July 2023 is here and time to validate another round of quarterly updates from CMS. The JZ modifier, in addition to the JW modifier, is now required to effectively bill for drug waste (JW) and to attest when no drug was discarded (JZ) for all separately payable that are single-dose or single-use containers. Additionally, we have updated the Visante Quarterly Update Tool and the C9399 Tool to help organizations validate that their system is up to date with the recent changes.  

As a part of the Inflation Reduction Act of 2022, CMS is requiring manufacture rebates for certain Medicare Part B drugs in which the cost has exceeded inflation. Beneficiaries out of pocket costs will be reduced to 20% of the inflation-adjusted payment described in the Act.

Self-administered drugs (SAD) have been a long-standing controversy when administered in a hospital outpatient setting from the perspectives of a patient, frontline healthcare workers, and billing. “Why does my Tylenol cost $10 per tablet, but the 1,000-count bottle I have at home was purchased for $3?” This question is often difficult to answer and may lead to unintended operational consequences.  

The new year brings a new focus on resolutions including prior authorization processes. In July 2020, Medicare implemented a prior authorization process for select services including botulinum toxin. Its time to revisit workflow processes and, if not exempt, confirm with respective teams that a prior authorization is obtained prior to providing the service.

The Pharmacy Revenue Cycle is starting out with a new fashion design for 2023 as there are 36 new brand-specific HCPCS codes. CMS has been reviewing its approach for assigning HCPCS Level II codes for drugs that have been approved under the Food, Drug and Cosmetic Act 505(b)(2) New Drug Application (NDA) or the Biologics License Application (BLA) after October 2003. These drugs are not rated therapeutically equivalent to the reference drug listed in the FDA’s Orange Book and therefore are considered single-source products according to section 1847A(c)(6) of the Social Security Act. Each single source product should be assigned a unique billing and payment code which now includes the brand name in the description to differentiate the HCPCS. Additionally, CMS removes brand names from the HCPCS description when the code is used for multiple source drugs.  

In efforts to decrease the use of “not otherwise specified codes” and align with the definitions embedded within the Social Security Act for single and multisource products, CMS plans to continue their review of products that were approved under separate NDA or BLA pathways after October 2003 and are not considered therapeutically equivalent to a listed reference product in an existing code.  

Shout Outs! 

1. Pharmacy and revenue integrity teams should ensure their HCPCS codes have been updated to reflect the changes effective 1/1/2023 and be on the lookout for additional brand-specific HCPCS codes in quarterly updates. 
2. Pharmacy and IT teams should evaluate their processes to ensure each NDC is matched to the correct HCPCS and that the NDC being administered to the patient is the NDC that is represented on the claim.  
3. Don’t forget to check out our updated tools to help you manage your pharmacy revenue cycle!

The Centers for Medicare & Medicaid Services (CMS) provided the OPPS Final Rule for CY2023 in the Federal Register on November 23, 2022. Provisions in this rule will be effective for dates of service on or after January 1, 2023.

Significant changes for drug reimbursement and coding occur in three areas: 340B-acquired drugs, non-opioid pain management reimbursement in Ambulatory Surgery Centers (ASC) and Hospital Outpatient Departments (HOPD), and new requirements for reporting waste in HOPD.

340B-acquired Drugs

In light of the Supreme Court decision in American Hospital Association v. Becerra, 142 S. Ct. 1896 (2022), CMS is applying the default rate, generally average sales price (ASP) plus 6 percent, to 340B acquired drugs and biologicals and removing the increase to the conversion factor that was made in CY 2018 to implement the 340B policy in a budget neutral manner. These changes are reflected in posted ASP Pricing Files and Addendum B reimbursement rates.

Non-opioid pain management

CMS will provide separate payment for five drugs in the ASC setting (but not in the HOPD setting) as non-opioid pain management drugs that function as supplies (Exparel, Omidria, Dextenza, Xaracoll, and Posimir). Note that Zynrelef received pass-through payment status on April 1, 2022, and is therefore eligible for separate payment in both the ASC and HOPD setting in CY2023.

Drug Waste Reporting in Hospital Outpatient Departments

New reporting requirements for drugs where there is no discarded waste were detailed in the CY2023 Physician Fee Schedule Rule and summarized in a recent Visante newsletter and podcast.

The following links and notes provide additional information on changes in drug reimbursement in HOPD for CY2023:

1. Pass-through expirations CY 2022- 32 drugs will have pass-through payment end on December 31, 2022. Table 57 (page 198 pdf)
2. Pass-through Drugs and biologicals that will receive one to four quarters of separate payment in CY 2023- 43 drugs will receive separate payment in one or more quarters in CY2023. Table 58 (pg 202 pdf)
3. Pass-through Drugs and biologicals with pass-through payment status to expire after CY2023 (with pass-through payment end dates)- 49 drugs will continue with pass-through status throughout CY2023. Table 59 (pg 208 pdf)
4. Packaging Threshold- CMS raises the per-day cost packaging threshold for separate payments from $130 to $135.
5. Biosimilars- Visante has provided a recent newsletter that details payment increases for biosimilars.

Hope this summary is helpful in evaluating your reimbursement for the coming year!

SHOUT-OUT

1. All pharmacy revenue cycle teams should review the OPPS CY 2023 Rule Final Rule and ensure systems are updated by January 1, 2023.

Dive into the CY23 CMS Physician Fee Schedule rule as it relates to the new requirements for discarded drugs or drug waste. A JW and JZ modifier are required for all Part B separately payable single-dose or single-use packages. Additionally, manufacturers are required to pay a refund for discarded drugs that exceed 10% of the total charges. 

Payment Increases for Biosimilars

On April 16th, 2022, the Inflation Reduction Act of 2022 was signed into law. Section 11403 requires a temporary increase in add-on payment for qualifying biosimilars from 6% to 8% for 5 years. This change was implemented on October 1, 2022, and CMS uploaded pricing files that already include the temporary price increase.

Applicable 5-year period
This increase began on October 1, 2022, for products for which payment was made by September 30, 2022. For other biosimilar products in which payment was made between October 1, 2022 - December 31, 2027, the 5-year period will begin on the first day of such a calendar quarter in which the payment was first made. For example, payments made between October 1, 2022 - December 31, 2022, the 5-year period will begin October 1, 2022, through September 30, 2027.
 
Qualifying biosimilar
A qualifying biosimilar product is defined as a biosimilar biological product with an ASP that is not more than the ASP of the reference product. Also, a biosimilar biological product ASP during a calendar quarter throughout the 5-year period is not more than the ASP of the reference product for such quarter.
 
Add on payment
The temporary price increase applies an 8% of the reference product ASP to the ASP of the biosimilar. This applies to separately payable pass-through and non-pass-through status biosimilars in accordance with the OPPS.
 
Shout Outs

1. Pharmacy and Finance Teams - should review your biosimilar strategy and financial models. CMS 2022 Q4 pricing files were uploaded to reflect the 8% temporary price increase.