Nebulizers - Policy Article

**NON-MEDICAL NECESSITY COVERAGE AND PAYMENT RULES**

For any item to be covered by Medicare, 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 Medicare statutory and
regulatory requirements. Information provided in this policy article relates
to determinations other than those based on Social Security Act 1862(a)(1)(A)
provisions (i.e. "reasonable and necessary").

Nebulizers are covered under the Durable Medical Equipment (DME) benefit
(Social Security Act 1861(s)(6)). In order for a beneficiary's equipment to
be eligible for reimbursement, the reasonable and necessary (R&N) requirements
set out in the related Local Coverage Determination must be met. In addition,
there are specific statutory payment policy requirements, discussed below,
that also must be met.

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 beneficiaries 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
noncovered.

A prefilled disposable large volume nebulizer (A7008) is noncovered under the
DME benefit because it is a convenience item. An unfilled nebulizer (A7007,
A7017, or E0585) filled with water or saline (A4217 or A7018) by the
beneficiary/caregiver is an acceptable alternative.

Kits and concentrates for use in cleaning respiratory equipment will be denied
as noncovered.

Aztreonam lysine is an inhalation solution that is indicated for beneficiaries
with cystic fibrosis with chronic Pseudomonas aeruginosa infection. Because it
has been determined that the nebulizer that is FDA-approved for administration
of aztreonam lysine is not sufficiently durable to meet the statutory
requirements for coverage under the DME benefit, claims for that nebulizer,
aztreonam lysine inhalation solution and related accessories will be denied as
noncovered (no Medicare benefit).

Drugs that are not administered through DME (e.g. Foradil Aerolizer and
metered-dose inhalers (MDI's)) are not billed to the DME MAC but may be
covered under other Medicare benefits (i.e., Medicare Part D). If the supplier
chooses to submit a claim for drugs not administered through DME, the drug
must be billed using code J3535 (DRUG ADMINISTERED THROUGH A METERED DOSE
INHALER) and is non-covered by the DME MACs.

Disposable equipment or equipment in which a major component required for
their function is disposable do not meet the definition of durable medical
equipment and must be billed using code A9270 (noncovered item or service).  
  
DISPENSING FEE:  
  
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
beneficiary during that time. This initial 30-day dispensing fee is a once in
a lifetime fee and only applies to beneficiaries who are using inhalation
drugs for the first time as a Medicare beneficiary on or after 01/01/2006. If
code G0333 is billed for a 30-day supply of covered inhalation drugs and it is
not the initial 30-day supply (i.e., G0333 has already been billed to Medicare
for that beneficiary), the claim will be denied as incorrect coding. When code
G0333 has been billed once in a beneficiary's lifetime, subsequent claims for
a 30-day dispensing fee must be billed using code Q0513.

Medicare will only pay 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 beneficiary during that time period - an
initial dispensing fee (G0333), a 30-day dispensing fee (Q0513), or a 90-day
dispensing fee (Q0514).

For a refill prescription, payment of a dispensing fee will be allowed no
sooner than 10 days before the end of usage for the current 30-day or 90-day
period for which a dispensing fee was previously paid. Medicare will not pay
for more than 12 months of dispensing fees per beneficiary 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 4/10/06, the dispensing fee on 4/10/06 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.

Medicare will not pay for a separate fee for the compounding of inhalation
drug(s).



**REQUIREMENTS FOR SPECIFIC DMEPOS ITEMS PURSUANT TO  FINAL RULE 1713 (84 Fed.
Reg Vol 217)**

Final Rule 1713 (84 Fed. Reg Vol 217) requires a face-to-face encounter and a
Written Order Prior to Delivery (WOPD) for specified HCPCS codes. CMS and the
DME MACs provide a list of the specified codes, which is periodically updated.
The required Face-to-Face Encounter and Written Order Prior to Delivery List
is available [here](https://www.cms.gov/Research-Statistics-Data-and-
Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-
Review/FacetoFaceEncounterRequirementforCertainDurableMedicalEquipment).

Claims for the specified items subject to Final Rule 1713 (84 Fed. Reg Vol
217) that do not meet the face-to-face encounter and WOPD requirements
specified in the LCD-related Standard Documentation Requirements Article
(A55426) will be denied as not reasonable and necessary.

If a supplier delivers an item prior to receipt of a WOPD, it will be denied
as not reasonable and necessary. If the WOPD is not obtained prior to
delivery, payment will not be made for that item even if a WOPD is
subsequently obtained by the supplier. If a similar item is subsequently
provided by an unrelated supplier who has obtained a WOPD prior to delivery,
it will be eligible for coverage.



**POLICY SPECIFIC DOCUMENTATION REQUIREMENTS**  
  
In addition to policy specific documentation requirements, there are general
documentation requirements that are applicable to all DMEPOS policies. These
general requirements are located in the DOCUMENTATION REQUIREMENTS section of
the LCD.  
  
Refer to the LCD-related Standard Documentation Requirements article, located
at the bottom of this Policy Article under the Related Local Coverage
Documents section for additional information regarding GENERAL DOCUMENTATION
REQUIREMENTS and the POLICY SPECIFIC DOCUMENTATION REQUIREMENTS discussed
below.  
  
MISCELLANEOUS  
  
A diagnosis code describing the condition which necessitates nebulizer therapy
must be included on each claim for equipment, accessories, and/or drugs.



**MODIFIERS**  
  
JW AND JZ MODIFIERS:  
  
Effective for claims with dates of service on or after January 1, 2017, the JW
modifier is required when billing for unused and discarded amounts of drugs
and biologicals from single-dose containers that are administered by the
supplier.  

Effective for claims with dates of service on or after July 1, 2023, the JZ
modifier is required when billing for drugs and biologicals from single-dose
containers that are administered by the supplier but have no unused and
discarded amounts.  
  
The JW and JZ modifiers are not required for drugs dispensed by the supplier
and self-administered by the patient or caregiver in the patient's home.  

Multi-use vials are not subject to payment for discarded amounts of drug or
biologicals.

The DME MACs expect rare use of the JW or JZ modifiers on claims due to HCPCS
code descriptors and their associated Units of Service (UOS) for DMEPOS in
addition to the limited instructions for use.  
  
There are two scenarios that can occur when billing with the JW modifier:  
  
Scenario 1  
When the HCPCS code UOS is less than the drug quantity contained in the single
use vial or single dose package, the following applies:

  * The quantity administered is billed on one claim line without the JW modifier; and,

  * The quantity discarded is billed on a separate claim line with the JW modifier.

In this scenario, the JW modifier must be billed on a separate line to provide
payment for the amount of discarded drug or biological. For example:

  * A single use vial is labeled to contain 100 mg of a drug.

  * The drug's HCPCS code UOS is 1 UOS = 1 mg.

  * 95 mg of the 100 mg in the vial are administered to the beneficiary by the supplier.

  * 5 mg remaining in the vial are discarded.

  * The 95 mg dose is billed on one claim line as 95 UOS.

  * The discarded 5 mg is billed as 5 UOS on a separate claim line with the JW modifier.

  * Both claim line items would be processed for payment.

Scenario 2  
When the HCPCS code UOS is equal to or greater than the total of the actual
dose and the amount discarded, use of the JW modifier is not permitted. If the
quantity of drug administered is less than a full UOS, the billed UOS is
rounded to the appropriate UOS. For example:

  * A single use vial is labeled to contain 100 mg of a drug.

  * The drug's HCPCS code UOS is 1 UOS = 100 mg.

  * 70 mg of the 100 mg in the vial are administered to the beneficiary by the supplier.

  * 30 mg remaining in the vial are discarded.

  * The 70 mg dose is billed correctly by rounding up to one UOS (representing the entire 100 mg vial) on a single line item.

  * The single line item of 1 UOS would be processed for payment of the combined total 100 mg of administered and discarded drug.

  * The discarded 30 mg must not be billed as another 1 UOS on a separate line item with the JW modifier. Billing an additional 1 UOS for the discarded drug with the JW modifier is incorrect billing and will result in an overpayment.

KX, GA, AND GZ MODIFIERS:  
  
Suppliers must add a KX modifier to codes for E0574, J7686, K0730 and Q4074
only if all of the criteria in the Coverage Indications, Limitations and/or
Medical Necessity" section of the related LCD have been met.  
  
If all of the criteria in the Coverage Indications, Limitations and/or Medical
Necessity 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 GA modifier on the claim line if they have obtained a
properly executed Advance Beneficiary Notice (ABN) or GZ modifier if they have
not obtained a valid ABN.  
  
Claim lines billed without a KX, GA, or GZ modifier will be rejected as
missing information.



**CODING GUIDELINES**  
  
EQUIPMENT:  
  
In this policy, nebulization of inhalation solutions is accomplished by two
types of devices. Pneumatic compressor nebulizers achieve nebulization of
liquid by means of air flow. Ultrasonic or electronic nebulizers produce
nebulization of liquid by means of a vibrating mechanism.  
  
HCPCS 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 may be AC-
powered, DC-powered or both.  
  
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.  
  
HCPCS code E0574 describes an ultrasonic/electronic generator used with a
small volume chamber for medication delivery. Aerosolization of the inhalation
solution occurs in a nebulization chamber by means of a vibrating mechanism
such as (not all inclusive) a vibrating disk, pizo-electric device or
vibrating mesh.

Accessories used in conjunction with ultrasonic nebulizers coded E0574 should
be billed on separate claim lines. The dome and mouthpiece should be billed
with code A7016. Other accessories should be billed with code A9999. When code
A9999 is used, the claim must clearly describe the type and quantity of
accessories provided.

For dates of service on or after April 1, 2011, products coded E0574 must have
received coding verification review (CVR) from the Pricing, Data Analysis and
Coding (PDAC) contractor. The only products that may be billed using code
E0574 are those that are specified in the Product Classification List (PCL) on
the PDAC contractor web site.

If a product is billed to Medicare using a HCPCS code that requires written
CVR, but the product is not on the PCL for that particular HCPCS code, then
the claim line will be denied as incorrect coding.  
  
HCPCS code E0575 describes a large volume ultrasonic nebulizer system which is
used for medication and humidification delivery, and which is capable of
continuous operation.  
  
HCPCS 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.

HCPCS code E0467 (HOME VENTILATOR, MULTI-FUNCTION RESPIRATORY DEVICE, ALSO
PERFORMS ANY OR ALL OF THE ADDITIONAL FUNCTIONS OF OXYGEN CONCENTRATION, DRUG
NEBULIZATION, ASPIRATION, AND COUGH STIMULATION, INCLUDES ALL ACCESSORIES,
COMPONENTS AND SUPPLIES FOR ALL FUNCTIONS) describes a ventilator that
integrates the function of multiple types of equipment into a single device.
Code E0467 combines the function of a ventilator with all of the following:

  * Oxygen equipment 

  * Nebulizer and compressor

  * Aspirator (suction device)

  * Cough stimulator (multiple products)

If the multifunction ventilator does not include all of the functions listed
above, then the ventilator must not be coded as E0467. Multifunction
ventilators that combine some but not all, of the listed functions, must be
coded as E1399 (DURABLE MEDICAL EQUIPMENT, MISCELLANEOUS).

Positive airway pressure (PAP) devices, respiratory assist devices (RAD), and
custom fabricated oral appliances, are considered same or similar to the
features of products coded E0467.

The following nebulizers and related accessories HCPCS codes for individual
items are included in the functionality of code E0467:

  * HCPCS codes E0565, E0570, E0572, E0585, A4619, A7003, A7004, A7005, A7006, A7007, A7012, A7013, A7014, A7015, A7017, A7525, and E1372

_For E0467 claims with dates of service before April 3, 2020:_

Claims for any of the HCPCS codes listed above that are submitted on the same
claim or that overlap any date(s) of service for E0467 is considered to be
unbundling.

In addition, any claim for repair (HCPCS code K0739 for labor and any HCPCS
code for replacement items) of beneficiary-owned equipment identified by HCPCS
codes listed above is considered as unbundling if the date(s) of service for
the repair overlaps any date(s) of service for code E0467.

Claims for code E0467 with a date(s) of service that overlaps date(s) of
service for any of the following scenarios are considered as a claim for same
or similar equipment when the beneficiary:

  * Is currently in a rental month for any of the items listed above

  * Owns any of the equipment listed above that has not reached the end of its reasonable useful lifetime.

_For E0467 claims with dates of service on or after April 3, 2020:_

Any claim for repair (HCPCS code K0739 for labor and any HCPCS code for
replacement items) of beneficiary-owned equipment identified by the HCPCS
codes listed above is considered as unbundling if the date(s) of service for
the repair overlaps any date(s) of service for code E0467.

Claims for code E0467 with a date(s) of service that overlaps date(s) of
service in a rental month for any of the items listed above are considered as
a claim for same or similar equipment.



CODING VERIFICATION REVIEW

The only products which may be billed using the following list of HCPCS codes
are those for which a written coding verification review (CVR) has been made
by the PDAC contractor and subsequently published on the Product
Classification List (PCL). Information concerning the documentation that must
be submitted to the PDAC for a CVR can be found on the PDAC website or by
contacting the PDAC. A PCL with products which have received a coding
verification can be found on the PDAC website. The effective date of the CVR
is included for each code.

Effective for claims with dates of service on or after January 1, 2022:  
E0467

If a product is billed to Medicare using a HCPCS code that requires written
CVR, but the product is not on the PCL for that particular HCPCS code, then
the claim line will be denied as incorrect coding.

Suppliers should contact the Pricing, Data Analysis and Coding (PDAC)
contractor for guidance on the correct coding of these items.

ACCESSORIES:  
  
HCPCS codes A7003, A7005, and A7006 include the lid, jar, baffles, tubing,
T-piece and mouthpiece. In addition, code A7006 includes a filter.  
  
HCPCS code A7004 includes only the lid, jar and baffles.  
  
HCPCS code A7012 describes a device to collect water condensation, which is
placed in line with the corrugated tubing, used with a large volume nebulizer.  
  
HCPCS code A7016 describes the dome and mouthpiece containing the
aerosolization mechanism for an ultrasonic/electronic nebulizer system.  
  
HCPCS 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 an 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
beneficiary-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 beneficiary 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 beneficiary. Even if
one the ingredients is an FDA-approved product (e.g., an injectable form of
the drug), if that is mixed by the pharmacy with other ingredients, the
solution that is dispensed to the beneficiary 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.
Code J7999 (COMPOUNDED DRUG, NOT OTHERWISE CLASSIFIED) does not apply to
compounded nebulizer drugs and must not be used. Claims for compounded
nebulizer drugs using J7999 will be denied as incorrect coding.  
  
HCPCS codes J2545 (pentamidine), J7608 (acetylcysteine), J7631 (cromolyn),
J7639 (dornase alfa) 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.  
  
HCPCS codes J7602 (Albuterol, all formulations including separated isomers,
inhalation solution, FDA-approved final product, non-compounded, administered
through DME, concentrated form, per 1 mg (albuterol) or per 0.5 mg
(levalbuterol)) and J7603 (Albuterol, all formulations including separated
isomers, inhalation solution, FDA-approved final product, non-compounded,
administered through DME, unit dose, per 1 mg (albuterol) or per 0.5 mg
(levalbuterol)) were effective for claims with dates of service from 1/1/2008
- 3/31/2008. They are invalid for claim submission for dates of service on or
after 4/1/2008.  
  
Unit dose form of an inhalation drug or a combination of drugs is one in which
the medication is dispensed to a beneficiary (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
beneficiary without adding any separate diluent.  
  
Concentrated form of a drug used for inhalation is one in which the drug is
dispensed to a beneficiary in a concentration which requires that a separate
diluent (usually saline) be added to the nebulizer when the drug is
administered to a beneficiary.  
  
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
beneficiary. 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
beneficiary in a single-dose bottles/vials/ampules, the inhalation solution is
billed as the compounded 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 beneficiary 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 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
J7620, the combination of albuterol and ipratropium. 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: J7605, J7606, J2545,
J7608, J7613, J7614, J7626, J7631, J7639, J7644, J7669, J7682, J7686, and
Q4074.  
  
The billing unit of service for inhalation drug codes varies. Suppliers must
be sure that they use the correct billing unit or 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:

  * HCPCS code J7620 is used for an FDA-approved combination of albuterol and ipratropium which contains 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 HCPCS codes 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% solution typically comes in a 3 ml vial/ampule, each vial/ampule
contains 2.5mg of albuterol (3 X 0.83 equals 2.5). If a pharmacist provides
120 ampules of an FDA-approved inhalation solution of 0.83% albuterol solution
each containing 3 ml, the billed units of service would be 300 (2.5 X 120)
units of code J7613 (for albuterol, 1 mg equals 1 unit).  
  
When a compounded unit dose preparation is billed, the diluent must not be
billed separately.  
  
The nebulizer used to administer aztreonam lysine must be coded and billed
using HCPCS code A9270, noncovered item or service.  
  
HCPCS code 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 beneficiary without adding any separate diluent and is
dispensed in a multidose container, use J7699.

Claims for revefenacin for dates of service on or after November 9, 2018,
through June 30, 2019, must be submitted using the HCPCS code J7699 (NOC
DRUGS, INHALATION SOLUTION ADMINISTERED THROUGH DME).

Claims for revefenacin for dates of service on or after July 1, 2019, must be
submitted using HCPCS code J7677 (REVEFENACIN INHALATION SOLUTION, FDA-
APPROVED FINAL PRODUCT, NON-COMPOUNDED, ADMINISTERED THROUGH DME, 1
MICROGRAM).

HCPCS 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.