Coding & Reimbursement

“Pass-through” drugs and you

These two ophthalmic drugs have the status, so know how to code their use.

By Suzanne L. Corcoran

Within the Medicare system, when major surgical procedures — defined by Medicare as those assigned a global surgery period of 90 days — are performed in a hospital outpatient department (HOPD) or ambulatory surgery center (ASC), the facility fee generally includes all supplies, including drugs. But not always — let’s review two important exceptions for ophthalmology.

Q. On what basis does Medicare pay separately for drugs used during a major surgical procedure performed in an HOPD or ASC?

A. Special ambulatory payment classification groups in the Outpatient Prospective Payment System (OPPS), which governs Part B Medicare reimbursement to HOPDs and ASCs, have been created to accommodate payment for new-technology services and innovative medical devices, drugs and biologicals. This pass-through provision creates a means for Medicare to pay above and beyond the usual facility fee for these specifically designated new drugs and medical devices. The period to bill for this extra payment lasts for 24 to 36 months.

Q. How are payment rates determined?

A. The Part B Medicare payment rate depends initially on the Wholesale Acquisition Cost as reported by the manufacturer and then, two quarters following the first sale of the drug, on the manufacturer’s Average Selling Price; CMS adjusts payment rates quarterly.

Q. What ophthalmic drugs currently have pass-through status?

A. Currently only two pass-through drugs are used in major ophthalmic surgery: Mitosol (ophthalmic mitomycin, Mobius Therapeutics) and Omidria (phenylephrine and ketorolac injection, Omeros Corporation). These drugs have separate reimbursement under the Part B Medicare OPPS transitional pass-through provision of the Social Security Act §1833(t)(6). Other third-party payers may follow CMS’ policy but are not obliged to do so. Here’s a brief description of these pass-through medications:

• Mitosol. Mitomycin is an anti-metabolite administered topically, most often in glaucoma and pterygium cases, to inhibit scar formation. It has been widely used for a number of years, but had no specific approval for ophthalmic use, so surgeons have been obliged to use it off-label if they used it at all. Coding for ophthalmic mitomycin use has usually been via an unlisted drug code (J3490); a few payers instructed providers to use the pre-existing code J9280 (mitomycin 5 mg), even though the dosing in the J9280 descriptor did not match ophthalmic uses.

In February 2012, the FDA approved an ophthalmic preparation, Mitosol, for use in glaucoma surgery. A new HCPCS code, J7315, was approved for Mitosol as of Jan. 1, 2013. When used in a facility setting, the drug has pass-through status, which allows separate reimbursement, as of April 1, 2013.

• Omidria 1%/0.3%. Omidria is used during cataract and lens replacement surgery (ie, refractive lens exchange or IOL exchange) to maintain pupil size by preventing intraoperative miosis (pupil constriction) and to reduce postoperative pain. A vial of Omidria is diluted in the balance salt irrigating solution for use during the procedure. The FDA approved Omidria on May 30, 2014.

Omidria was granted pass-through status in October 2014 and became eligible for claim submission with dates of service on or after Jan. 1, 2015. The new HCPCS code is C9447 (injection, phenylephrine and ketorolac, 4 ml vial).

Q. Does use of these drugs affect the surgeon’s reimbursement?

A. No. Application of topical mitomycin in glaucoma or pterygium surgery is incidental to the surgical procedure. Likewise, irrigation of the eye during cataract surgery is an inherent part of the procedure. In either case, there is no separate or distinct professional service for which to bill.

Q. Do beneficiary copayments apply to pass-through drugs?

A. Different rules exist for HOPDs and ASCs. When CMS grants a product pass-through status under Part B Medicare, no copayments apply to the reimbursement of the product within the HOPD. The statutory 20% copayment, however, does apply in an ASC. Other parts of the same claim are not affected; the usual deductibles and copayments apply to the surgical procedure(s).

Q. Are there purchasing concerns related to pass-through drugs?

A. Only the facility should purchase these drugs since the facility is paid for them. Significantly, the surgeon should not purchase them for later sale to a facility, nor should the facility seek payment from the surgeon as a way to decrease costs. OM

Suzanne L. Corcoran is vice president of Corcoran Consulting Group. She can be reached at (800) 399-6565 or www.corcoranccg.com.