Current CMS Biosimilars Reimbursement Policy Outlined

Although there are many parameters yet to be defined, the Centers for Medicare and Medicaid Services (CMS) has published several policies on biosimilars reimbursement.

Biosimilars approved under the U.S. Food and Drug Administration’s (FDA) abbreviated biosimilar pathway, as well as those deemed interchangeable, will be reimbursed at the same average sales price (ASP)-based rate (ASP plus 6 percent of the ASP of the reference product) using a single Healthcare Common Procedure Coding System (HCPCS) code. The goal is to remove financial incentives to choose an innovator product over a biosimilar, or vice versa, since providers will receive the same margin for either product. Follow-on biologics approved with a full biologics license application (BLA), which are essentially biosimilars but do not have to demonstrate biosimilarity, are eligible to receive a distinct HCPCS code and will be reimbursed based on ASP. During the initial post-launch period before ASP data are available, CMS will pay for these new biosimilars at wholesale acquisition cost (WAC) plus 6 percent of the reference product’s cost.

Once a HCPCS code for a biosimilar has been created, the code will apply to all future biosimilar versions of the same reference product, but with a manufacturer-specific modifier. For example, Q5101, the code created for Zarxio (Sandoz’s biosimilar of Amgen’s Neupogen) will apply to all other biosimilar versions that are approved, but the HCPCS code for Zarxio must also include the modifier ZA-Novartis/Sandoz. Claims that lack the appropriate modifier will be rejected.

Under the Medicare Hospital Outpatient Prospective Payment System, coding and payment for biosimilars in hospital outpatient departments will be the same as in the physician office under Part B. CMS will post new biosimilar HCPCS codes and manufacturer-specific modifiers on its Part B biosimilars web page.