CMS Considers Altering Billing Code Policy Affecting Biosimilars

The 2018 Medicare Physician Fee Schedule Proposed Rule, issued by CMS on July 13, considers changing a contentious billing code policy affecting biosimilar products.

In its 2016 Physician Fee Schedule Final Rule, the body finalized a proposal that grouped payment for all biosimilar products referenced on a single originator product under common billing codes. However, in its Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for Calendar Year 2018, due to be published in the Federal Register on July 21, CMS indicates that it is reconsidering its policy.

CMS states that it reviewed a number of comments on its Part B billing code policy, which revealed that many stakeholders opposed a single payment amount for biosimilars that rely on the same reference product. These commenters believed that such a regulation would decrease incentives for biosimilar makers to develop products, which could in turn lead to market consolidation and increased costs for biosimilar treatments. Others were concerned that prescribers’ choices could be limited by the grouping, while still others said that they believed that pharmacovigilance activities could be negatively impacted by the policy.

CMS reports that many commenters suggested that the body determine a payment amount for each biosimilar or biologic treatment using individual Healthcare Common Procedure Coding System (HCPCS) codes, and suggested that this approach could create a cost savings of 10% to 15% on biosimilars in comparison to their reference products.

However, some commenters supported CMS’s proposed regulation and their view of its effect on competition, saying that the potential market for biosimilars is less risky than that of innovator biologics, and believed that separate payment for each biosimilar could result in both reduced competition among manufacturers and also higher prices for Medicare beneficiaries. Inside Health Policy reports that congressional Medicare advisors have recommended that CMS retain the policy, and that they have suggested that it could be used even more aggressively to group both reference and biosimilar products under the same codes.

Despite such support of the policy, CMS says that it “seeks to promote innovation, to provide more options to patients and physicians, and competition to drive prices down, recognizing that even though these two goals may be difficult to achieve concurrently, to delink them would be counterproductive.” CMS went on to say that “it is essential to take a measured approach that considers all options given the significant federal spending by Medicare on Part B drugs.” CMS says that it will seek comments regarding its payment policy as it continues to investigate alternatives to its current practice.

Biosimilars Forum hailed CMS’ decision to revisit the coding policy, saying that issuing unique HCPCS codes to each biosimilar product will help to ensure a robust and competitive marketplace for biosimilars, and that it could help spur innovation. “To ensure that the prescribed physician-administered biologics are given to patients, Medicare should allow a fair and predictable reimbursement to purchasers of biosimilars,” the nonprofit organization said in its July 14 statement.

CMS’ comment period on the entirety of its proposed rule will remain open until September 11, 2017.