incarcerated or strangulated $717 $894 $822 $990 $826 $1,192 Other Hernia Repair, laceration of diaphragm, any approach $ Repair, paraesophageal hiatus hernia, transabdominal, with or without fundoplasty, vagotomy, and/or pyloroplasty, except neonatal Repair, neonatal diaphragmatic hernia, with or without chest tube insertion and with or without creation of ventral hernia $945 $5, Repair, diaphragmatic hernia (esophageal hiatal); transthoracic $ Repair, diaphragmatic hernia (esophageal hiatal); combined, thoracoabdominal $ Repair, diaphragmatic hernia (esophageal hiatal); combined, thoracoabdominal, with dilation of stricture (with or without gastroplasty) Repair, diaphragmatic hernia (other than neonatal), traumatic; acute $ Repair, diaphragmatic hernia (other than neonatal), traumatic; chronic $ Repair lumbar hernia $ Repair epigastric hernia, reducible $ Repair epigastric hernia, incarcerated or strangulated $ Repair spigelian hernia $510 $944 Inguinal Hernia Repair incarcerated or strangulated initial inguinal hernia $ Repair recurrent inguinal hernia; any age; reducible $ Repair incarcerated or strangulated recurrent inguinal hernia, any age $ Repair inguinal hernia, sliding, any age $511 Miscellaneous procedure, hernia repair, NOS Carrier Priced ** Implantation of mesh or other prosthesis for open incisional or ventral hernia repair or mesh for closure of debridement for necrotizing tissue infection. (List separately in addition to code for the incisional or ventral hernia repair.) $ , surgical; repair initial inguinal hernia $ , surgical; repair recurrent inguinal hernia $493 1 *** New codes for Add on code ** Add-on code is revised in 2009, adding the word open to its CPT verbiage. It cannot be reported for the newly added laparoscopic incisional or ventral hernia repairs. 2

4 Component Separation Trunk Muscle, myocutaneous, or fasciocutaneous flap; trunk $1,241 TRAM Flap Breast reconstruction with transverse rectus abdominis myocutaneous flap (TRAM), single pedicle, including closure of donor site; Breast reconstruction with transverse rectus abdominis myocutaneous flap (TRAM), single pedicle, including closure of donor site; with microvascular anastomosis (supercharging) Breast reconstruction with transverse rectus abdominis myocutaneous flap (TRAM), double pedicle, including closure of donor site $1,680 $2,089 $1,897 (Ambulatory (Ambulatory Surgical Surgical Center) Center) Implantation of Xenograft 30 Acellular Xenograft Implant; first 100 sq cm or less $ each additional 100 sq cm NA Medicare 3 + Add on code > CPT codes are newly established and should be utilized for reporting laparoscopic hernia repairs specifically described for each code and not the open repair codes. > Since the CPT verbiage for codes includes mesh insertion, when performed, mesh insertion as well as lysis of adhesions are not separately reported. > Documentation should specify the type of hernia (e.g. inguinal, ventral, incisional, etc.), technique (laparoscopic versus open) and whether reducible versus incarcerated or strangulated. > Diagnostic laparoscopy is inherent to surgical services included in these new codes. (Source: Becker s Review, 11/24/08) 4

5 (Ambulatory (Ambulatory Surgical Surgical Center) Center) Femoral Hernia CPT Code Repair initial femoral hernia; any age; reducible $ Repair initial femoral hernia; incarcerated or strangulated $1, Repair recurrent femoral hernia; reducible $ Repair recurrent femoral hernia; incarcerated or strangulated $1,292 Incisional (Ventral) Hernia Repair initial incisional or ventral hernia; reducible $ Repair initial incisional or ventral hernia; incarcerated or strangulated $1, Repair recurrent incisional or ventral hernia; reducible $ Repair recurrent incisional or ventral hernia; incarcerated or strangulated $1, ** Implantation of mesh or other prosthesis for open incisional or ventral hernia repair or mesh for closure of debridement for necrotizing tissue infection. (List separately in addition to code for the incisional or ventral hernia repair.) $1, , surgical; repair initial inguinal hernia $1, , surgical; repair recurrent inguinal hernia $1, ***, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); reducible 49653***, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); incarcerated or strangulated 49654***, surgical, repair, incisional hernia (includes mesh insertion, when performed); reducible 49655***, surgical, repair, incisional hernia (includes mesh insertion, when performed); incarcerated or strangulated 49656***, surgical, repair, recurrent incisional hernia (includes mesh insertion, when performed); reducible 49657***, surgical, repair, recurrent incisional hernia (includes mesh insertion, when performed); incarcerated or strangulated $1,529 $1,529 $1,529 $1,529 $1,529 $1,529 Inguinal Hernia Repair, initial inguinal hernia, full term infant under age 6 months, or preterm infant over 50 weeks postconception age and under age 6 months at the time of surgery, with or without hydrocelectomy; reducible Repair, initial inguinal hernia, full term infant under age 6 months, or preterm infant over 50 weeks postconception age and under age 6 months at the time of surgery, with or without hydrocelectomy; incarcerated or strangulated Repair initial inguinal hernia, age 6 months to under 5 years, with or without hydrocelectomy; reducible Repair initial inguinal hernia, age 6 months to under 5 years, with or without hydrocelectomy; incarcerated or strangulated Umbilical Hernia Repair umbilical hernia, reducible < 5 yrs. $ Repair umbilical hernia, incarcerated or strangulated < 5 yrs. $1, Repair umbilical hernia, reducible > 5 yrs. $ Repair umbilical hernia, incarcerated or strangulated > 5 yrs. $1,292 $946 $946 $946 $1, Repair initial inguinal hernia > 5 yrs. or over, reducible, under 5 years $ Repair incarcerated or strangulated initial inguinal hernia $1, Repair recurrent inguinal hernia; any age; reducible $1, Repair incarcerated or strangulated recurrent inguinal hernia, any age $1, Repair inguinal hernia, sliding, any age $ , surgical; repair initial inguinal hernia $1, , surgical; repair recurrent inguinal hernia $1,420 Other Hernia Repair lumbar hernia $ Repair epigastric hernia, reducible $ Repair epigastric hernia, incarcerated or strangulated $1, Repair spigelian hernia $888 Miscellaneous 5 + Add on code ** Add-on code is revised in 2009, adding the word open to its CPT verbiage. It cannot be reported for the newly added laparoscopic incisional or ventral hernia repairs. *** New codes for ** Implantation of mesh or other prosthesis for open incisional or ventral hernia repair or mesh for closure of debridement for necrotizing tissue infection. (List separately in addition to code for the incisional or ventral hernia repair.) $1,291 6

6 Component Separation Trunk Muscle, myocutaneous, or fasciocutaneous flap; trunk (component separation technique) $674 Tram Flap CPT Code Breast reconstruction with transverse rectus abdominis myocutaneous flap (TRAM), single pedicle, including closure of donor site Breast reconstruction with transverse rectus abdominis myocutaneous flap (TRAM), single pedicle, including closure of donor site; with microvascular anastomosis (supercharging) Breast reconstruction with transverse rectus abdominis myocutaneous flap (TRAM), double pedicle, including closure of donor site Not reimbursable in by Medicare Not reimbursable in by Medicare Not reimbursable in by Medicare Outpatient Outpatient Implantation of Xenograft 30 Acellular Xenograft Implant; first 100 sq cm or less $ each additional 100 sq cm $247 HCPCS C1781 Mesh Implantable N1 C9364^ Porcine Implant, Permacol, per square centimeter TBD 7 + Add on code ^ Effective 7/1/09 Permacol is assigned to C9364; Porcine Implant, Permacol, per square centimeter. > CPT codes are newly established and should be utilized for reporting laparoscopic hernia repairs specifically described for each code and not the open repair codes. > Since the CPT verbiage for codes includes mesh insertion, when performed, mesh insertion as well as lysis of adhesions are not separately reported. > Documentation should specify the type of hernia (e.g. inguinal, ventral, incisional, etc.), technique (laparoscopic versus open) and whether reducible versus incarcerated or strangulated. > Diagnostic laparoscopy is inherent to surgical services included in these new codes. (Source: Becker s Review, 11/24/08) 8

7 OUTPATIENT OUTPATIENT Outpatient Outpatient Femoral Hernia CPT Code Repair initial femoral hernia; any age; reducible Repair initial femoral hernia; incarcerated or strangulated Repair recurrent femoral hernia; reducible Repair recurrent femoral hernia; incarcerated or strangulated Incisional (Ventral) Hernia Repair initial incisional or ventral hernia; reducible Repair initial incisional or ventral hernia; incarcerated or strangulated Repair recurrent incisional or ventral hernia; reducible Repair recurrent incisional or ventral hernia; incarcerated or strangulated 49652***, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); reducible 49653***, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); incarcerated or strangulated 49654***, surgical, repair, incisional hernia (includes mesh insertion, when performed); reducible 49655***, surgical, repair, incisional hernia (includes mesh insertion, when performed); incarcerated or strangulated $2,503 $2,503 $2,503 $2,503 Incisional (Ventral) Hernia (Cont.) 49656***, surgical, repair, recurrent incisional hernia (includes mesh insertion, when performed); reducible 49657***, surgical, repair, recurrent incisional hernia (includes mesh insertion, when performed); incarcerated or strangulated Inguinal Hernia Repair, initial inguinal hernia, preterm infant (less than 37 weeks gestation at birth), performed from birth up to 50 weeks postconception age, with or without hydrocelectomy; incarcerated or strangulated Repair, initial inguinal hernia, full term infant under age 6 months, or preterm infant over 50 weeks postconception age and under age 6 months at the time of surgery, with or without hydrocelectomy; reducible Repair, initial inguinal hernia, full term infant under age 6 months, or preterm infant over 50 weeks postconception age and under age 6 months at the time of surgery, with or without hydrocelectomy; incarcerated or strangulated Repair initial inguinal hernia, age 6 months to under 5 years, with or without hydrocelectomy; reducible Repair initial inguinal hernia, age 6 months to under 5 years, with or without hydrocelectomy; incarcerated or strangulated $2,503 $2, Repair initial inguinal hernia > 5 yrs. or over, reducible, under 5 years Repair incarcerated or strangulated initial inguinal hernia Repair recurrent inguinal hernia; any age; reducible 9 *** New codes for 2009 *** New codes for

8 OUTPATIENT OUTPATIENT Inguinal Hernia (cont.) CPT Code Repair incarcerated or strangulated recurrent inguinal hernia, any age Repair inguinal hernia, sliding, any age 49650, surgical; repair initial inguinal hernia 49651, surgical; repair recurrent inguinal hernia I I $3,060 $3,060 Miscellaneous procedure, hernia repair, NOS ** Implantation of mesh or other prosthesis for open incisional or ventral hernia repair or mesh for closure of debridement for necrotizing tissue infection. (List separately in addition to code for the incisional or ventral hernia repair.) 130 $2,503 Umbilical Hernia Repair umbilical hernia, reducible < 5 yrs Repair umbilical hernia, incarcerated or strangulated < 5 yrs Repair umbilical hernia, reducible > 5 yrs Repair umbilical hernia, incarcerated or strangulated > 5 yrs. Other Hernia Repair lumbar hernia Repair epigastric hernia, reducible Repair epigastric hernia, incarcerated or strangulated Repair spigelian hernia + Add on code ** Add-on code is revised in 2009, adding the word open to its CPT verbiage. It cannot be reported for the newly added laparoscopic incisional or ventral hernia repairs

9 OUTPATIENT OUTPATIENT Component Separation Trunk Muscle, myocutaneous, or fasciocutaneous flap; trunk (Component separation technique) TRAM Flap Breast reconstruction with transverse rectus abdominis myocutaneous flap (TRAM), single pedicle, including closure of donor site; 137 NA Level V Skin Repair $1,392 (Not reimbursable under OPPS) Breast reconstruction with transverse rectus abdominis myocutaneous flap (TRAM), single pedicle, including closure of donor site; with microvascular anastomosis (supercharging) Breast reconstruction with transverse rectus abdominis myocutaneous flap (TRAM), double pedicle, including closure of donor site NA NA (Not reimbursable under OPPS) (Not reimbursable under OPPS) Implantation of Xenograft 30 Acellular Xenograft Implant; first 100 sq cm or less +31 each additional 100 sq cm HCPCS I Skin Repair I Skin Repair $292 $292 Inpatient Inpatient C1781 Mesh Implantable N C9364^ Porcine Implant, Permacol, per square centimeter 9364 Porcine Implant, Permacol, per square centimeter TBD 13 + Add-on code ^ Effective 7/1/09 Permacol is assigned to C9364; Porcine Implant, Permacol, per square centimeter. > CPT codes are newly established and should be utilized for reporting laparoscopic hernia repairs specifically described for each code and not the open repair codes. > Since the CPT verbiage for codes includes mesh insertion, when performed, mesh insertion as well as lysis of adhesions are not separately reported. > Documentation should specify the type of hernia (e.g. inguinal, ventral, incisional, etc.), technique (laparoscopic versus open) and whether reducible versus incarcerated or strangulated. > Diagnostic laparoscopy is inherent to surgical services included in these new codes. (Source: Becker s Review, 11/24/08) 14

10 INPATIENT October 1, 2008 through September 30, 2009 INPATIENT October 1, 2008 through September 30, 2009 Diaphragmatic Hernia Incisional (Ventral) Hernia Laparoscopic repair of diaphragmatic hernia, abdominal approach Incisional (Ventral) Hernia repair Other and open repair of diaphragmatic hernia, abdominal approach Other open Incisional (Ventral) Hernia repair with graft or prosthesis Repair of diaphragmatic hernia, abdominal approach, not otherwise specified Laparoscopic Incisional (Ventral) Hernia repair with graft or prosthesis Repair of diaphragmatic hernia with thoracic approach, not otherwise specified The above ICD codes may be used in these DRG classifications* Plication of the diaphragm Repair of parasternal hernia MS-DRG Code and ** Laparoscopic repair of diaphragmatic hernia, with thoracic approach Other and open repair of diaphragmatic hernia, with thoracic approach The above ICD codes may be used in these DRG classifications* 353 Hernia procedures, except inguinal and femoral, with major 354 Hernia procedures, except inguinal and femoral, with $13, $7,785 MS-DRG Code and 163 Major chest procedures with major complications ** $27, Hernia procedures except, inguinal and femoral, without or major complications $5,357 Inpatient Inpatient 164 Major chest procedures with $14, Major chest procedures without complications and comorbidities or major 326 Stomach, esophageal and duodenal procedure with major 327 Stomach, esophageal and duodenal procedure with 328 Stomach, esophageal and duodenal procedure without or major complications Femoral Hernia Unilateral repair of femoral hernia with graft or prosthesis $10, $32, $15, $8,068 Inguinal Hernia Laparoscopic Laparoscopic repair of direct inguinal hernia with graft or prosthesis Laparoscopic repair of indirect inguinal hernia with graft or prosthesis Laparoscopic repair of inguinal hernia with graft or prosthesis, not otherwise specified Laparoscopic bilateral repair of direct inguinal hernia with graft or prosthesis Laparoscopic bilateral repair of indirect inguinal hernia with graft or prosthesis Laparoscopic bilateral repair of inguinal hernia, one direct and one indirect, with graft or prosthesis Laparoscopic bilateral repair of inguinal hernia with graft or prosthesis, not otherwise specified The above ICD codes may be used in these DRG classifications* MS-DRG Code and ** Other unilateral femoral herniorrhaphy Bilateral repair of femoral hernia with graft or prosthesis Other bilateral femoral herniorrhaphy 350 Inguinal and femoral hernia procedures with major 351 Inguinal and femoral hernia procedures with $12, $6,995 The above ICD codes may be used in these DRG classifications* MS-DRG Code and ** 352 Inguinal and femoral hernia procedures without complications or major $4, Inguinal and femoral hernia procedures with major $12, Inguinal and femoral hernia procedures with complications $6, Inguinal and femoral hernia procedures without complications or major $4,507 * Note the appropriate MS-DRG classification is also dependent on the diagnosis code, demographics, sex and possible co-conditions. ** Reimbursement rates shown are (wage index = 1) and for hospitals submitting qualifying quality data

11 INPATIENT October 1, 2008 through September 30, 2009 INPATIENT October 1, 2008 through September 30, 2009 Inguinal Hernia Open Unilateral repair of inguinal hernia, not otherwise specified Other and open repair of direct inguinal hernia Other and open repair of indirect inguinal hernia Other and open repair of direct inguinal hernia with graft or prosthesis Other and open repair of indirect inguinal hernia with graft or prosthesis Repair of inguinal hernia with graft or prosthesis, not otherwise specified Bilateral repair of inguinal hernia, not otherwise specified Other and open bilateral repair of direct inguinal hernia Other and open bilateral repair of indirect inguinal hernia Other and open bilateral repair of inguinal hernia, one direct and one indirect Other and open bilateral repair of direct inguinal hernia with graft or prosthesis Other and open bilateral repair of indirect inguinal hernia with graft or prosthesis Other and open bilateral repair of inguinal hernia, one direct and one indirect, with graft or prosthesis Bilateral inguinal hernia repair with graft or prosthesis, not otherwise specified The above ICD codes may be used in these DRG classifications* MS-DRG Code and 350 Inguinal and femoral hernia procedures with major 351 Inguinal and femoral hernia procedures with complications 352 Inguinal and femoral hernia procedures without complications or major ** $12, $6, $4,507 Umbilical Hernia Other and open repair of umbilical hernia with graft or prosthesis Laparoscopic repair of umbilical hernia with graft or prosthesis Other laparoscopic umbilical herniorrhaphy Other open umbilical herniorrhaphy The above ICD codes may be used in these DRG classifications* MS-DRG Code and 353 Hernia procedures except, inguinal and femoral, with major 354 Hernia procedures except, inguinal and femoral, with 355 Hernia procedures except, inguinal and femoral, without or major complications Other Hernia Repair of other hernia of anterior abdominal wall Other laparoscopic repair of other hernia of anterior abdominal wall with graft or prosthesis Other and open repair of other hernia of anterior abdominal wall with graft or prosthesis The above ICD codes may be used in these DRG classifications* MS-DRG Code and 353 Hernia procedures except, inguinal and femoral, with major 354 Hernia procedures except, inguinal and femoral, with 355 Hernia procedures except inguinal and femoral without or major complications ** $13, $7, $5,357 ** $13, $7, $5, * Note the appropriate MS-DRG classification is also dependent on the diagnosis code, demographics, sex and possible co-conditions. ** Reimbursement rates shown are (wage index = 1) and for hospitals submitting qualifying quality data. * Note the appropriate MS-DRG classification is also dependent on the diagnosis code, demographics, sex and possible co-conditions. ** Reimbursement rates shown are (wage index=1) and for hospitals submitting qualifying quality data. 18

12 INPATIENT October 1, 2008 through September 30, 2009 INPATIENT October 1, 2008 through September 30, 2009 Component Separation Trunk Cutting and preparation of pedicle grafts or flaps Includes: Elevation of pedicle from its bed Flap design and raising Partial cutting of pedicle or tube Pedicle delay The above ICD code may be used in these DRG classifications MS-DRG Code and 356 Other digestive system operating room procedures with major 357 Other digestive system operating room procedures with 358 Other digestive system operating room procedures without or major complications 463 Wound debridement and skin graft except hand, for musculo-connective tissue disease with major 464 Wound debridement and skin graft except hand, for musculoconnective tissue disease with 465 Wound debridement and skin graft except hand, for musculo-connective tissue disease without complications or major ** $21, $12, $7, $26, $14, $8,310 Tram Flap Transverse rectus abdominis myocutaneous (TRAM) flap, pedicled The above ICD code may be used in these DRG classifications MS-DRG Code and 582 Mastectomy for malignancy with complications and comorbidities or major 583 Mastectomy for malignancy without complications and comorbidities or major 584 Breast biopsy, local excision and other breast procedures with or major 585 Breast biopsy, local excision and other breast procedures without or major ** $5, $4, $7, $4, Other operating room procedures for injuries with major $20, Other operating room procedures for injuries with $10, Other operating room procedures for injuries without or major complications $6, Other O.R. procedures for multiple significant trauma w MCC $33, Other operating room procedures for multiple significant trauma with 959 Wound debridement and skin graft except hand, for musculo-connective tissue disease with major $20, $13, Other operating room procedures for multiple significant trauma with major $33, Other operating room procedures for multiple significant trauma with $19, Other operating room procedures for multiple significant trauma without or major $13,279 Medical Medical Severity Severity 19 ** Reimbursement rates shown are (wage index=1) and for hospitals submitting qualifying quality data. ** Reimbursement rates shown are (wage index=1) and for hospitals submitting qualifying quality data. > National average weights for hospitals not submitting qualifying quality data are approximately 1.8% less. > Rates shown do not consider hospital specific status as DSH, SCH, IME adjustment, etc. 20

13 Medical Severity Diagnostic Related Groups Methodology (with MCC, CC and without CC/MCC) In the Medicare Inpatient Prospective Payment Systems the combination of the ICD-9 Code and the appropriate ICD-9 Diagnostic Code (in some cases age, sex, demographics) determine the appropriate MS-DRG classification. It is important for surgeons to accurately and thoroughly dictate patient comorbidities to ensure the hospital is being appropriately reimbursed for the complexity of each case. Medicare Inpatient Prospective Payment System How an MS-DRG Is Assigned One payment per patient encounter. ICD-9 Diagnosis Code + + Patient Sex and Age = MS-DRG Assignment This information is fed into DRG Grouper, which provides the MS-DRG classification Geographic and hospital-specific adjustments will apply Medical Medical Severity Severity MS-DRGs more appropriately compensate providers for resource-intensive patients and procedures. ICD-9 procedures will typically be grouped to a MS-DRG classification which indicates: With major (MCC) With (CC) Without or major (without CC/MCC) Sample Sample reimbursement reimbursement cases cases

14 Sample Reimbursement Cases Sample Reimbursement Cases Final coding determinations are always the decision of the health service provider; it is the responsibility of the health service provider to confirm the appropriate coding required by their local Medicare Carriers, Fiscal Intermediaries and commercial payors. Case 1: Open Initial Ventral Hernia Repair (with MCC) Using Parietex TM Mesh Repair initial incisional or ventral hernia: incarcerated or strangulated Implantation of mesh or other prosthesis for open incisional or ventral hernia repair Mesh Implantable Case 2: Repair Incarcerated or Strangulated Recurrent Inguinal Hernia, Any Age (with CC) Indirect, Using Parietex TM Mesh Repair incarcerated or strangulated recurrent inguinal hernia, any age HCPCS/ CPT Codes HCPCS/ CPT Codes ICD-9 Code ICD-9 Code Professional Professional $838 $1, $250 C1781 $562 (50%) $690 $1,292 Outpatient Inpatient Rate MS-DRG Rate Mesh Implantable Outpatient Inpatient Rate MS-DRG Rate 355 $5,357 $1,046 (50%) N 351 $6,995 Case 3: Laparoscopic Surgical Repair of Incisional (Ventral) Hernia, Incarcerated of Strangulated (with CC) Using Permacol TM Biologic Implant, surgical, repair, incisional hernia (includes mesh insertion when performed) incarcerated of strangulated HCPCS/ CPT Codes ICD-9 Code Professional $990 $1, Permacol^ C9364 TBD 9364 Outpatient Inpatient Rate MS-DRG Rate Porcine Implant, Permacol, per sq cm Case 4: Component Separation Trunk (Other Digestive System O.R. with MCC) Permacol TM Biologic Implant for an Inpatient Setting Cutting and preparation of pedicle grafts or flaps Acellular xenograft implant, graft first 100 sq cm or less HCPCS/ CPT Codes ICD-9 Code Professional $2, $7,785 TBD Outpatient Inpatient Rate MS-DRG Rate 15734*** $1,241 NA NA NA NA 356* $19, $454 Mesh Implantable C1781 N1 Mesh Implantable N Acellular xenograft implant, graft each additional 100 sq cm or less 31 NA for Medicare, possible commercial payment Porcine Implant, Permacol, per sq cm C9364 NA NA NA NA Sample reimbursement cases * Actual MS-DRG subject to ICD Diagnosis. *** Check with local Medicare Carrier or commercial payor regarding appropriate coding for multiple procedures. ^ Effective 7/1/09 Permacol is assigned to C9364; Porcine Implant, Permacol, per square centimeter. > National average weights for hospitals not submitting qualifying quality data are approximately 1.8% less. > Rates shown do not consider hospital specific status as DSH, SCH, IME adjustment, etc

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