In this policy, the actual equipment (i.e., electrical device) will generally be referred to as either a compressor (when nebulization of liquid is achieved by means of air flow) or as a generator (when nebulization of liquid is achieved by means of ultrasonic vibrations). The term nebulizer is generally used for the actual chamber in which the nebulization of liquid occurs and is an accessory to the equipment. The nebulizer is attached to an aerosol compressor or an ultrasonic generator in order to achieve a functioning delivery system for aerosol therapy.

For any item to be covered, it must:

1. be eligible for a defined Medicare benefit category;
2. be reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member; and,
3. meet all other applicable statutory and regulatory requirements.

For the items addressed in this medical policy, the criteria for "reasonable and necessary" are defined by the following indications and limitations of coverage.

A small volume nebulizer (A7003, A7004, A7005), related compressor (E0570, E0571), and FDA-approved inhalation solutions of the drugs listed below are covered when:

1. It is medically necessary to administer albuterol (J7611, J7613), arformoterol (J7605), budesonide (J7626), cromolyn (J7631), formoterol (J7606), ipratropium (J7644), levalbuterol (J7612, J7614), or metaproterenol (J7669) for the management of obstructive pulmonary disease; or
   
   
2. It is medically necessary to administer dornase alpha (J7639) to a patient with cystic fibrosis; or
   
   
3. It is medically necessary to administer tobramycin (J7682) to a patient with cystic fibrosis or bronchiectasis; or
   
   
4. It is medically necessary to administer pentamidine (J2545) to a patient with HIV, pneumocystosis, or complications of organ transplants; or
   
   
5. It is medically necessary to administer acetylcysteine (J7608) for persistent thick or tenacious pulmonary secretions.

Compounded inhalation solutions (J7604, J7607, J7609, J7610, J7615, J7622, J7624, J7627, J7628, J7629, J7634, J7635, J7636, J7637, J7638, J7640, J7641, J7642, J7643, J7645, J7647, J7650, J7657, J7660, J7667, J7670, J7680, J7681, J7683, J7684, J7685, and compounded solutions billed with J7699) will be denied as not medically necessary.

If none of the drugs used with a nebulizer are covered, the compressor, the nebulizer, and other related accessories/supplies will be denied as not medically necessary.

A large volume nebulizer (A7007, A7017), related compressor (E0565 or E0572), and water or saline (A4217 or A7018) are covered when it is medically necessary to deliver humidity to a patient with thick, tenacious secretions, who has cystic fibrosis, bronchiectasis, a tracheostomy, or a tracheobronchial stent. Combination code E0585 will be covered for the same indications.

An E0565 or E0572 compressor and filtered nebulizer (A7006) are also covered when it is medically necessary to administer pentamidine to patients with HIV, pneumocystosis or complications of organ transplants.

Because there is no proven medical benefit to nebulizing particles to diameters smaller than achievable with a pneumatic compressor, when a small volume ultrasonic nebulizer (E0574) is ordered to administer a covered inhalation solution, payment will be based on the allowance for the least costly medically appropriate alternative, a pneumatic compressor (E0570).

Similarly, a large volume ultrasonic nebulizer (E0575) offers no proven clinical advantage over a pneumatic compressor. However, since code E0575 is in a different payment category than pneumatic compressors, payment for a least costly alternative cannot be made. Therefore, when an E0575 nebulizer is provided, it will be denied as not medically necessary as will any related accessories and supplies.

A battery-powered compressor (E0571) is rarely medically necessary. If an E0571 compressor is provided and the coverage criteria for code E0570 are met, payment will be based on the allowance for the least costly medically appropriate alternative, E0570.

A controlled dose inhalation drug delivery system (K0730) is covered when it is medically necessary to deliver the iloprost (Q4074) to patients with pulmonary artery hypertension (diagnosis codes 416.0 or 416.8) who meet the following criteria.

Iloprost (Q4074) is covered when both criteria 1 and 2 are met:

1. The pulmonary hypertension is not secondary to pulmonary venous hypertension (e.g., left sided atrial or ventricular disease, left sided valvular heart disease, etc) or disorders of the respiratory system (e.g., chronic obstructive pulmonary disease, interstitial lung disease, obstructive sleep apnea or other sleep disordered breathing, alveolar hypoventilation disorders, etc.); and
   
   
2. The patient has primary pulmonary hypertension or pulmonary hypertension which is secondary to one of the following conditions: connective tissue disease, thromboembolic disease of the pulmonary arteries, human immunodeficiency virus (HIV) infection, cirrhosis, diet drugs, congenital left to right shunts, etc. If these conditions are present, the following criteria (a-d) must be met:
   1. The pulmonary hypertension has progressed despite maximal medical and/or surgical treatment of the identified condition; and
   2. The mean pulmonary artery pressure is greater than 25 mm Hg at rest or greater than 30 mm Hg with exertion; and
   3. The patient has significant symptoms from the pulmonary hypertension (i.e., severe dyspnea on exertion, and either fatigability, angina, or syncope); and
   4. Treatment with oral calcium channel blocking agents has been tried and failed, or has been considered and ruled out.

If the above criteria are not met, the controlled dose inhalation drug delivery system (K0730) and the iloprost (Q4074) will be denied as not medically necessary.

If K0730 is used to administer any other covered nebulizer drug other than iloprost and the coverage criteria for E0570 are met, payment will be based on the allowance for the least costly medically appropriate alternative, E0570.

Accessories
Accessories are separately payable if the related aerosol compressor and the individual accessories are medically necessary. The following table lists the compressor/generator, which is related to the accessories described. Other compressor/generator/accessory combinations are considered medically unnecessary.

This array of accessories represents all possible combinations, but it may not be appropriate to bill any or all of the codes for one device.

The following table lists the usual maximum frequency of replacement for accessories. Claims for more than the usual maximum replacement amount must be supported by documentation in the patient's medical record, which must be available upon request.

The supplier must monitor the amount of supplies and accessories a patient is actually using and assure that the patient has nearly exhausted the supply on hand prior to dispensing any additional items. “Contact with the member or designee regarding refills should take place no sooner than approximately 7 days prior to the delivery/shipping date. For subsequent deliveries of refills, the supplier should deliver the DMEPOS product no sooner than approximately 5 days prior to the end of usage for the current product .”

Inhalation Drugs and Solutions
The following table represents the maximum milligrams/month of inhalation drugs that are reasonably billed for each nebulized drug.

When albuterol, levalbuterol, or metaproterenol are prescribed as rescue/supplemental medication for patients who are taking arformoterol, the maximum milligrams/month that are reasonably billed are:

Claims for more than these amounts of drugs will be denied as not medically necessary unless there is documentation in the patient's medical record which justifies a larger amount in the individual case. This information must be available upon request.

The pharmacist is responsible for assessing how much inhalation solution a patient is actually using. Considering this information, the pharmacist is responsible for assuring that the patient has used almost all of his/her supply on hand prior to dispensing a new supply. “Contact with the member or designee regarding refills should take place no sooner than approximately 7 days prior to the delivery/shipping date. For subsequent deliveries of refills, the supplier should deliver the DMEPOS product no sooner than approximately 5 days prior to the end of usage for the current product.”

When a "concentrated form" of an inhalation drug is covered, separate saline solution (A4216 or A4218 [metered dose]) used to dilute it will be separately reimbursed. Saline dispensed for the dilution of concentrated nebulizer drugs must be billed on the same claim as the drug(s) being diluted. If the unit dose form of the drug is dispensed, separate saline solution (A4216 or A4218 [metered dose]), will be denied as not medically necessary. Water or saline in 500 or 1000 ml quantities (A4217 or A7018) are not appropriate for use by patients to dilute inhalation drugs and will therefore be denied as not medically necessary if used for this purpose. These codes are only medically necessary when used in a large volume nebulizer (A7007, A7017, or E0585).

Albuterol, levalbuterol, and metaproterenol are all short-acting bronchodilators with beta-adrenergic stimulatory effect. It would rarely be medically necessary for a patient to be using more than one of these at a time. The use of more than one of these drugs at the same time will be denied as not medically necessary unless there is documentation in the patient’s medical record supporting the medical necessity. Albuterol, levalbuterol, or metaproterenol is covered if it is used as a rescue/supplemental medication in addition to the long-acting beta-adrenergic agonist drug formoterol or arformoterol.

Formoterol (J7656) and arformoterol (J7605) are long- acting bronchodilators with beta-adrenergic stimulatory effect. It is not necessary for a patient to use more than one of these at a time. The use of more than one of these drugs at the same time will be denies as not medically necessary.

Code J7620 describes the FDA-approved unit dose combination of albuterol base 2.5 mg and ipratropium bromide 0.5 mg in unit dose vials. The medical necessity for administering additional albuterol sulfate (J7611, J7613), levalbuterol (J7612,7614) and/or ipratropium bromide (J7644) has not been established. Claims for J7611-J7614 and J7644 billed in addition to J7620 will be denied as not medically necessary.

Charges for the drugs, diluent, and dispensing fees may only be billed by the entity that actually dispenses the drug to the member and that entity must be permitted under all applicable federal, state, and local laws and regulations to dispense drugs. Only entities licensed in the state where they are physically located may submit a claim for nebulizer drugs. Physicians may submit a claim for drugs if all of the following conditions are met: the physician is 1) enrolled as a DMEPOS supplier with the National Supplier Clearinghouse, and 2) dispensing the drug(s) to the member, and 3) authorized by the State to dispense drugs as part of the physician’s license. Claims submitted by entities not licensed to dispense drugs will be denied for lack of medical necessity.

For an item to be covered, a written signed and dated order must be received by the supplier before a claim is submitted. If the supplier bills for an item addressed in this policy without first receiving the completed order, the item will be denied as not medically necessary.

Services that do not meet the medical necessity criteria on this policy will be considered not medically necessary. A provider cannot bill the member for the denied service unless the provider has given advance written notice, informing the member that the service may be deemed not medically necessary and providing an estimate of the cost. The member must agree in writing to assume financial responsibility, in advance of receiving the service. The signed agreement, in the form of a Pre-Service Denial Notice, should be maintained in the provider's records.

Reasons for Noncoverage

A large volume pneumatic nebulizer (E0580) and water or saline (A4217 or A7018) are not separately payable and should not be separately billed when used for patients with rented home oxygen equipment.

If a large volume nebulizer, related compressor/generator, and water or saline are used predominantly to provide room humidification, it will be denied as non-covered. A network provider can bill the member for the non-covered services.

A prefilled disposable large volume nebulizer (A7008) is non-covered under the DME benefit because it is a convenience item. A network provider can bill the member for the non-covered services. An unfilled nebulizer (A7007, A7017, or E0585) filled with water or saline (A4217 or A7018) by the patient/caregiver is an acceptable alternative.

Kits and concentrates for use in cleaning respiratory equipment will be denied as non-covered. A network provider can bill the member for the non-covered services.

Dispensing Fee

NOTE:

This section of policy addresses general guidelines applicable to dispensing fees. It should be used as a reference source in conjunction with the member's benefits, the network provider's agreement with Highmark, and any applicable dispensing fee billing guidelines.

An initial dispensing fee (G0333) is payable to a pharmacy for the initial 30 day supply of covered inhalation drug(s) regardless of the number of drugs dispensed, the number of shipments, or the number of pharmacies used by the member during that time. This initial 30-day dispensing fee is a once in a lifetime fee and only applies to members who are using inhalation drugs for the first time as a member on or after 01/01/2006.

Payment will only be made for one of the following for covered inhalation drugs regardless of the number of drugs dispensed, the number of shipments, or the number of pharmacies used by the member during that time period-an initial dispensing fee (G0333), a 30 day dispensing fee (Q0513), or a 90 day dispensing fee (Q0514).

If code G0333 is billed for a 30 day supply of covered inhalation drugs and criteria for payment of G0333 are not met but criteria for payment of Q0513 are met, it will be payable based on the allowance for code Q0513.

For a refill prescription, payment of a dispensing fee will be allowed no sooner than 7 days before the end of usage for the current 30 day or 90 day period for which a dispensing fee was previously paid. Payment will not pay be made for more than 12 months of dispensing fees per member per 12 month period.

If the dispensing fee is billed sooner than the interval specified above, it will be denied as not separately payable. For example, if a 90 day fee (Q0514) is billed on 1/30/06 and is covered and there is a subsequent claim for a 30 day fee (Q0513) on 4/20/06, the dispensing fee on 4/20/06 will be denied as not separately payable.

Both a Q0513 and a Q0514 dispensing fee are not covered on the same date of service. If a supplier dispenses a 90 day supply of one drug and a 30 day supply of another drug on the same day, code Q0514 (90 day fee) must be billed.

The dispensing fee must be billed on the same claim as the inhalation drug(s). If it is not, it will be denied as incorrect billing.

A dispensing fee is not separately billable or payable for saline, whether used as a diluent or for humidification therapy.

A separate fee for the compounding of inhalation drug(s) will not be paid.

Documentation Requirements

An order for each item billed must be signed and dated by the treating physician, kept on file by the supplier, and made available upon request. Items billed before a signed and dated order has been received by the supplier must be submitted with an EY modifier added to each affected procedure code.

The order for any drug must clearly specify the type of solution to be dispensed to the patient and the administration instructions for that solution. The type of solution is described by a combination of (a) the name of the drug and the concentration of the drug in the dispensed solution and the volume of solution in each container, or (b) the name of the drug and the number of milligrams/grams of drug in the dispensed solution and the volume of solution in that container. Examples of (a) would be: albuterol 0.083% 3 ml; or albuterol 0.5% 20 ml; or cromolyn 20 mg/2 ml. An example of (b) is: albuterol 1.25 mg in 3 ml saline. For compounded inhalation solutions, the order must include the following statement prior to signature by the physician: compounded inhalation solution – not FDA-approved. Administration instructions must specify the amount of solution and frequency of use. Examples would be: 3 ml qid and prn - max 6 doses/24 hr.; or one ampule q 4 hr prn; or 0.5 ml diluted with saline to 3.0 ml tid and prn. A new order is required if there is a change in the type of solution dispensed or the administration instructions. For all inhalation drugs, a new order is required at least every 12 months even if the prescription has not changed.

A diagnosis code describing the condition which necessitates nebulizer therapy must be included on each claim for equipment, accessories, and/or drugs.

KX, GA, and GZ Modifiers
If all the coverage criteria described in the "Indications and Limitations of Coverage" section have been met for K0730 and/or Q4074, a KX modifier must be added to the code(s).

If all of the criteria in the Indications and Limitations of Coverage section have not been met, the GA or GZ modifier must be added to the code. When there is an expectation of a medical necessity denial, suppliers must enter the GA modifier on the claim line if they have obtained a properly executed Pre-Service Denial Notice or the GZ modifier if they have not obtained a valid Pre-Service Denial Notice. Services submitted with a GA modifier will be denied as not medically necessary and are billable to the member. Services submitted with a GZ modifier will be denied as not medically necessary and are not billable to the member.

Claim lines billed without a KX, GA, or GZ modifier will be rejected as missing information.

Miscellaneous
When code E1399 is billed for miscellaneous equipment or accessories, the claim must be accompanied by a clear description of the item including the manufacturer and the model name/number if applicable.

When Not Otherwise Classified (NOC) drug code J7699 is billed for miscellaneous inhalation drugs, the claim must be accompanied by the detailed order information described above and a clear statement of the number of ampules/bottles of solution dispensed.

NOTE:

This policy is designed to address medical guidelines that are appropriate for the majority of individuals with a particular disease, illness, or condition. Each person's unique clinical circumstances may warrant individual consideration, based on review of applicable medical records.

Equipment
Code E0565 describes an aerosol compressor, which can be set for pressures above 30 psi at a flow of 6-8 L/m and is capable of continuous operation.

A nebulizer with compressor (E0570) is an aerosol compressor, which delivers a fixed, low pressure and is used with a small volume nebulizer. It is only AC powered.

A portable compressor (E0571) is an aerosol compressor, which delivers a fixed, low pressure and is used with a small volume nebulizer. It must have battery or DC power capability and may have an AC power option.

A light duty adjustable pressure compressor (E0572) is a pneumatic aerosol compressor which can be set for pressures above 30 psi at a flow of 6-8 L/m, but is capable only of intermittent operation.

Code E0574 describes an ultrasonic/electronic generator used with a small volume chamber for medication delivery, which is capable only of intermittent operation.

Code E0575 describes a large volume ultrasonic nebulizer system which is used for medication and humidification delivery, and which is capable of continuous operation.

Code K0730 describes a controlled dose inhalation drug delivery system. Aerosol is delivered in pulses during the inspiration. The duration of each pulse is adapted according to the breathing pattern.

Accessories
Code A7003, A7005, and A7006 include the lid, jar, baffles, tubing, T-piece and mouthpiece. In addition, code A7006 includes a filter.

Code A7004 includes only the lid, jar and baffles.

Code A7012 describes a device to collect water condensation, which is placed in line with the corrugated tubing, used with a large volume nebulizer.

Code E0585 is used when a heavy-duty aerosol compressor (E0565), durable bottle type large volume nebulizer (A7017), and immersion heater (E1372) are provided at the same time. If all three items are not provided initially, the separate codes for the components would be used for billing. Code A7007 or A7017 is billed when an unfilled large volume nebulizer is used with a E0572 compressor or a separately billed E0565 compressor. Code A7007 or A7017 would not be separately billed when an E0585 system was also being billed. Code E0580 (Nebulizer, durable, glass or autoclavable plastic, bottle type, for use with regulator or flow meter) describes the same piece of equipment as A7017, but should only be billed when this type of nebulizer is used with a member-owned oxygen system.

Inhalation Drugs
The following instructions apply to claims billed using J codes. When claims are billed in NCPDP format using NDC numbers, different instructions may apply. Refer to the NCPDP Companion Document available through the CMS website.

A compounded inhalation solution is one in which the product that is delivered to the patient is not an FDA-approved preparation. It is produced by a pharmacy that is not an FDA-approved manufacturer and involves the mixing, combining, or altering of ingredients for an individual patient. Even if one of the ingredients is an FDA-approved product (e.g., an injectable form of the drug) that is mixed by the pharmacy with other ingredients, the solution that is dispensed to the patient is considered to be a compounded product.

There are distinct codes for FDA-approved final products and for compounded final products. The appropriate code must be used when a claim is submitted.

Codes J2545 (pentamidine), J7608 (acetylcysteine), J7631 (cromolyn), J7639 (dornase alpha), and Q4074 (iloprost) may only be used for inhalation solutions which are FDA-approved. If compounded versions of these drugs are provided, they must be billed using code J7699.

There are no FDA-approved final products that are described by the following codes: J7633 (budesonide, concentrate), J7648 (isoetharine, concentrate), J7649 (isoetharine, unit dose), J7658 (isoproterenol, concentrate), J7659 (isoproterenol, unit dose),and J7668 (metaproterenol, concentrate). These codes are invalid for claim submission.

Codes J7602 and J7603 are invalid for claim submission. Codes J7611, J7612, J7613, and J7614 are used for albuterol and levalbuterol, concentrate and unit dose.

Unit dose form of an inhalation drug or a combination of drugs is one in which the medication is dispensed to a patient (1) in a bottle/vial/ampule which contains the dose usually used for a single inhalation treatment, and (2) in a concentration which is dilute enough that it may be administered to a patient without adding any separate diluent.

Concentrated form of a drug used for inhalation is one in which the drug is dispensed to a patient in a concentration which requires that a separate diluent (usually saline) be added to the nebulizer when the drug is administered to a patient.

The coding of a unit dose form or a concentrated form of an inhalation drug is determined by the formulation of the drug as it is dispensed to the patient. For example, if a pharmacist takes a concentrated form of a single inhalation drug (e.g., 0.5% albuterol) and dilutes it to a ready-to-use concentration (e.g., 0.083% albuterol), which is then dispensed to the patient in a single-dose bottles/vials/ampules, the inhalation solution is billed as the unit dose form not the concentrated form.

When there is a single drug in a unit dose container, the KO modifier is added to the unit dose form code. (Exception: The KO modifier is not used with code J2545 or Q4074.)

Except for code J7620, when two or more drugs are combined and dispensed to the patient in the same unit dose container, each of the drugs is billed using its unit dose form code. The KP modifier is added to only one of the unit dose form codes and the KQ modifier is added to the other unit dose code(s).

Whenever a unit dose form code is billed, it must have either a KO, KP or KQ modifier. (Exception: The KO, KP and KQ modifiers should not be used with code J7620.) If a unit dose code does not have one of these modifiers, it will be denied as an invalid code. The KO, KP, and KQ modifiers are not used with the concentrated form codes.

The only FDA-approved unit dose preparation containing more than one drug is the combination of albuterol and ipratropium (e.g., DuoNeb) and there is a unique code, J7620, for this combination. Therefore, if the following FDA-approved unit dose codes are billed with a KP or KQ modifier, they will be rejected as invalid for claim submission: J2545, J7608, J7613, J7626, J7631, J7639, J7644, J7649, J7659, J7669, J7682, Q4074.

The billing unit of service for inhalation drug codes varies. Suppliers must be sure that they use the correct billing unit of the code when calculating the number of units of service to enter on the claim. The following is guidance on a few codes where errors are commonly seen:

• Code J7620 is used for an FDA-approved combination of albuterol and ipratropium and other similar products which contain 3.0 mg of albuterol sulfate (which is 2.5 mg of albuterol base) and 0.5 mg of ipratropium bromide in each unit dose vial. For these products, 1 unit of service of J7620 equals 1 unit dose vial.
• For code J7626 and J7627 (budesonide, unit dose) bill one unit of service for each vial dispensed, regardless of whether a 0.25 mg vial or a 0.5 mg vial is dispensed.

The concentration of the drug in the dispensed solution can be converted to mg or gm as follows: A solution with a labeled concentration of 1% has ten (10) mg of drug in each milliliter(ml) of solution. Therefore, a 0.083% albuterol solution has 0.83 mg of albuterol in each ml of solution. Since albuterol 0.083% typically comes in a 3ml vial/ampule, each vial/ampule contains 2.5mg of albuterol (3 X . 83 equals 2.5). If a pharmacist provides 120 ampules of 0.83% albuterol solution each containing 3ml, the billed units of service would be 300 (2.5 X 120) units of code J7613 (for albuterol, 1mg equals 1 unit). 

When a compounded unit dose preparation is billed, the diluent must not be billed separately.

A4218 is used for metered dose sterile saline products that are used to dilute the concentrated form of inhalation drugs.

When a drug is provided in a concentration which is dilute enough that it may be administered to the patient without adding any separate diluent and is dispensed in a multidose container, use J7699.

Code J7699 is also used for an inhalation drug which does not have a valid specific code. Claims for drugs that are incorrectly coded J7699 instead of the appropriate code will be denied for invalid coding.

Suppliers should contact the Pricing, Data Analysis and Coding (PDAC) contractor for guidance on the correct coding of these items. https://www.dmepdac.com

Provider News

08/2010, CMS DMEPOS and oxygen modifiers: usage of requirements explained for FreedomBlue claims
08/2010, Financial responsibility and medical necessity requirements for upgraded items, the least costly alternative

Section 1833(e) of the Social Security Act precludes payment to any provider of services unless "there has been furnished such information as may be necessary in order to determine the amounts due such provider." It is expected that the patient's medical records will reflect the need for the care provided. The patient's medical records include the physician's office records, hospital records, nursing home records, home health agency records, records from other healthcare professionals and test reports. This documentation must be available upon request.

CMS Manual System, Pub. 100-03, Medicare National Coverage Determinations Manual, Chapter 1, Section 280.1

Equipment

Accessories

Inhalation Drugs

The presence of a diagnosis code listed in this section is not sufficient by itself to assure coverage. Refer to the “Indications and Limitations of Coverage” section for other coverage criteria and payment information.

For procedure codes A4619, E0565, E0572

For procedure codes A7013, A7014, A7015, A7525

For procedure codes A7003, A7004, E0570, E0571, E0574

For procedure codes A7006, J2545

For procedure codes A4217, A7007, A7010, A7011, A7012, A7017, A7018, E0585, E1372

For procedure code A4216

For procedure code J7608

For procedure codes J7611, J7612, J7613, J7614, J7620, J7626, J7631, J7644, J7669

For procedure code J7639

For procedure code J7682

For procedure codes K0730, Q4074

For procedure code A7005