Oncology & Hematology Coding Alert

Medicare to adopt common J codes for biosimilar and reference biologic drugs.

The Centers for Medicare & Medicaid Services (CMS) is expected to incorporate biosimilars that are approved under the abbreviated biological approval pathway into the average sales price (ASP) payment methodology. According to guidance from CMS earlier this year, Medicare was to pay 106 percent of the manufacturer’s wholesale acquisition cost (WAC) for the product until ASP information is available. Medicare was also to make payment equal the ASP for the biosimilar product plus six percent of the ASP for the reference product once ASP of the biosimilar is available.

The CMS has issued proposed changes in payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee Schedule (PFS) for 2016. This includes an update to Part B Drugs/Payment for biosimilar biologic drugs as described in the Affordable Care Act (ACA), 2010. There is a clear directive for biosimilar coding. Here is what CMS unveils for biosimilar coding.

What is the new CMS update for biosimilar reimbursement?

This update clearly states that the payment amount for a billing code that describes a biosimilar “is based on the average sales price (ASP) of all biosimilar biological products that reference a common biological product’s license application.”

What does the policy mean for biosimilar coding?

According to the policy, all biosimilars of a reference biologic drug will be issued the same J code for Medicare reimbursement purposes.

This may not be a welcome change to implement and is likely to invite debate from providers and drug manufacturers. Biosimilar biologic medicines will no longer be considered affordable if these are equally reimbursed as the reference drug.

What lies ahead?

CMS is accepting public comments on the CY 2016 PFS proposed rule, until September 8, 2015. There is likelihood of further guidance on biosimilar coding after the comments are received.

Read more about the CMS policy at: http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-07-08.html