Supplies are High Dollar, High Use

Supplies are a large group of items on medical bills that most people don’t understand. These items contribute to the complexity of a bill, making it difficult to understand and create opportunities for inaccuracy. There can be 1-100+ items on the bill that are just supplies used during your stay in the hospital or physician office. 

Key Takeaways

• The difference between routine and billable supplies

• Revenue codes and details to look for when reviewing your itemized bill for accuracy

• Just because supplies are used does not make them billable

• If, supply costs are not bundled into the procedure costs, they can appear on a bill and become patient responsibility as insurance typically does not pay for them

• Supplies are a key area to review for accuracy on your hospital bill

In 25 years of auditing hospital chargemasters, which are comprehensive catalogues of all the procedures, products, and services for which a hospital charges, the one big thing I learned is that there are no real rules or regulations on what to charge, and how much to charge.

In the mid 90’s the government released an article about what could be charged and what could not be charged with various lists of supply items. Thousands of items were removed as non-billable, and millions of dollars were lost in actual billable charges. That list disappeared in a period of months and CMS (Center for Medicare & Medicaid Services) sent a letter to all healthcare providers stipulating that “no one could tell a hospital what supplies they could bill for”.  As you can imagine this threw a huge wrench in each hospital system and has left a grey area where errors are often found on a patients detailed bill.

Definition of Supply Categories

Over the last twenty years we have grown smarter, systems have developed and documentation is electronically managed. What has evolved is a common definition based on category of use and definition of location. These main categories are as follows: 

Routine Supplies: These supplies are used consistently on every patient, they are typically charged under one revenue code (0270/0271). They are not reimbursable by insurance carries and, in many facilities, are bundled or added to the cost of the area or the procedure they are used in. If bundled, you will not see the line items on your bill. However, if the hospital treats the item as billable, it will appear on your bill and you, the patient, could be responsible for this in part or in entirety. For example, this may be included as part of your deductible, or the entire fee may be assigned to patient responsibility.
Examples of routine supplies include:

• Supplies used for housekeeping, maintenance, cafeteria, office supplies. 

• Multi-use packaging items like 4x4 gauze.

• Items consistently used in procedures like gel required for ultrasounds in radiology.

• Admission kits the pack you receive when admitted that have a basin to wash in, bedpan, water pitcher, and emesis basin. Toothpaste, toothbrush, and socks with nonskid on the bottom. These are routine and should not be billed to the patient.

• Linens and towels used during surgery, gowns, masks, gloves, surgical booties to cover shoes as examples.

Billable supplies: These are the easiest ones to recognize on a statement because they are unique to the patient and or necessary for a specific procedure with a higher cost of replacement. They include supplies like vendor specific surgical supplies, sterile supplies, procedure supplies such as a catheter, drain, specialty IV tubing. Insurance companies will typically cover these costs depending on their contract with the facility, see the section below on revenue codes for more details on what to look for on your bill. 

Implants are items that have been left in the body and you go home with for up to 90 days minimum. Implant supplies are typically covered by insurance and therefor by patients as defined in their policy. Please note that I said left in the body, that’s been a clear criteria for many years. This is important as some items are often mis-categorized as an implant when they are actually a sterile supply 

Just because a supply is used does not make it billable. 

When auditing a patient account some of the first areas in the bill Tricky Bills auditors look at are supply charges. They are easy to recognize to auditors who have clinical backgrounds and understand the clinical process for supply use.

Revenue Codes on your bill and EOB

The good news is that all hospital detailed bills show revenue codes. These codes are 4-digit codes that give specific information on location and use and may require specific HCPCS (standardized alpha numeric codes assigned by the American Medical Association) codes.  Supplies are revenue code 027X which means anything that falls between 0270-0279. When looking at your EOB and your detailed bill, look at the headings and look for RevCode. Your bill is divided by revenue code from lowest to highest so O27X will likely fall shortly after your room and board charges (which are located at Rev Code 010X). 

When reviewing your bill for accuracy, it may help to know the following supply revenue codes:

• 0270/0271 are routine non billable supplies. Your insurance company will not pay for them, and neither should you.

• 0272 are sterile supplies and are always billed especially when assigned a HCPCS code which makes them reimbursable. 

• 0274 are items used by rehab departments. PT, OT, speech, and audiology.  Common items are splints, orthotic devices for patients, casts, hearing aids, and always have a HCPCS code which makes them reimbursable.

• 0275 are pacemakers & supplies for the heart, again they will have a HCPCS code which makes them reimbursable. 

• 0276 are for intraocular lenses when you have cataract surgery, again they will have a HCPCS code which makes them reimbursable. 

• 0278 are implantable items like hip, knee, shoulder replacements, heart stents, orthopedic screws, plates and wire used to fix broken bones in surgery, neuro-stimulators. These items must be in the body for a specific minimum of time but can be removed or left for the duration the patient lives. This means they will have a HCPCS code and will be reimbursable.

Wrap Up

As you can see Material Management is a very complex department. The amount billed is not reflective of the amount reimbursed by insurance. Items without a HCPCS code usually are not reimbursed on outpatient claims. Opportunities always hold true with an audit for errors on bills for outpatient surgeries. Especially if a supply is not categorized correctly with the correct HCPCS code, revenue code for reimbursement with insurance, and number of items used based on documentation from the operative report. It’s all in the details!