New Medicare Payment Policy for Biosimilars

on Tuesday, 03 April 2018. Outpatient Services | Coding | Billing

Copycats, Cost and Competition

When we think of copycat products, we often picture the nefarious character flipping open his overcoat to reveal a row of “Rolex” watches available at bargain basement prices - in other words, counterfeit products of a lesser quality and illegally bearing a trademark name. But in the world of biological drugs, legitimate but costly copycat products offer physicians and patients other options for treatment. With appropriate payment policies, the United States biosimilar product marketplace can continue to grow resulting in cost savings and those additional treatment options. In the 2018 Medicare Physician Fee Schedule Final Rule (MPFS), CMS changed the payment policy for biosimilars to separately code and determine payment for each biological biosimilar product under Medicare Part B.

The original policy addressing biosimilars was from the 2016 MPFS rule. At that time CMS decided to base the payment amount for a biosimilar biological product on the average sales price (ASP) of all biosimilars for one reference product and to assign one payment code (HCPCS code) to all biosimilars for the same reference product. “In general, this means that products that rely on a common reference product’s biologics license application (that is, FDA’s previous finding of safety, purity, and potency for the common reference product) are grouped into the same payment calculation for determining a single ASP payment limit and that a single HCPCS code is used for such biosimilar products. The regulation went into effect on January 1, 2016.” Biosimilars sharing the same HCPCS code, but produced by different manufacturers, were distinguished by HCPCS modifiers.

There were varying opinions about Medicare’s payment policy for biosimilars from the beginning – some stakeholders supporting the use of one HCPCS code and others opposing it. In the 2018 MPFS FR, CMS notes, “The biosimilar product marketplace has continued to grow, and four biosimilar biological products that are paid under Part B have been licensed, including one product approved in 2017 that is sharing a HCPCS code with another previously licensed biosimilar biological product. Based on the number of biosimilar biological products that are reported to be nearing approval and the approvals made over the past 2 years, CMS anticipates that several more biosimilar biological products will be licensed for use in the United States during the next year and that during the following years, the marketplace will continue to grow steadily, provided that the approved products are marketed without delay. …CMS is aware of concerns that current Medicare policy may discourage development of new biosimilars and other innovation in this area potentially resulting in higher costs over time due to a lack of competition in the market place.”

As usual for CMS rules, the topic was discussed in great detail in the 2018 MPFS Final Rule (starting on page 53182). Some of the more interesting points of the discussion include,

Facts about Biosimilars:

  • Biosimilars are similar, but not identical, to their reference products, and due to these subtle differences, they may have different therapeutic and adverse effects on patients, requiring clinical distinctions between the products.
  • None of the currently available biosimilars are approved as interchangeable. The current biosimilar approval process does not compare biosimilar biological products to each other, rather, only similarity to a reference product is established and the licensing of a biological product under the biosimilar pathway does not mean that the products are interchangeable.
  • Biosimilar biological products may be approved for fewer indications than the reference product and the approved indications within a group of biosimilar biological products with the same reference product may vary.
  • These products are likely to be expensive and may have different acquisition costs. The development costs for these products and their manufacturing facilities are estimated to be in the hundreds of millions of dollars.

Stakeholders’ Comments

  • Grouping (biosimilars) for payment could lead to prescribing choices based on cost rather than clinical considerations.
  • The current policy may impair access to biosimilars, could potentially limit the introduction of biosimilars to the US market, and would fail to maximize competition and savings.
  • Grouping products for payment that do not have all the same indications could cause clinicians and patients to think the products are interchangeable or could lead to off-label use.
  • Blended payment could be a significant financial risk to the provider because the products that would be the best choice for a patient may not be paid above acquisition cost.
  • ‘‘Race to the bottom’’ pricing competition would result from shared codes and lead to prices that could not sustain educational efforts and other activities associated with marketing new and complex biological products, ultimately resulting in manufacturers leaving the United States marketplace.
  • Determining a payment for each biosimilar product by using individual HCPCS codes would drive and reward innovators, producing the potential cost savings of at least 10–15 percent compared to the reference biologic ASP necessary for biosimilar products to compete with the reference biological.

Because of the above facts and concerns, CMS has “become increasingly concerned about the relationship between cost, prices and competition; specifically, many commenters’ continued unease regarding the effects of our payment policy on patient and provider choices, as well as the biosimilar marketplace. We have also considered how the payment policy could affect market entry of new biosimilar manufacturers. If payment amounts limit manufacturers’ willingness to invest in the development of new biosimilars, it could in the long term, decrease the number of biosimilar biological products that are available to prescribe and thus impair price competition. Given that the United States’ biosimilar biological product marketplace is still relatively new, we believe that it is important to maintain a payment policy innovation as well as reasonable pricing for consumers. We agree that it is important to consider and effect policy changes early, as this portion of the drug marketplace develops, in order to support a robust marketplace that provides choices for providers and patients while maximizing savings.”

Effective January 1, 2018, newly approved biosimilar biological products with a common reference product will no longer be grouped into the same HCPCS code. Each biosimilar will be assigned a unique HCPCS code and payment will be based on the ASP for that individual biosimilar. Biosimilar HCPCS codes in use prior to January 1, 2018 are being changed and replaced to be in compliance with the new payment policy.  This is described on the Medicare Biosimilar webpage and addressed in the April 2018 OPPS Update MLN Matters Article.  Effective April 1, 2018, the descriptor for HCPCS code Q5101 (filgrastim biosimilar) is being changed to “Injection, zarxio.”  HCPCS code Q5102 (infliximab biosimilar) is being replaced effective April 1, 2018 with HCPCS codes Q5103 (Injection, inflectra) and Q5104 (Injection, renflexis).  The new biosimilar payment policy also makes the use of modifiers that describe the manufacturer of a biosimilar product unnecessary. Therefore, modifiers ZA, ZB, and ZC will be discontinued for dates of service on or after April 1, 2018. However, please note that HCPCS code Q5102 and the requirement to use applicable biosimilar modifiers remain in effect for dates of service prior to April 1, 2018.  

See the table below for complete descriptions and effective dates for new and changed biosimilar codes.  The table also includes other updates from the April 2018 OPPS Update.

April 2018 OPPS Code Updates
HCPCS CodeLong DescriptorOPPS Status IndicatorEffective DateDescription of Change
C9749 Repair of nasal vestibular lateral wall stenosis with implant(s) J1 April 1, 2018 New separtely payable procedure code
0011M Oncology, prostate cancer, mRNA expression assay of 12 genes (10 content and 2 housekeeping), RT-PCR test utilizing blood plasma and/or urine, algorithms to predict high-grade prostate cancer risk A January 1, 2018 New Multianalyte Assays with Algorithmic Analyses (MAAA) code
0004U Infectious disease (bacterial), DNA, 27 resistance genes, PCR amplification and probe hybridization in microarray format (molecular detection and identification of AmpC, carbapenemase and ESBL coding genes), bacterial culture colonies, report of genes detected or not detected, per isolate D January 1, 2018 Deleted Proprietary Laboratory Analyses (PLA) code
0015U Drug metabolism (adverse drug reactions), DNA, 22 drug metabolism and transporter genes, real-time PCR, blood or buccal swab, genotype and metabolizer status for therapeutic decision support D January 1, 2018 Deleted PLA code
0024U Glycosylated acute phase proteins (GlycA), nuclear magnetic resonance spectroscopy, quantitative Q4 January 1, 2018 New PLA code
0025U Tenofovir, by liquid chromatography with tandem mass spectrometry (LC-MS/MS), urine, quantitative Q4 January 1, 2018 New PLA code
0026U Oncology (thyroid), DNA and mRNA of 112 genes, next-generation sequencing, fine needle aspirate of thyroid nodule, algorithmic analysis reported as a categorical result ("Positive, high probability of malignancy" or "Negative, low probability of malignancy") A January 1, 2018 New PLA code
0027U JAK2 (Janus kinase 2) (eg, myeloproliferative disorder) gene analysis, targeted sequence analysis exons 12-15 A January 1, 2018 New PLA code
0028U CYP2D6 (cytochrome P450, family 2, subfamily D, polypeptide 6) (eg, drug metabolism) gene analysis, copy number variants, common variants with reflex to targeted sequence analysis A January 1, 2018 New PLA code
0029U Drug metabolism (adverse drug reactions and drug response), targeted sequence analysis (ie, CYP1A2, CYP2C19, CYP2C9, CYP2D6, CYP3A4, CYP3A5, CYP4F2, SLCO1B1, VKORC1 and rs12777823) A January 1, 2018 New PLA code
0030U Drug metabolism (warfarin drug response), targeted sequence analysis (ie, CYP2C9, CYP4F2, VKORC1, rs12777823) A January 1, 2018 New PLA code
0031U CYP1A2 (cytochrome P450 family 1, subfamily A, member 2)(eg, drug metabolism) gene analysis, common variants (ie, *1F, *1K, *6, *7) A January 1, 2018 New PLA code
0032U COMT (catechol-O-methyltransferase)(drug metabolism) gene analysis, c.472G>A (rs4680) variant A January 1, 2018 New PLA code
0033U HTR2A (5-hydroxytryptamine receptor 2A), HTR2C (5-hydroxytryptamine receptor 2C) (eg, citalopram metabolism) gene analysis, common variants (ie, HTR2A rs7997012 [c.614-2211T>C], HTR2C rs3813929 [c.-759C>T] and rs1414334 [c.551-3008C>G]) A January 1, 2018 New PLA code
0034U TPMT (thiopurine S-methyltransferase), NUDT15 (nudix hydroxylase 15)(eg, thiopurine metabolism), gene analysis, common variants (ie, TPMT *2, *3A, *3B, *3C, *4, *5, *6, *8, *12; NUDT15 *3, *4, *5) A January 1, 2018 New PLA code
Q4180 Revita, per sq cm N April 1, 2018 Reassigned to the high cost skin substitute group
C9462 Injection, delafloxacin, 1 mg G April 1, 2018 Pass-through drug or biological
C9463 Injection, aprepitant, 1 mg G April 1, 2018 Pass-through drug or biological
C9464 Injection, rolapitant, 0.5 mg G April 1, 2018 Pass-through drug or biological
C9465 Hyaluronan or derivative, Durolane, for intra-articular injection, per dose G April 1, 2018 Pass-through drug or biological
C9466 Injection, benralizumab, 1 mg G April 1, 2018 Pass-through drug or biological
C9467 Injection, rituximab and hyaluronidase, 10 mg G April 1, 2018 Pass-through drug or biological
C9468 Injection, factor ix (antihemophilic factor, recombinant), glycopegylated, Rebinyn, 1 i.u.. G April 1, 2018 Pass-through drug or biological
C9469 Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg G April 1, 2018 Pass-through drug or biological
J0606 Injection, etelcalcetide, 0.1 mg G April 1, 2018 Pass-through drug or biological
Q2040 Tisagenlecleucel, up to 250 million car-positive viable t cells, including leukapheresis and dose preparation procedures, per infusion G April 1, 2018 Pass-through drug or biological
Q2041 Axicabtagene Ciloleucel, up to 200 Million Autologous Anti-CD19 CAR T Cells, Including Leukapheresis And Dose Preparation Procedures, Per Infusion G April 1, 2018 Pass-through drug or biological
Q5104 Injection, infliximab-abda, biosimilar, (renflexis), 10 mg G April 1, 2018 Pass-through drug or biological
Q5101 Injection, filgrastim-sndz, biosimilar, (zarxio), 1 microgram G April 1, 2018 Revised descriptor
Q5102 Injection, infliximab, biosimilar, 10 mg G April 1, 2018 Deleted biosimilar code replaced with new codes
Q5103 Injection, infliximab-dyyb, biosimilar, (inflectra), 10 mg G April 1, 2018 New biosimilar code
Q5104 Injection, infliximab-abda, biosimilar, (renflexis), 10 mg G April 1, 2018 New biosimilar code

 

Article by Debbie Rubio

Debbie Rubio, BS, MT (ASCP), is the Manager of Regulatory Affairs and Compliance at Medical Management Plus, Inc.  Debbie has over twenty-seven years of experience in healthcare including nine years as the Clinical Compliance Coordinator at a large multi-facility health system.  In her current position, Debbie monitors, interprets and communicates current and upcoming regulatory and compliance issues as they relate to specific entities concerning Medicare and other payers.  You may contact Debbie at This email address is being protected from spambots. You need JavaScript enabled to view it. .

 

This material was compiled to share information.  MMP, Inc. is not offering legal advice.  Every reasonable effort has been taken to ensure the information is accurate and useful.

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