Time is Money - Diving into the details of “Pass-Through Status” 4/26/21

Drugs continue to enter the market at a fast rate with a heavy price tag. This is complimented with lightning speed information flow directly to providers and patients creating a quick uptake in the utilization. “Time is money”. This phrase has stood the test of time and is more important to consider in the evaluation of the pharmacy revenue cycle.

CMS provides temporary or transitional pass-through payment for certain drugs, biologicals and radiopharmaceuticals as indicated in the Social Security Act Section 1833(t)(6). For the purposes of pass-through, radiopharmaceuticals are included as “drugs”. 

The following outlines at high level some of the key elements to transitional pass-through payment. This is not all inclusive and should refer back to the act for more details.

• An application must be submitted to CMS for approval of pass-through status

• Service is provided in a covered hospital outpatient department

• Service provided is not comparable to another group clinically and with respect to the use of resources to another category 

• Drug is “new” and whose cost is not insignificant in relation to the associated OPPs payment for the procedure

• Pass-through payment will be made for at least 2 years, but not more than 3 years

• Pass-through payment applications are accepted on a quarterly basis and will expire quarterly to grant pass-through payment for as close to 3 years as possible (previously expiration occurred annually) 

• Pass-through drugs are assigned a status indicator of “G” in Addenda A and B

• Payment is based on the ASP methodology and may use a basis of ASP, WAC, or AWP depending on data availability 

Pass-through status often creates confusion around biosimilars as this language has changed throughout the last five years. In CY2016 and 2017, biosimilars were included in their reference product HCPCS assignment and not subject to pass-through status. Upon the finalizing CY2018 Hospital Outpatient Prospective Payment, biosimilars were granted a separate HCPCS code and became eligible for pass-through status. Thus, each new biosimilar that enters the market regardless if it is not the first biosimilar in the category will be assigned a unique HCPCS code and is eligible to receive pass-through payment. 

Shout Outs!

1. Pharmacy teams should monitor for new and expiring drugs with pass-through status. Pass-through status may aid in a formulary decision when assessing financial impact taking special consideration for biosimilars.

2. Revenue integrity teams should monitor for new and expiring drugs with pass-through status and the associated change in status indicator. In select 340B eligible organizations, this change will drive changes in billing modifiers. (To be discussed in more detail in future article)