Hello Roberta Buell,

Happy August and dog days of summer!! I am here in Sonoma County, home of wine tastings galore, and it has been great to be out of the San Francisco cold for a while. And, there has been a lot of news for this time of year, so here we go or, as my daughter says, "HWG".

You may be wondering why there are just so many HCPCS codes each quarter. As we have said before, these are what's known as 505(b)(2) drugs. Like wine, there are many varietals of drugs--brands, generics, biosimilars, and 505(b)(2)s. 505(b)(2)s are unique because some of them are therapeutically equivalent and some aren't. Those that are not therapeutically equivalent are given unique HCPCS per a policy enacted at the end of last year. While 505(b)(2)s have some advantages over generics, the assignment of HCPCS codes has caused a boatload of billing issues. Check out our article, White Paper, and webinar which are all available below.

While I was immersed in the latest round of regulatory proposals, another Proposed Rule was released. I think this proposal (as opposed to the Physician Proposed Rule) is very good news in some ways. During the Trump years, plans that are not compliant with Obamacare are called 'temporary', even though someone can be insured by them for up to three years. One thing that was terrible, particularly for cancer and other specialty drug therapies, was a cap on monthly or annual insurance spends. The Biden proposal assures that patients will only have access to these plans for a short time.

I have resisted covering drug shortages because everyone has published something about them. But, I do think there are reimbursement and practice management issues with these shortages, so there is an article enclosed that explains that aspect. Plus, we have Sound Bytes as well.

Have fun for the last two weeks of Summer...and, then, Football Season is here!

Da' Mistress

The 505(b)(2) new drug application (NDA) is one of three U.S. Food and Drug Administration (FDA) drug approval pathways and represents an appealing regulatory strategy for many manufacturers. The pathway was created by the Hatch-Waxman Amendments of 1984, with 505(b)(2) referring to a section of the Federal Food, Drug, and Cosmetic Act . Manufacturers can gain approval for a product that is very similar to a brand-name drug but does not have the exact same chemical composition. By referencing an approved drug, pharma companies can shorten the approval timeline, omit years of clinical trials, and release a new drug with a different dosage form, strength, or administration route. Some 505(b)(2) drugs are therapeutically equivalent in terms of indications; others are not.

The current HCPCS situation for 505(b)(2) drugs started when a Part B Medicare Physician Fee Schedule Rule 2021 proposal regarding 505(b)(2) drugs was issued in late 2020. In that Proposed Rule CMS proposed to install a new coding decision pathway for some 505(b)(2) drugs. Initially, they proposed to group all equivalent drugs into a single drug HCPCS. Here’s what CMS said at the time, which is VERY DIFFERENT than the current code assignment strategy:

“Some drugs approved under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act share similar labeling and uses with generic drugs that are assigned to multiple source drug codes. CMS is proposing to continue assigning certain 505(b)(2) drug products to existing multiple source drug codes. This approach is consistent with our interpretation of the definition of multiple source drug in section 1847A of the Act.” 

However, since then, Medicare generic drug coding scheme (placing all generics in one drug code) has been associated with some drug shortages. Recently, generics like carboplatin, cisplatin, IV fluids, and furosemide have been consistently unavailable. This is partially due to competitive prices dropping so low in single HCPCS codes that suppliers can no longer produce these drugs.

After 2020, the HCPCS climate changed with ongoing drug shortages and increased use of unlisted codes (“NOC” which are unspecified/miscellaneous codes, e.g., J9999 or J3490) due to the swell of provider-administered drug approvals, particularly of 505(b)(2) drugs. According to MMIT , 60% of approved NDAs were submitted via the 505(b)(2) pathway.

So, the Centers for Medicare & Medicaid Services (CMS) took steps in Fall 2022 to recognize the value of 505(b)(2) value-added medicines that are not therapeutically equivalent to their reference products by approving distinct HCPCS codes for them based upon FDA equivalence status. An important change to the approval process was that The Consolidated Appropriations Act of 2022 now requires CMS to review 505(b)(2) drugs for HCPCS designation within 180 days of launch. To date (July 2023), 60+ 505(b)(2) products have been assigned a unique code.

As CMS issues new codes for these drugs each quarter, this regulatory process may offer distinct advantages for 505(b)(2) drug products. Yet, with any policy change, there are specific billing issues that HCPs need to be aware of and consider in the billing of 505(b)(2) drugs claims.

Advantages of 505(b)(2) Unique Codes

The most obvious advantage of the unique HCPCS (compared with adding all drugs with the same active ingredient to the same HCPCS) is the ability for each manufacturer to establish their own Average Sales Price for Medicare (and other payers). That is, manufacturers can launch 505(b)(2) without worrying about competitors immediately dropping the price of their new drug. This strategy also affords providers the opportunity to compare reimbursements for several drugs with the same or similar indications. 

Other benefits include:

• There are less NOC (Unspecified) HCPCS Codes and better, faster billing with unique HCPCS. According to our most recent survey, 20% of practices/clinics will not bill a drug until it receives its own HCPCS. The reason is each NOC code must be manually reviewed by insurers. This causes delays and denials of drug claims and frustration for HCPs.
• Providers can contrast and compare pricing among drugs that are therapeutically equivalent. The unique HCPCS have their own Average Sales Price plus 6% for Medicare payment and, naturally, each drug has a unique cost. When drugs are lumped into a single code as many of these drugs once were, it is impossible to know the profitability (or not). With pricing changes each quarter, HCPs can decide which products meet the reimbursement goals of their facilities, e.g., top line, bottom line, distributor offers or rebates, etc.
• These products, particularly those 505(b)(2)s that are branded (e.g., Pemfexy, Camcevi, Fensolvi), have programs to assist patients, which generics do not. Due to the quick de-escalation of prices and reimbursements with generics, many manufacturers abandon their Patient Assistance, Commercial Co-pay cards, and Foundation programs for patient access. Many of the 505(b)(2) drugs are branded and maintain these programs which are valued by HCPs, patients, and advocacy organizations.
• HCPs can explore which product fits their facility’s chair traffic. Some 505(b)(2)s have the same active ingredient and approved for the same indications but may have differing infusion times and routes. For example, Bendeka and Belrapso are two 505(b)(2) bendamustines that have the same active ingredients and indications. Belrapso has a 30- or 60-minutes infusion time, while Bendeka’s is 10 minutes. Busy practices generally prefer shorter infusion times as they can serve more patients in a single day, even with lower drug administration payments. Conversely, smaller practices might prefer to keep their infusion suite full and may select drugs with longer infusion times to capture more drug administration reimbursement. 505(b)(2) offer flexibility to meet every facility’s needs.
• Some 505(b)(2)s can help participating practices minimize risk in the Enhancing Oncology Model (“EOM”) because some drugs in particular indications are classified as ‘novel’ therapies. While there is no penalty for NOT using Novel Therapies in the EOM, the Novel Therapy Adjustment (“NTA”) is an upward adjustment in the benchmark for each of the approved in the EOM 7 tumor types to each 6-month episode. The adjustment is to account for the use of innovative drugs in certain indications without a negative impact on the targeted benchmarks by tumor for that period. The American Society of Clinical Oncology (ASCO) has said this about the NTA : “The NTA applied at a cancer type level would have resulted in more instances where practices would have qualified for a benchmark adjustment. We believe that the EOM approach to NTA applied at a cancer type level is more favorable for participating practices and provides valuable financial protection when incorporating clinically appropriate novel therapy for cancer treatment.” There are 505(b)(2) oncologics on the EOM Novel Therapies List such as pemetrexed, bendamustine, and bortezimib. One might not expect these therapies to be novel, but they are!

With any new coding and billing policy, even if favorable, our experience tells us that there is usually billing and payment confusion. And 505(b)(2) coding is no exception. To minimize confusion and maximize clean claims, we outline some of the pitfall’s practices may experience in billing 505(b)(2) drug and strategies to prevent them:

• Matching National Drug Codes to HCPCS can be tricky. Currently over 68% of payers require NDC codes. Incorrect NDC codes have been a billing problem for the last several years. For any given chemical compound, there may be multiple unique HCPCS codes that correspond to certain NDCs. For example, Vancomycin has 3 HCPCS codes and 19 NDCs. Some of these NDCs are generics and some 505(b)(2)s. It is hard to know which 11-digit NDC matches to a HCPCS when there are multiple choices, The HCPCS is never conveyed on the package or label. A mismatch can cause a claim to be denied and/or cause extra steps to payment.
• Keeping up with the quarterly load of codes is hard on providers. CMS issues codes each quarter; plus, manufacturers gain additional 505(b)(2)s approvals on an ongoing basis. Providers must constantly change their computerized charge documents to reflect these changes. The last thing stretched offices and clinics need is more administrative tasks.
• 505(b)(2) drug prices are a challenge for HCPs as they can fluctuate wildly from quarter to quarter. Additionally, drug costs change as do discounts and rebates from distributors. Choosing the right drug for a practice or clinic may be a daunting task as the best price for 505(b)(2) may change again the very next quarter, while the Average Sales Price for Medicare reimbursement may also increase or decrease. Moreover, Alchemy Healthcare, a company that tracks pricing for drugs, has indicated there have been MAJOR errors in NDC alignments from all four pricing compendia.
• 505(b)(2)s with unique HCPCS are also new for non-Medicare payers. Payers adopt new HCPCS in varying time frames. The large payers, like United, CVS/Aetna, and CIGNA, usually adopt new codes quickly. Smaller payers and some Medicaid plans do not—another issue for HCPs. But, even if the HCPCS is adopted, with all 505(b)(2)s, generics, biosimilars and branded drugs HCPCS, it is dubious that all payers have correctly adopted all changes for 60+ codes since the beginning of 2023. This may be causing adjudication delays and unnecessary claim denials.

To read a White Paper on this topic which shows some examples and some words of wisdom for manufacturers, please click here. To watch a video of our recent webinar on 505(b)(2) and HCPCS, click here. It takes a few minutes to load and start (at about 1:45).

When the Proposed Rules came out last month, we did not have time to report on another significant Proposal from the Biden Administration. This proposed rule released in July reduces the impact of Junk Health Plans established by the Trump Administration; clarifies some issues with the No Surprises Act; and. protects Seniors from the horrors of significant medical debt.

• Cracking down on junk insurance: One thing we have seen in our data is that, for the past 5 or 6 years, plans started having "caps" meaning monthly or annual limits on healthcare. Also, we sporadically saw denials for what looked like pre-existing conditions.. Actions from the previous administration allowed insurance companies to take advantage of loopholes in the law and sell “junk insurance” plans that evade these protections. These loopholes can leave patients without coverage when they develop acute or chronic diseases. In response to this madness, the Biden Administration has proposed:
• Short-term” plans must be truly short-term. Under the new rules, if finalized, plans that claim to be “short-term” health insurance would be limited to just 3 months, or a maximum of 4 months, if extended – instead of the 3 years that junk plans can be today. One of the objections to this proposal is that it will increase the uninsured rate in the U.S. And, by the way, the uninsured rate 7.7%--an all-time low.
• Income replacement “fixed indemnity” plans cannot mimic comprehensive health insurance. These plans are meant to replace lost income when people get sick, rather than provide full medical coverage -- they may have to live up to their original purpose and cannot be designed like comprehensive health insurance. What these plans do is give patients a fixed amount per day rather than fully insuring the patient's inpatient or outpatient care. Under the proposed rules, plans are required to provide consumers with a clear disclaimer that explains the limits of their benefits, including to existing consumers currently enrolled in these plans. 
• Plans have to clearly disclose limits. Under the proposed rules, plans are required to provide consumers with a clear disclaimer that explains the limits of their benefits, including to existing consumers currently enrolled in these plans
• Preventing surprise medical billing. Millions of people received surprise bills for health care they thought was in-network care covered and (sometimes) discounted by their health plan. This could include when people need emergency care and are taken to the nearest hospital, or when a pregnant woman delivers her baby at an in-network hospitals only to find out that the anesthesiologist who cared for her is actually out-of-network. These surprise bills can cost people hundreds or thousands of dollars, averaging between $750 to $2,600, according to the administration. And, speaking of No Surprises, CMS Friday on August 11 said that the administrative fee for using the federal independent dispute resolution (IDR) process created by the No Surprises Act will be back down to $50 as of August 3, and although the IDR portal remains closed for now the administration says it will reopen for new submissions “soon” and the interested parties will be notified at that time. The portal has been closed since August 3, when a federal court in Texas ruled that the administration violated the Administrative Procedure Act by hiking the fee from $50 in 2022 to $350 starting January 1.

The Administration is taking more measures to protect consumers from surprise medical bills by issuing guidance to clarify that payers cannot use loopholes to avoid surprising billing protections:

• Ending abuse of “in-network” designation. Today, some health plans contract with hospitals, but try to claim that they are not technically “in-network” – which can expose consumers to higher payments when they have to make a hospital visit. The Administration proposes that this is not allowed under federal law: health care services provided by these providers are either out-of-network and subject to the surprise billing protections, or they are in-network and subject to the ACA’s annual limitation on cost-sharing, further protecting consumers from excessive out-of-pocket costs.
• Facility fees treated like other health care costs. The Administration is also concerned about an increase in patients being charged “facility fees” for health care provided outside of hospitals, like at a doctor’s office. Why hospitals are the only source of this cost is beyond me. These fees are often a surprise for consumers and a bone of contention for all physician practices. Health plans and providers must make information about these facility fees publicly available to consumers, as well as other price information for services and items they cover or provide.
• Protecting consumers from unfair medical debt. Increasingly, health care providers are signing up patients for third-party medical credit cards and loans to help pay for care. These credit cards often include 'teaser rates' and deferred interest features that lead to higher costs for consumers, and may be offered even when low- or no-cost alternatives, such as zero-interest payment plans, financial assistance, or health coverage may be available. Health care providers may be promoting these products because they may allow providers to get paid faster, by outsourcing service and collections costs to third parties. They may also receive a higher payment from consumers who otherwise would pay a discounted price for care, and in some circumstances, receive a share of the interest revenue gained by the third-party financial company. Use of these products may complicate insurance coverage and the availability of financial assistance, and consumers may not fully understand the risks associated with these products, leading to higher costs and possible negative credit ratings.

For more about this proposed rule, here is the Fact Sheet from the White House.

Drug shortages are the highest they have been in 10 years. As of June 6, 2023, there were 138 products listed on the FDA drug shortage list, of which all but 40 were on the American Society for Health Systems Pharmacists’ (ASHP) drug shortage list. Additionally, the ASHP list included 141 other products that are not considered to be in shortage by the FDA. It seems like every single day I am publishing an Alert to our RxVantage subscribers regarding drug shortages. When things like Sterile Water for Injection are in shortage, you know we are in Deep Trouble.

Both the American Society of Clinical Oncology ("ASCO") and the Community Oncology Alliance ("COA") have testified to Congressional Committees regarding this crisis, which has hit cancer patients particularly hard with shortages of cisplatin, carboplatin, and, periodically, leucovorin. In their Member Survey, NCCN polled 27 NCCN member institutions across the United States from May 23 to 31. While the survey found that all of the centers were still able to treat patients who needed cisplatin without any delays, only 64% were able to keep all current carboplatin patients on the drug. Another 20% said they were able to provide carboplatin to only some patients. Many other specialties are also impacted by shortages of IV fluids, Furosemide, and Dexamethasone.

There are many factors that cause drug shortages and knowing some of them can be predictive in terms of trying to figure out solutions to this awful problem. Here are some of them:

• Shrinking margins, particularly for generic drugs--To capture market share, the first to market generic drug, in a quest to have a lower Average Selling Price ("ASP") than their reference product lowers the product price. As competition within the generic entrants, both the brand and generics continues to lower prices until some manufacturers cannot afford to produce drugs.
• High volume GPOs and Large Provider Networks negotiate lower prices. As consolidation grows in the healthcare economy, large networks are tough about including competitive drugs on formulary. Plus, Group Purchasing Organizations also can drive manufacturer margins down by requiring lower and lower price. And, these are not the only deep discounts manufacturers face. 340B and Medicaid rebates also tear into margins and contribute to disincentives that lead to shortages.
• Unexpected increases in demand--ADHD products and off-label weight loss drugs such as Ozempic® have had periodic shortages due to possible unexpected demand for both legal and 'underground' sales of these products. Unless manufacturers can accurately forecast unit sales, supplies can run short. While the non-prescription market can be difficult to forecast, Purdue sure had no problem producing oxycodone.
• Manufacturing issues that cause low production. There are many reasons that there can be snafus in manufacturing, but here are some I have read about in research for this article:
• The shortage of platinum-based drugs is causing oncologists all over the U.S. to ration the drugs that are used to treat as many as 500,000 new cancer patients per year. As cisplatin and carboplatin are being rationed at clinics nationwide, (The Cancer Letter, May 26, April 7, 2023). The reason for this reportedly occurred because manufacturers failed to invest in enhancing production capacity--cisplatin had a factory issue and this caused a chain reaction leading to a dwindling supply of carboplatin.
• Natural disasters like the tornado that struck a Pfizer facility in North Carolina and the hurricane in Puerto Rico a few years ago can short production. The unfortunate part of these is that facilities cannot easily be replaced in some cases.
• Recalls and sterilization problems can wreak havoc on the supply chain. Both of these issues along with the Pandemic hit IV fluids particularly hard and this has caused shortages of almost every IV fluid.

It is great to know the causes of these problems. But, that does not solve the shortage issue for most practices and hospitals. The main thing is to come up with solutions. First off, in my view, CMS should consider paying generics by the National Drug Code ("NDC") ASP rather than by weighted-average HCPCS ASP. While this may be an administrative hassle in the short term, 68% of payers now require an NDC and many large practices include NDC on every claim. In the absence of this change, CMS maybe should pay generics had a higher ASP percentage like they do with biosimilars. Here are some steps practices and clinics can take (inspired by this great article from ASHP):

• Keep updated on drugs in shortage. If you are an RxVantage Member, we update through our Alerts each time the FDA posts shortages for widely-used drugs. Alternatively, both the FDA and the ASHP post shortages on a regular basis. If you don't stay updated, it will be hard to follow all of the remaining steps listed here.
• Ensure that your patients are very well informed. As we all know our patients Google their diagnosis and may be well aware of their probable medication, so proactive explanations may be in order. Furthermore, there may be payer issues with substitutions so that Medicare patients may have to sign an Advance Beneficiary Notice ("ABN") or go through a lengthy authorization process with commercial insurance.
• Have a formal process for substitution: If you have a Pharmacy and Therapeutics Committee or regular meeting for this purpose, substitution should be a formal process in this group. Minutes for these meetings should be thorough and accessible to outside agencies, such as payers. Additionally, if your group uses clinical pathways, documentation of shortages should be in amended pathways.
• Try to minimize financial risk. From what we have heard, payers are aware of some of the most publicized shortages. However, for commercial patients, prior auth may not be required for generic drugs, but, if there is substitution, it is a good idea to make sure that substitution is approved by the payer. Additionally, good record-keeping is crucial to ensure that, in retrospective audits, payers may want to know why another drug was chosen for that patient. This means documentation in treatment plans and, in some cases, in financial records is important.
• And one more thing: We are well aware that there is price gouging out there, which may be unavoidable under the current conditions. According to NBC News, at the height of a drug shortage crisis in 2011, pharmacists at more than 200 hospitals reported receiving daily offers from up to 10 different gray market vendors to purchase medications that were no longer available through their manufacturer or usual wholesaler, according to a survey by the Institute for Safe Medication Practices, a nonprofit group. Our experience tells us that some of these drugs might not be what they say they are. Let's be careful out there!

For more information, again, this article is a great resource for planning and implementation in your practice or clinic. For those of you in the cancer world, ASCO has some pertinent advice also for cancer clinics and offices. Hopefully, the time will come when this type of article is no longer needed.

The Department of Labor is suing UMR, a unit of insurance giant UnitedHealth Group, alleging the plan administrator improperly denied thousands of emergency department and drug screening claims without assessing their merit. In the complaint filed earlier this month, Secretary of Labor Julie Su asked the court to order UMR to bring its procedures for handling claims in line with the law and re-adjudicate claims denied since 2015. UMR is a third-party administrator that contracts with almost 2,140 self-funded plans to adjudicate their claims. According to UnitedHealth, UMR is the largest third-party administrator in the U.S...Humana is stepping up its Medicare Advantage game. Humana — currently the second-largest MA payer after UnitedHealthcare — announced earlier this year it would exit the employer insurance business altogether to focus on government programs. The payer raised its MA membership growth outlook to 18% growth, or about 825,000 more people, in 2023 overall — ahead of earlier forecasts of 17%,..The names have been changed to protect the guilty. Elevance is rebranding its entire Amerigroup segment to Wellpoint, saying the move signifies the health insurer’s commitment to whole-person health (lol!!). Elevance’s relaunch of the Wellpoint brand — the payer’s original name from its founding — is meant to unify its Medicaid, Medicare and commercial health plans in select markets, states where Elevance doesn’t offer Blue Cross and Blue Shield branded products, the payer said. The rebrand announced earlier this month will roll out in January 2024 in six states: Arizona, Iowa, New Jersey, Tennessee, Texas and Washington. Amerigroup plans in Maryland were rebranded as Wellpoint earlier this year. The Amerigroup brand will remain in Washington, D.C. and Georgia, which are on a separate timeline for rebranding, according to an Elevance spokesperson...CDC: Uninsured Rate Hit 'Record Low' Right As States Cut Medicaid. Roughly 7.7% of Americans didn’t have any health insurance as of this past March — a “record low” uninsured rate, according to the latest health insurance survey from the Centers for Disease Control and Prevention. However, that uninsured rate — which still translated to more than 25 million Americans with no health coverage — is almost certainly higher now. That’s because the data don’t include the millions of low-income Americans who have lost the Medicaid coverage they gained during the pandemic...As we mentioned earlier, a Pfizer production plant was damaged in a tornado. While Pfizer has identified 65 injectable drugs that may be in short supply following extensive tornado damage at its Rocky Mount, North Carolina, plant on July 19, experts say most are available from other suppliers. In a July 21 letter to US hospitals, Pfizer listed the 65 at-risk drugs by name and formulation. The list includes forms of epinephrine, fentanyl, heparin, lidocaine, and sodium chloride. The company said it didn't have an estimated date for resumption of drug production at the plant...According to Healthicity, July was a busy month for the OIG! The organization added a significant number of items to its Work Plan, and the White Paper on their site summarized some key updates for you...Modern Healthcare (8/9, Devereaux, Subscription Publication) reports that CMS “is revising its patient experience survey to address low response rates and expand data on care quality.” Announced at the start of August “as part of the agency’s inpatient prospective payment system final rule, the modifications to the Hospital Consumer Assessment of Healthcare Providers and Systems survey have been years in the making.” Specifically, “the HCAHPS survey, given to a random sample of adult hospital patients after their discharge, asks 29 questions about the quality of the care they received.” The survey’s core areas “ask patients to rate their communication between clinicians; the hospital’s environment and cleanliness; and information they were given about medications and discharge planning.” Patients can also “report how likely they would be to recommend the hospital to others.”...On August 1, 2023, the Centers for Medicare & Medicaid Services (CMS) issued the Fiscal Year (FY) 2024 Inpatient Prospective Payment Systems (IPPS) for Acute Care Hospitals and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) Final Rule. This rule has revisions to NTAP, MS-DRGs, ICD-10-CM and ICD-10-PCS, and the hospital quality programs. Here is the IPPS Fact Sheet ...New research by the Ponemon Institute and IBM Security revealed that the global average cost of a data breach reached $4.45 million and the costs of avoiding law enforcement after a ransomware attack have increased by $470,000.Looking across industries at 553 organizations impacted by data breaches that occurred between March 2022 and March 2023, not only did the healthcare sector see a 53% jump in breach costs since the COVID-19 pandemic, health data breach costs reached nearly $11 million.

This newsletter is a brief interpretation of information. It may be subject to typos, misinterpretation, and misapplication. This company and its parent assume no liability for the content herein. Moreover, this is not consultative or legal advice. Billing of claims and payment thereof is individual to payers and circumstance. Providers should check with each payer prior to billing. This information is time-sensitive and may change at any time. Please ensure that you constantly check for new information.