Biosimilar Coding—Could There Be Billions in Hidden Savings?

By Xcenda

We partnered with the Biosimilars Forum to publish an original study relating to CMS reimbursement of biosimilars. The study demonstrates the need for changes in CMS reimbursement for biosimilars under Medicare Part B.


Estimating the Budgetary Impact of Biosimilar Coding Policies Under Medicare Part B

In November 2015, the Centers for Medicare & Medicaid Services (CMS) finalized a controversial Medicare payment rule for biosimilars: all biosimilars relative to the same reference product will share the same Healthcare Common Procedure Coding System (HCPCS) code and payment rate, separate from the reference product. This creates a single, blended Medicare reimbursement rate for the biosimilars based on the average sales price (ASP) of all biosimilars to a reference product, plus 6% of the ASP for the reference biologic. Under current policy, reference products will still maintain their separate HCPCS codes and individual ASPs. 
Xcenda, working with the Biosimilars Forum, modeled alternative methodologies. While CMS’ policy is estimated to save the Medicare program $25.0 billion over 10 years, an alternative coding policy, which would provide each biosimilar with its own billing code and separate payment rate, could increase savings by an additional $15.1 billion, or 30% ($65.0 billion in total over 10 years). A separate coding and payment policy could provide larger savings to the Medicare program, as it could encourage greater price competition and uptake of biosimilar products in the marketplace, representing a win for patients and payers.

The study comes at a fortuitous time, as CMS announced just last month in the Medicare Physician Fee Schedule (MPFS) proposed rule it was revisiting the biosimilars coding and payment policy