In 2023, Will CMS Assign HCPCS “A” or “Q” Codes to New CTPs?

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At least once a week since the beginning of 2023, this author/consultant has received multiple inquiries from wound/ulcer management professionals and manufacturers who want to know if a new cellular- and/or tissue-based product (CTP) for skin wounds was, or will be, assigned a HCPCS “Q” code, rather than a HCPCS “A2XXX” code. The reasons they are concerned about the code assignment are:

• Hospital-owned outpatient wound/ulcer management provider-based departments (PBDs) want to use new CTPs, but many of the program directors report that they must “jump over hurdles” to educate their Chargemaster Manager, coders, and billers that CTPs assigned HCPCS “A2XXX” codes, rather than the traditional HCPCS “Q” codes can be reported to Medicare on the same claim with the application codes (15271–15278; C5271–C5278).
• Physicians and qualified healthcare professionals (QHPs) who apply CTPs in their offices report that they must also jump over similar HCPCS “A2XXX” code hurdles with their coders and billers. In addition, physician/QHP offices are hesitant to use CTPs that as assigned HCPCS “A2XXX” codes because each product’s Medicare payment rates are determined by the Medicare Administrative Contractor (MAC) that processes their claims.
• The manufacturers of new CTPs want their recently launched technology 1) to be assigned a HCPCS “Q” code, similar to the more than 100 CTPs that are already assigned HCPCS “Q” codes, and 2) to be paid by Medicare based upon the average selling price (ASP), which manufacturers are required to report to Medicare on a quarterly basis. 

In 2022, the April Business Briefs column explained that the Centers for Medicare & Medicaid Services (CMS) began assigning other HCPCS codes (some “C” codes and some “A2XXX” codes) to CTPs. The CMS did not explain” why” and did not provide clear implementation directions to the PBDs, the physician offices, and the MACs. The July 2022 Business Briefs column outlined the HCPCS codes (“A2XXX” or Q” codes) that CMS assigned to new CTPs during the first half of 2022. The November 2022 Business Briefs column explained the CTP code assignment information that CMS included in the 2023 Outpatient Prospective Payment System (OPPS) and Medicare Physician Fee Schedule (MPFS) Final Rules.

As a reminder, these final rules explained how CMS is now determining HCPCS code assignments for new CTPs:

• New human cell, tissue, or cellular- or tissue-based products (HCT/Ps) that met all the criteria for use as a barrier or cover under section 361 of the Public Health Service (PHS) Act and the regulation in 21 CFR part 1271, and whose Tissue Reference Group (TRG) letters from the FDA aligned with the manufacturer’s HCPCS application, will be assigned HCPCS “Q” codes. NOTE: In the 2023 OPPS Final Rule, CMS also clarified that previous assignment of a HCPCS “Q” code to a particular HCT/P does not mean that the product is appropriately regulated solely under section 361 of the PHS Act and the FDA regulations in 21 CFR part 1271. Therefore, CMS advised manufacturers of HCT/Ps to either obtain an FDA TRG letter or obtain determination, through an FDA Request for Designation (RFD), on whether their HCT/Ps are appropriately regulated.
• New biological products (that are not HCT/Ps) and new synthetic products, which were FDA cleared through the 510(k) pathway, will be assigned HCPCS “A2XXX” codes.

Because this new code assignment methodology is inconsistent with CMS’s past methodology, manufacturers and wound/ulcer management professionals are still confused. Therefore, the remainder of this article will review the CMS coding decisions for CTPs that were/were not assigned HCPCS “Q” codes in the first two quarters of 2023.

CTPs Assigned HCPCS “Q” Codes in 2023

In the 2022 third quarter Drug and Biological HCPCS code application review cycle, CMS assigned HCPCS “Q” codes, which became effective on January 1, 2023, to the following HCT/Ps:

• Q4236 carePATCH^™, per square centimeter   
• Q4262 Dual Layer Impax^™ Membrane, per square centimeter                     
• Q4263 SurGraft^® TL, per square centimeter
• Q4264 Cocoon Membrane, per square centimeter

In the 2022 fourth quarter review cycle, CMS assigned HCPCS “Q” codes, which became effective on April 1, 2023, to the following HCT/Ps:

• Q4265 NeoStim TL, per square centimeter
• Q4266 NeoStim Membrane, per square centimeter
• Q4267 NeoStim DL, per square centimeter
• Q4269 SurGraft^® XT, per square centimeter application
• Q4270 Complete^™ SL, per square centimeter
• Q4271 Complete^™ FT, per square centimeter

All the applicants’ HCPCS code application summaries about their new CTPs stated something like this: “[Name of CTP] is intended to act as a barrier and provide protective coverage from the surrounding environment ...”  Then in every case, CMS said something like this in their final HCPCS coding decision: “After review of the Food and Drug Administration’s (FDA) Tissue Reference Group (TRG) letter submitted by the applicant, it appears [Name of CTP], when intended for use over the wound and as a barrier or protective cover from the surrounding environment, for acute and chronic wounds, meets the criteria for regulation solely under section 361 of the Public Health Service (PHS) Act and the regulations in 21 CFR part 1271. As a result of our review of the TRG’s feedback, CMS has decided to establish a new HCPCS Level II code QXXXX, [Name of CTP], per square centimeter.”

CTPs Denied HCPCS Codes in 2023

CMS denied HCPCS codes requested by several CTP manufacturers. Some reasons for the code denials were:

• Several applicants stated that their product is used as a biological barrier or wound cover, which typically aligns with the FDA’s TRG letter. However, the applicants’ HCPCS code applications stated additional claims such as:

          o   “Is used for the treatment of non-healing wounds and burns.”
          o   “Is used to treat complex acute and chronic wounds and burns.”
          o   “Contributes to the reduction of amputations and hospital admissions associated with the chronic non-healing wound of not only diabetic patients, but patients with complicated full thickness wounds.”
          o   “Intended to be used for the repair and reconstruction of the recipient’s soft tissue.”

CMS’s final coding decisions stated: “After review of the FDA’s TRG letter submitted by the applicant, the product information submitted to CMS as part of the HCPCS application appears to differ from the information that the applicant submitted to the FDA’s TRG. According to the TRG letter, [name of CTP] appears to meet all the criteria for regulation under section 361 of the PHS Act and the regulations in 21 CFR part 1271. However, in the HCPCS application for [name of CTP], the applicant referenced additional intended uses. Based on this information, it appears [name of CTP] may not be suitable for registration as an HCT/P under section 361 of the PHS Act and the regulations in 21 CFR part 1271. CMS refers the applicant back to the FDA’s TRG to obtain written feedback regarding how the product, consistent with its intended used described in the HCPCS application, is appropriately regulated by the TRG. The applicant is welcome to submit a complete HCPCS application in a subsequent coding cycle where the information presented to CMS in the application is consistent with written feedback from the FDA’s TRG. Information for submitting questions to the FDA’s TRG is located at https://www.fda.gov/vaccines-blood-biologics/tissue-tissue-products/tissue-reference-group.”

• Several applicants requested a HCPCS code for a different product name than they submitted for review by the FDA TRG. CMS denied the HCPCS code request and said that the FDA’s TRG letter does not identify [name of CTP] as the product that that the TRG reviewed.
• CMS denied a HCPCS “Q” code for one CTP because the company/manufacturer referenced in the FDA’s TRG letter differed from the company/manufacturer referenced in the HCPCS application. CMS referred the applicant to the FDA to obtain the FDA’s feedback regarding the manufacturing of [name of CTP]. The applicant is welcome to submit a complete HCPCS application in a subsequent coding cycle where the product manufacturer information presented to CMS in the application is consistent with written feedback from the FDA’s TRG.

CMS Assigned “A2XXX” Codes, Rather Than the Requested “Q” Codes, to 8 CTPs in 2023

During the quarterly Drug and Biological HCPCS code application review cycle and the biannual Non-Drug and Non-Biological Items and Services HCPCS code application review cycle, several manufacturers requested HCPCS “Q” codes for their CTPs, but CMS assigned HCPCS “A2XXX” codes. In all cases, the CTPs were FDA 510(k) cleared, The CMS final HCPCS coding decisions also stated: “In accordance with HCPCS Level II codes that CMS effectuated for similarly situated products in 2022 and the Calendar Year Physician Fee Schedule Final Rule (86 FR 64996), Medicare payment for this product will be determined by the MACs.
 
Thus far in 2023, CMS assigned HCPCS “A2XXX” codes to the following CTPs:

• A2014 Omeza^® Collagen Matrix, per 100 mg
• A2015 Phoenix^™ Wound Matrix, per square centimeter
• A2016 PermeaDerm B, per square centimeter
• A2017 PermeaDerm Glove, each
• A2018 PermeaDerm C, per square centimeter
• A2019 Kerecis^® Omega3 MariGen^® Shield, per square centimeter
• A2020 AC5^® Advanced Wound System (AC5)
• A2021 NeoMatrix^® Wound Matrix, per square centimeter

Summary

For many years, this author/consultant has been advising manufacturers to carefully align 1) their FDA 510(K) submissions with their HCPCS code applications, or 2) their HCPCS code applications with the FDA TRG letters. The CMS’s final HCPCS coding decisions, discussed above, verify the importance of this alignment. A manufacturer should not describe their product differently to the FDA and CMS. In addition, a manufacturer should not make any claims in their sales and marketing initiatives, brochures, and websites, which do not appear in their FDA TRG letters, 510(k) clearance letters, or PMA/BLA approval letters. Because manufacturers do not usually have the expertise to precisely prepare HCPCS applications, they may be wise to consider engaging a consultant who is accustomed to paying attention to the details required in HCPCS applications.
 
Although CMS has caused confusion by previously assigning HCPCS “Q” codes to some CTPs that were 510(k) cleared and by currently assigning HCPCS “A2XXX” codes to CTPs that followed that same FDA pathway, manufacturers should follow CMS’s current methodology. In addition, wound/ulcer management PBDs and physician/QHP offices should implement the appropriate coding and billing processes to manage both types of HCPCS codes (”Q” and “A2XXX”) for CTPs.
 
Kathleen D. Schaum is a founding member of the Today’s Wound Clinic editorial advisory board and oversees a consulting business. She can be reached for consultation and questions by emailing kathleendschaum@gmail.com.

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