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2024 PFS Final Rule: A Deeper Dive on Drugs

January 9, 2024


The Medicare Physician Fee Schedule for 2024 contains several provisions concerning drugs and biologicals that will have an impact on pain practices. This alert provides a summary of those provisions.   

We have provided three alerts in the past few weeks devoted to provisions within the 2024 Medicare Physician Fee Schedule (PFS) final rule applicable to the anesthesia and pain community. This alert seeks to summarize what the final rule has to say about drugs and biologicals, which we believe will be of interest to many of our readers—especially those in a chronic pain practice. Based on a review of a fact sheet published by the Centers for Medicare and Medicaid Services (CMS), we have highlighted the following areas of focus.

Opioid Treatment Programs

The final rule extends current flexibilities for periodic assessments that are furnished via audio-only telecommunications through the end of CY 2024. CMS will allow Opioid Treatment Programs (OTPs) to “bill Medicare under the Part B OTP benefit for furnishing periodic assessments via audio-only telecommunications when video is not available to the beneficiary, to the extent that use of audio-only communications technology is permitted under the applicable SAMHSA and DEA requirements at the time the service is furnished, and all other applicable requirements are met.”

The intent of this extension, according to CMS, is to promote continued beneficiary access to these services by minimizing potential disruptions to services following the end of the COVID-19 PHE. The extension is also intended to better align telehealth flexibilities for OTPs with telehealth flexibilities authorized for certain other settings.

Drugs and Inflation

The Inflation Reduction Act (2022) contains several provisions that affect payment limits for beneficiary out-of-pocket costs for certain drugs payable under Part B. The final rule contains the following actions:

  • Section 11402 amends the payment limit for new biosimilars furnished on or after July 1, 2024, during the initial period when ASP data is not available. The final rule codifies this provision.
  • Section 11403 makes changes to the payment limit for certain biosimilars with an ASP that is not more than the ASP of the reference biological for a period of five years. CMS implemented Section 11403 of the IRA under program instruction, as permitted under Section 1847A(c)(5)(C) of the Act. The final rule contains changes to regulatory text to reflect these provisions.
  • Section 11101 requires that beneficiary coinsurance for a Part B rebatable drug is to be based on the inflation-adjusted payment amount if the Medicare payment amount for a calendar quarter exceeds the inflation-adjusted payment amount, beginning on April 1, 2023. CMS issued initial guidance implementing this provision, as permitted under Section 1847A(c)(5)(C) of the Act, on February 9, 2023, and is finalizing “conforming changes” to regulatory text.

Discarded Drug Amounts

In the 2023 PFS final rule, CMS adopted policies to implement Section 90004 of the Infrastructure Investment and Jobs Act. Among them, were (a) reporting requirements for use of the JW modifier to report discarded amounts of drugs from single-dose containers and the use of the JZ modifier for such drugs with no discarded amounts; (b) an increased applicable percentage of 35 percent for a category of drugs with unique circumstances; and (c) a dispute resolution process.

In the 2024 PFS final rule, these additional policies were added, including:

  • Timelines for the initial and subsequent discarded drug refund reports to manufacturers.
  • The method of calculating refunds for discarded amounts from lagged claims data.
  • The method of calculating refunds when there are multiple manufacturers for a refundable drug.
  • Increased applicable percentages for certain drugs with unique circumstances (e.g., drugs with small volume doses and rarely utilized orphan drugs).
  • An application process by which manufacturers may request an increased applicable percentage for a drug with unique circumstances.
  • Modification to the JW and JZ modifier policy for drugs payable under Part B from single-dose containers that are furnished by a supplier who does not administer the drug.

Electronic Prescribing for Controlled Substances

The final rule provides for the issuing of a prescriber notice of non-compliance as the non-compliance action for subsequent measurement years. CMS may consider a prescriber’s non-compliance under the CMS EPCS program in its processes for assessing potential fraud, waste, and abuse. In some instances, this could result in a referral to law enforcement or revocation of billing privileges in the event that evidence of fraud, waste, or abuse is present.

CMS is also finalizing the following provisions:

  • Remove the same entity exception.
  • Determine compliance by counting unique prescriptions in the measurement year by prescription number assigned by the pharmacy and included in the Part D claims data. This would exclude refills (which are not separately transmitted) from the compliance calculations and include renewals, which are assigned a new prescription number by the pharmacy.
  • Update the exception for emergencies to allow CMS to identify which emergencies qualify for the exception and establishing that, as a default, prescribers impacted by the recognized emergency exception would be excepted for the entire measurement year.
  • Updates to extraordinary circumstances waivers to further clarify the process for applying for a waiver, the circumstances in which CMS can grant a waiver and establishing that approved waivers would apply to the entire measurement year.

The final rule also clarifies that the CMS EPCS Program will continue to align with Part D e-prescribing standards.

For more information on this or other parts of the 2024 PFS final rule, you can visit the following website: Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule | CMS.

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