CMS Shifts Coding and Payment Policy for Biosimilars Under Medicare Part B

The Centers for Medicare and Medicaid Services (CMS) late Thursday announced that it would finalize a policy to separately code and pay for biosimilar products under Medicare Part B, signaling a win for industry.

CMS said it is making the change as it was "persuaded that that there is a program need for assigning Part B biosimilar biological products into separate HCPCS [Healthcare Common Procedure Coding System] codes, specifically that this policy change will address concerns about a stronger marketplace, access to these drugs in the United States marketplace, provider and patient choice and competition."

In comments submitted to CMS in September, industry groups and companies 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 average sale price (ASP).

Despite the announcement Thursday afternoon, CMS said do not expect the changes to be completed immediately on 1 January 2018.

"Effective January 1, 2018, newly approved biosimilar biological products with a common reference product will no longer be grouped into the same HCPCS code. We will issue detailed guidance on coding, including instructions for new codes for biosimilars that are currently grouped into a common payment code and the use of modifiers. Completion of these changes, which will require changes to the claims processing systems, is planned to occur as soon as feasible, but should not be expected to be complete by January 1, 2018," CMS said.

The Biosimilars Forum applauded CMS' decision to reverse the reimbursement policy that had been in effect since 1 January 2016.

Comments

The agency also responded to comments on tracking biosimilars and ensuring consistency between Medicare Part B, Part D and Medicaid.

In discussing comparisons between the US and EU biosimilar markets, CMS said: "In general, we believe that the European examples provided by commenters help confirm that savings can be expected in the United States marketplace with a variety of policy approaches because payments for biosimilar products used in Europe are determined in a several ways. In other words, several payment approaches for biosimilars have yielded savings. 

"We note that payment methodologies for drugs and biologicals in many European countries differ, sometimes significantly, from payment methodologies for drugs and biologicals in the United States. For example, a number of European countries utilize a single payer system and some have the authority to set prices, so some of these examples may not provide information that is fully applicable to the United States market. For example, the description of Austria’s payment policy for biosimilar biological products is not similar to our pricing policy for several reasons. First, Austria uses a single payer system that we understand to include mandatory payment reductions in certain circumstances. We do not use a tiered pricing strategy in Part B and, under the payment methodology in section 1847A of the Act, we cannot mandate 40 to 50 percent reductions in payment for biosimilar biological products by deeming them generic drugs as Austria has done. We believe that many commenters continue to misunderstand our position on the relationship between biosimilar biological products and generic drugs, that is, we distinguish between the two."

Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2018; Medicare Shared Savings Program Requirements; and Medicare Diabetes Prevention Program