CMS Implements Significant Updates to HCPCS Level II Coding Cycles and Procedures

HCPCS Level II Coding CyclesThe Centers for Medicare & Medicaid Services (CMS) announced that, beginning in January 2020, CMS will implement shorter and more frequent HCPCS Level II coding  cycles for requests to modify the Healthcare Common Procedure Coding System (HCPCS) Level II code set. Under the updated procedures, stakeholders will be able to submit code applications on a quarterly basis for drugs and biologicals, and on a bi-annual basis for durable medical equipment, orthotics, prosthetics and supplies (DMEPOS) and other non-drug, non-biological products. CMS also will publish final coding decisions more frequently, and has made additional process changes in light of the updated coding cycles. These updates represent a significant change from the prior framework that had only one submission deadline and coding cycle for each calendar year.

These updates are part of CMS’s initiative to “unleash innovation” and provide an opportunity for manufacturers and other stakeholders to benefit from more frequent opportunities to submit coding applications. According to CMS, these changes seek to improve patients’ access to new therapies and technologies. CMS forecasted these changes in May 2019, as addressed in a prior Sidley update, emphasizing the role of these updates in “a comprehensive CMS strategy to address barriers to medical innovation in the Medicare program” and to “expedite adoption of and patient access to new medical technologies.”

Key Procedural Changes and Considerations Beginning January 1, 2020

Removal of FDA approval grace period for drugs and biologicals. Under the previous annual HCPCS application process (with only one coding cycle per year), CMS did not require drugs and biologicals to have received Food and Drug Administration (FDA) approval prior to the initial submission of an application in early January. Instead, CMS provided a “grace period” of approximately three months during which drug and biological applicants could submit FDA approval information for a previously submitted application. Applicants typically had until around March 31 to submit FDA approval information; otherwise, the application would not be considered until the following calendar year.

Under the new quarterly application process and HCPCS Level II coding  cycles for drugs and biologicals, CMS is removing this “grace period” and instead will require all products to receive FDA approval before an application may be submitted. Accordingly, moving forward, all required FDA documentation must be included when a HCPCS Level II coding application is submitted.

Elimination of public meetings for drugs and biologicals. To enable the implementation of quarterly HCPCS Level II coding  cycles for drugs and biological products beginning in 2020, CMS states that it “will not be able to conduct public meetings for coding decisions on drugs and biological products.” But, “for 2020 coding cycles, [CMS] will provide an opportunity for applicants to resubmit the application in a subsequent quarterly coding cycle” if the applicant does not receive a favorable determination. According to CMS, “[t]his offers an opportunity for individual applicants who are dissatisfied with CMS’ coding decisions in one quarterly cycle to immediately reapply in the next or a subsequent quarterly cycle” and, as such, still may generally provide a shorter “overall timeframe for consideration of successive applications” as compared to the prior, annual coding cycle.

However, CMS also reserves the right to consider certain applications beyond the coding cycle in which they were submitted. In addition, the updated procedures for 2020 applications expressly refer to the 2020 coding cycles. As such, it is not clear whether all of the process changes for 2020 will apply in future years. CMS notes, though, that it believes these changes “are necessary to allow CMS to provide coding on a quarterly cycle” for drugs and biologicals.

Continuation of public meetings for DMEPOS and other non-drug, non-biological items. CMS will continue to conduct public meetings regarding applications for DMEPOS and other non-drug, non-biological products, in light of certain statutory requirements regarding “public consultation for coding and payment determinations for new DME items under Medicare Part B.” These public meetings will occur bi-annually in 2020 (in light of the change to bi-annual coding cycles for these items) and will “provide a forum for interested parties to make oral presentations and/or to submit written comments in response to preliminary HCPCS coding and Medicare pricing recommendations” for these products.

Potential for decisions to extend beyond a coding cycle. CMS states that it “will make every effort to complete the review” of “all timely and complete code applications” within the applicable coding cycle. CMS further states that certain coding decisions may be “particularly complex or multi-faceted,” and that “CMS maintains the flexibility at its discretion to continue consideration of [an] application into the next coding cycle” in the “rare” circumstance where CMS needs additional time for its review, such as applications requiring in-depth clinical or other research, or involving complicated claims adjudication scenarios.

Important Dates for 2020 Applications and Coding Cycles

Updated application deadlines, decision time frames, and Medicare effective dates for drugs and biologicals. The updated HCPCS Level II Coding Procedures document outlines key dates and deadlines for the new 2020 HCPCS Level II coding cycles. The deadline for Q1 2020 application submissions is January 6, 2020. CMS also provides information regarding effective dates associated with each coding cycle. Regarding these effective dates, CMS emphasizes that “[e]ach payer effectuates the changes to the code sets on its own timeframes,” but that the specified effective dates for changes to the code sets will apply for Medicare unless otherwise announced or specified.

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