This year’s HCPCS Public Meeting is providing a master class in some of the common challenges inherent in billing and coding, and how those challenges impact payment policy and, ultimately, utilization of products. Day 2 featured lessons in separate payment for products used in conjunction with services, and appropriate payment when multiple products share the same billing code.
Check out our write-up of yesterday’s meeting here.
When Should a Product Receive Separate Payment if it is Integral to a Service?
Generally, payment for products that are considered integral to a service are not paid separately; payment is included in the cost of the service itself. This is why you don’t see line-item charges for tongue depressors! Exceptions can be made for products that are new, or expensive, or can be used in different types of services.
Avedro, Inc. submitted a request to establish a new HCPCS code to identify their product Photrexa. Photrexa is a photo-enhancing drug for corneal collagen cross-linking to treat serious thinning of the cornea in keratoconus and corneal ectasia following refractive surgery. Photrexra is the only FDA-approved, non-compounded product with this chemical composition. CMS has denied the request on a preliminary basis, since the product is an integral part of a procedure and payment for that service includes payment for Photrexa, if it is used.
In public comments, Avedro disagreed with the preliminary recommendation, arguing that the descriptor for the CPT code that describes the service does not list Photrexa as included in the payment. Dr. John McInnis, Director of the Division of Outpatient Care at CMS, provided a response stating that CPT code descriptors are not exhaustive, and do not establish binding payment policy. He noted that Photrexa is not appropriate to use outside of the procedure; therefore, compensation for Photrexa is included in the practice expense values paid under the Physician Fee Schedule (for office-use) and in the facility fee (for hospital use).
What Happens When Multiple Products Share One Billing Code?
Fidia Pharma USA Inc. submitted a request to discontinue existing HCPCS code J7321 (Hyaluronan or derivative, hyalgan or supartz, for intra-articular injection, per dose” and instead establish unique HCPCS codes to identify individual products that are currently billed using J7321, specifically Fidia’s product Hyalgan and Bioventus’s product Supartz. Zimmer Biomet submitted a similar request for their product VISCO-3.
The manufacturers claimed that it is inappropriate for the products to share one billing code because there are clinical and therapeutic differences between the products that require individual differentiation for dosing, adverse event reporting, and patient outcomes monitoring. Separately, the presenters explained that the shared code made it difficult to negotiate rebates with commercial payers and for providers to file claims, and they are frequently required to provide additional documentation. CMS has denied the request on a preliminary basis.
Michael Daley, President and CEO of OrthogenRX, Inc., spoke in support of CMS’ preliminary decision, stating that the separate billing codes would instead enable manufacturers to increase prices. Frequently, payers will establish a single payment rate for one billing code, forcing manufacturers to keep prices competitive with the prevailing payment rate. This can disadvantage new, more expensive products, even if those products are more clinically appropriate for a specific patient, or are therapeutically superior. Separate billing codes would give manufacturers more control over their benchmark prices and would make it easier for commercial payers to favor one product over another and negotiate manufacturer rebates. Pointing out that there are 12 different products described by J7321, Dr. Daley argued that lower-cost therapeutic options should be encouraged and the use of higher-cost therapeutic options should be discouraged.
A final decision on all of the items considered today is expected in November 2017.
If you have questions about how these applications and corresponding changes could impact your business or products, or would like assistance in preparing a HCPCS application, please contact us at (202) 558-5272 or jscott@appliedpolicy.com.