CMS Billing Code Changes Could Impact Biosimilars' Competitiveness With Reference Products

Revisions to the CMS billing code system could be announced November 1, 2017, potentially impacting how biosimilars will compete with reference products.

The proposed CMS rule change could give every biosimilar its own Healthcare Common Procedure Coding System (HCPCS) (“J-code”). Currently, Medicare Part B pays for biosimilars under the Physician Fee Schedule (PFS) based on average sales price (ASP) of all biosimilar products within the same HCPCS code—biosimilar products with the same reference product are grouped together to calculate an ASP, and physicians are reimbursed the same amount for all biosimilars with the same reference product. The coding system for biosimilars is also separate from the coding system for their reference products, so that as a biosimilar’s price is reduced, the ASP also declines, which is the basis for reimbursement. However, the reference products’ ASPs remain unaffected.

A proposed CMS rule change was posted in July 2017 concerning current CMS payment policies under the PFS and other revisions to Medicare Part B for 2018. If a rule change occurs, it would apply beginning January 1, 2018.

Amanda Forys, MSPH, Director at Xcenda, notes that because Medicare will be such a large payer for biosimilars, coding and payment policy set forth by CMS will have a significant effect on the success, sustainability, and availability of biosimilars. CMS’s controversial decision to group biosimilars into single HCPCS codes can cause confusion among providers and create concerns around pharmacovigilance. In addition, the rule increases the administrative burden and claims processing delays and can inadvertently prompt physicians to continue using reference drugs because they have better clarity in their coding and billing guidance. “Ultimately, this scenario could limit patient access to products that could significantly reduce out-of-pocket payments for specialty medications,” Forys explains in her blog.

In comments submitted to CMS, industry group Pharmaceutical Research and Manufacturers of America (PhRMA) urged CMS to revise its biosimilar reimbursement policy to provide for separate HCPCS codes for each biosimilar and to reimburse each biosimilar based on its own ASP—this would encourage a robust competitive market for biosimilars and clinically appropriate, safe use of these medicines. The Biotechnology Innovations Organization (BIO) agreed, noting that this change would maximize patient safety and access to appropriate therapies and foster a competitive, innovative market for biosimilars.

The Biosimilars Council also recommended that each biosimilar be assigned its own code in the HCPCS system and be paid at a rate based on that biosimilar’s own ASP: “To have a level playing field, the Medicare payment rate for biosimilars should reflect the same approach applied to other nonsubstitutable products.” The group said that without a level playing field, it is doubtful biosimilars will be able to achieve the kind of success Congress envisioned when it passed the Biologics Price Competition and Innovation Act. Biosimilar maker Novartis also encouraged CMS to revise its reimbursement policy in the final rule to allow for distinct coding and payment for each biosimilar. “We request that CMS pay each biosimilar at 100% of its own individual ASP (plus a fixed percentage of the reference product’s ASP, as is already clearly established) and under its own HCPCS code,” the company said. “Such a policy would spur competition in the market and allow patients greater access to drugs at lower prices.”

Patient organizations including the Arthritis Foundation, the Cancer Support Community of Arizona, and the U.S. Pain Foundation asked CMS to end the blended reimbursement policy for biosimilars to help increase the number of biosimilar products available to patients.

QuintilesIMS also called on CMS to assign each biosimilar a unique HCPCS code rather than blending multiple biosimilars into a single code. “CMS’ current policy of using modifiers for biosimilars reimbursed under the same HCPCS code makes such data collection difficult,” the company wrote. “First, the use of these modifiers, which is unique to biosimilars, applies only to Medicare and not other payers. Thus, tracking of adverse events across different payers would prove challenging.”