Coding Chaos: How Pharma Can Help Providers Get Paid
For manufacturers of medical benefit drugs, ensuring accurate provider reimbursement is essential. If providers are unaware of how to appropriately bill for a particular drug, their errors will result in claims denials, which in turn may lead them to stop prescribing that drug in favor of another. Inadvertent underbilling for services rendered is also a top provider concern, especially given the popularity of buy-and-bill procurement.
In an attempt to manage medical drug spend, a majority of payers are now enforcing an NDC mandate. Many payers have systems in place to validate coding and unit conversions, and will deny a claim outright if their policies are not followed to the letter. Providers must ensure that their NDC/HCPCS crosswalk information is correct, and that they do not have an invalid NDC or the wrong J code for the drug administered. Providers must also ensure the correct conversion to HCPCS billing units, and make sure that drug wastage is accurately reported.
Let’s look at three market challenges that contribute to prescriber uncertainty about billing and coding requirements—and discuss what manufacturers can do to help.
Continued Coding Confusion for 505(b)(2) Generics
In 2023, CMS began issuing unique HCPCS codes for generic drugs approved under the FDA’s 505(b)(2) new drug application (NDA) pathway. As generics approved via this pathway are considered single source drugs—which are not therapeutically equivalent to their reference drug—they now have a unique HCPCS Level II billing and payment code, or J code.
In a previous blog post, we discussed the likelihood that this change would lead to immense coding confusion. Providers have to be careful to select the correct J code for the drug they’re administering in order to be appropriately reimbursed. As many J-code drugs are very expensive, there can be a huge cost differential per unit based on the chosen code.
Now that we’re a year and a half into this change, confusion remains in the marketplace. CMS has issued new codes for certain generics and then subsequently recategorized them under a different code. The agency is also continuing to add unique J codes in separate addendums, which compounds the confusion. In situations in which the product does not have a therapeutic equivalent, its J code will specify the manufacturer’s name.
However, some manufacturers now have two product lines for the same generic drug. Recently, a few manufacturers of 505(b)(2) generics have also launched a competing generic, which is therapeutically equivalent to the originating product. This results in the manufacturer having two different generics with two different NDCs, each of which points back to a different J code.
Inaccurate NDC/HCPCS Crosswalking and Unit Conversions
In recent years, the delicate art of correctly associating an NDC to a J code has become even more challenging. As more payers have implemented NDC mandates, providers have faced an increase in denials, with some practices seeing a 30% jump.
At smaller practices that prescribe only a handful of drugs, providers have typically figured out the correct billing process over time. Without the use of a crosswalk and conversion tool, however, they may be unprepared to bill for any new drugs that emerge in their indication. Although payers exercise varying degrees of rigor in their claims auditing, many take a hard line on errors in order to prompt changes in physician billing behavior.
On the flip side, providers are more likely to receive inaccurate reimbursement from payers that do not enforce an NDC mandate. If a provider is not required to specify a drug’s unique NDC on the claim, the payer will likely use the median code price for that drug category for reimbursement—which may be significantly less than the price of the drug that was actually administered. As prescribers often don’t know what kind of fee schedule the payer is applying to their payment, they may not be aware of the missing funds until much later.
To complicate matters, CMS routinely changes its coding to reflect internal reorganization initiatives or accommodate new therapies. To cite just one example, the monoclonal antibody therapy Entyvio is available both intravenously and subcutaneously. Both NDCs for each formulation initially crosswalked to J-3380, which was previously described as a 1 mg vedolizumab injection without a specified route of administration.
When CMS issued a code descriptor change for J-338, changing it to “injection, vedolizumab, intravaneous, 1 mg,” the agency then relocated the subcutaneous version of Entyvio to J-3590, which is a catch-all for more than 780 “unclassified biologics.” Until subcutaneous Entyvio receives a permanent J-code of its own, providers billing for this drug will need to use J-3590 to ensure reimbursement, or risk denial.
Providers must also contend with NDC to HCPCS billing unit conversions, which introduces a whole new set of concerns. If a provider administers 10 mg of a drug, the equivalent of 1 unit for that NDC, they must convert the dosage to the appropriate HCPCS code’s billing unit, which may equal 5 ml, or .2 of a vial. There’s a complicated conversion factor that must be applied to arrive at the correct number of HCPCS units.
Unfortunately, many providers simply choose the same units as the NDC, leading to gross over- and/or under-billing. If the payer conducts an audit, the claim will be denied. And even if there is no audit, the mistake might mean the provider is only paid half of what they’re owed.
New Drug Wastage Billing Requirements
Drug wastage is defined as the unused portion of a drug package that is not administered to the patient. While multi-dose packages can be used for multiple patients or doses, single-dose drug packages are used once and then discarded. Single-dose packages account for the majority (62%) of medically administered NDCs, including 84% of all specialty drug NDCs.
A recent CMS change now asks providers to track drug wastage for single-dose packages using new billing requirements for JW and JZ modifiers. If a provider uses 75% of a single-dose vial, for example, the provider should bill Medicare for the amount of drug administered while simultaneously filing a second claim for the 25% drug wastage. CMS has stated that if a manufacturer’s drug wastage exceeds a certain threshold over time, they will begin issuing invoices to manufacturers to collect reimbursement for this cumulative drug wastage.
Beginning in July 2023, Medicare now requires the JZ modifier (which indicates no waste) on all claims for single-dose containers where there are no discarded amounts. For all cases in which there is drug wastage, the provider must now submit two claim lines: one that specifies the number of units given to the patient, with the calculated price for only the administered amount; and another that specifies the number of units wasted, with the JW modifier (which indicates waste) and the calculated price for only the drug wastage amount.
Naturally, this change is causing a fair amount of confusion for providers, as it’s a change from how they’ve become accustomed to billing. For example, the use of the JW modifier is no longer permitted when the billing unit is equal or greater than the total actual dose and the amount discarded.
To summarize, pharma companies must recognize that providers need quite a bit of help coping with these continuously evolving billing and coding complexities. Manufacturers of both new and existing medical benefit drugs can offer providers crosswalk and coding validation tools to dramatically improve reimbursement accuracy. By investing up front in the financial health of a brand’s prescribers, a pharma company can ensure that coding confusion and reimbursement challenges do not cause providers to abandon its brand in favor of competitors.
Learn how MMIT’s provider-facing RC Claim Assist solution can help your brand’s prescribers receive the right payments using the correct coding, crosswalk data, and conversion units.
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