A bipartisan congressional effort is underway to convince CMS to reverse its biosimilar reimbursement policy implemented under the Obama administration. We discussed the current reimbursement policy in a March 2016 blog post when CMS initially released the guidance.  CMS implemented the controversial guidance as a final rule in October 2016.

The current policy requires all biosimilars that are related to a reference product to be given a shared Healthcare Common Procedure Coding System (HCPCS) code. For Medicare Part B, reimbursement is then calculated based on the average sales price (ASP) of all of the biosimilars with that HCPCS code plus 6% of their reference product’s ASP. Continue Reading CMS Urged To Reverse Obama-Era Biosimilar Reimbursement Policy

Last week, the Medicare Payment Advisory Commission (the “Commission”) debated a package of policy reforms that would change the way Medicare reimburses physicians for Medicare Part B drugs. In the midst of calls to lower drug prices, the Commission has been developing its Part B reform package over the last two years and now, finally, appears poised to move forward with a vote at next month’s meeting.

Medicare Part B drugs are a multi-billion dollar benefit and typically include higher cost specialty drugs that are administered in a physician’s office on an outpatient basis. Drugs covered under Medicare Part B are reimbursed through a so-called “buy and bill” approach. That is, the physician buys the drugs and bills Medicare for their use. Medicare pays the provider the average sales price (“ASP”) of the drug plus a markup of 6% of the ASP.  The 6% markup is generally considered compensation to physicians for the storage, handling, and other administrative costs associated with these specialty drugs. Continue Reading Medicare Advisors Debate Part B Drug Payment Reforms

Last week, the Centers for Medicare & Medicaid Services (CMS) and the Pharmaceutical Research and Manufacturers of America (PhRMA) released proposals to address recent criticism over rising drug prices.  CMS proposed to tackle the rising cost of drugs paid under Medicare Part B by testing an alternative payment model for Part B drugs and biologicals.  Only days after CMS released its proposed rule, PhRMA issued a set of policies to address the high-cost of drugs.  Central to both CMS’s proposed rule and PhRMA’s policies is the use of value-based purchasing.

CMS’s alternative payment model includes two phases.  If finalized, the first phase would change the statutory 6 percent add-on to Average Sales Price (ASP) that is paid to physicians and suppliers to 2.5 percent plus a flat fee of $16.80.  CMS believes that this change, and specifically the change to a flat fee, will minimize providers’ and suppliers’ financial incentives to prescribe more expensive drugs.  Continue Reading Tackling Drug Prices: CMS and PhRMA Propose Steps to Promote Value-Based Purchasing

On March 30, 2015, CMS released guidance addressing Medicare and Medicaid coverage for biosimilar drug products.  The Medicare/Medicaid coverage guidance comes on the heels of the FDA’s landmark approval of a biosimilar version of the reference cancer drug Neupogen. Our colleague Tom Wintner previously wrote about the FDA’s review process for biosimilars, and the expected action on this product.

In its first biosimilar approval, the FDA found that the new product, Zarxio, was in fact a biosimilar to Neupogen and cleared it for use for the same indications as Neupogen.  Zarxio’s manufacturer, Sandoz, did not seek, and the FDA did not determine, however, that Zarxio is interchangeable with Neupogen — meaning physicians will have to specifically prescribe the biosimilar; it may not be automatically substituted for the prescribed branded product.

Perhaps taking its cue from the FDA, CMS’s biosimilar guidance documents should be viewed as a first step: historic in some aspects, but at the same time tentative and incomplete.

Medicare Coverage Requirements

CMS issued two separate Medicare-related documents, one specific to Medicare Part B and one specific to Medicare Part D.

The Medicare Part B issuance notifies health care professionals that:

  • Medicare Part B reimbursement to health care professionals for approved biosimilars will be based on Average Sales Price (ASP) methodology. Once the manufacturer’s Wholesale Acquisition Price (WAC) is available for the biosimilar, Medicare will pay 106% of the WAC before transitioning to payment based on 100% of the ASP plus 6% of the ASP for the reference product.
  • CMS intends to create distinct codes for approved biosimilars to distinguish the biosimilar from the reference product. For the one approved biosimilar, CMS anticipates including a code for it in the coming weeks, retroactive to the FDA approval date.

Importantly, the Part B notice is specific to reimbursement for health care professionals; the materials are silent on Part B reimbursement for hospital outpatient use.   

Continue Reading CMS Takes Initial Steps to Address Medicare & Medicaid Coverage for Biosimilars

Written by:  Kimberly J. Gold

The U.S. Department of Health & Human Services (“HHS”) announced last week that same-sex married couples can now qualify for Medicare Part A and Part B special enrollment periods and reductions in late enrollment penalties.

This policy change results from the groundbreaking 2013 Supreme Court ruling in United States v. Windsor that Section 3 of the Defense of Marriage Act (“DOMA”), which defined marriage as a union between one man and one woman, was unconstitutional.  Because of this ruling, Medicare is no longer prevented by DOMA from recognizing same-sex marriages for determining entitlement to, or eligibility for, Medicare.

HHS Secretary Kathleen Sebelius stated that the Medicare changes will help “to clarify the effects of the Supreme Court’s decision and to ensure that all married couples are treated equally under the law.”

Continue Reading HHS Extends Medicare Coverage to Same-Sex Couples

Written by:  Bridgette A. Wiley

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) released its Work Plan for Fiscal Year 2014 on January 31, 2014.  The Work Plan provides insight into the OIG’s priorities by providing a brief description of the activities it will initiate and continue during fiscal year 2014.  Albeit several months late, the newly published Work Plan aligns with OIG’s Strategic Plan, published in November 2013, and furthers its goals of fighting fraud, waste, and abuse; promoting quality, safety, and value; securing the future; and advancing excellence and innovation.

Continue Reading OIG Plans to Fight Fraud, Waste, and Abuse While Promoting Quality, Safety, and Value in 2014