Medicare Monday: Billing code basics for biologics in Part B

We’ve explored the Centers for Medicare & Medicaid Services’ (CMS) flawed policy for reimbursing biologic and biosimilar products before. Today, we’re exploring how proposals from MedPAC would build on this flawed approach and put access to these important medicines at risk.

The set of medicines covered by Medicare Part B are used to treat complex conditions, such as cancer, rheumatoid arthritis and autoimmune disorders. Many Part B medicines are biologics, which are products that consist of large, complex molecules that are difficult to define and produce. As a result, these medicines cannot be exactly copied in the same way that a generic copy can be made for small molecule drugs. Today, manufacturers are beginning to introduce biosimilars for some of the biologics covered by Part B, which are highly similar to, but not the same as, their reference biologics.

Medicines covered by Part B are reimbursed through a market-based mechanism called Average Sales Price (ASP), where most products have their own unique billing code. MedPAC is currently considering a proposal that would change this system. Instead of giving each product a unique billing code and reimbursing the product according to its own ASP, MedPAC’s proposal, called “consolidated billing,” would allow CMS to blend coding and payment for all biologics and their biosimilars. This proposal presents a number of challenges, including:

• Clinical Appropriateness: Blending coding and reimbursement for biologic and biosimilar products could create barriers to accessing clinically appropriate care. Though biosimilars are “similar” to their reference product, there may be clinical reasons why physicians may choose one product over another for treatment of a patient. If reimbursement for biologics and their biosimilars were blended, health care providers could face financial barriers to providing certain treatments because their acquisition costs will be higher than the CMS reimbursement.

• Incentives for Competition: Blending coding and reimbursement for biologics and biosimilars could deter investment in biosimilars, which are expected to bring competition to many Part B medicines.

• Patient Safety: Blending coding and reimbursement for biologics and biosimilars could harm patient safety by making it more difficult to track and accurately attribute adverse events given two or more different medicines will have data consolidated under the same code.

Proposals like blended coding could have even more harmful consequences for patients down the road and could hurt the competitive market for Part B medicines. Establishing separate billing and reimbursement for biologics and each of their biosimilars, as specified by Congress, is the best way to ensure access to these important medicines.

Learn more about Medicare Part B at PhRMA.org/PartB.