Biologics and Specialty Drugs

• Definition and examples of biologics and specialty drugs
• Why they are different from traditional drugs
• Special billing procedures and requirements
• Common billing codes
• Coverage and reimbursement challenges
• Strategies for managing specialty drug costs

Some common examples of biologics include:

• Monoclonal antibodies – Used to treat cancer, autoimmune disorders, and more
• Cytokines – Treat cancer and immune disorders
• Enzymes – Used for enzyme replacement therapy
• Vaccines – Prevent infectious diseases
• Blood components – Used for transfusions and therapies
  

Biologics and specialty drugs have unique features that differentiate them from traditional prescription medications:

• Highly complex molecular structure – Require advanced manufacturing and handling
• Treat serious, often chronic illnesses
• Small patient populations – For rare diseases
• Require injection/infusion – Can’t take by mouth
• Expensive – High development and production costs
• Extra patient monitoring required
• Short shelf life – Special storage and handling
• Higher risk of side effects

These complex differences mean biologics and specialty drugs require special procedures for billing, reimbursement, and cost management.

Billing for biologics and specialty drugs has some unique coding, coverage, and reimbursement requirements:

Coding

• Require specific J-codes, C codes, Q codes, and other specialty codes
• May need multiple codes for dose, drug, and administration
• Modifiers important for identifying wasted drugs, partial fills

Patient Financial Assistance

• Copays can be $100s or $1,000s per month
• Manufacturers often provide copay cards and patient assistance programs

Prior Authorization

• Almost always requires prior authorization from insurance
• Detailed medical necessity documentation needed
• Eligibility criteria may apply (failed other therapies, lab values, etc)

Site of Care

• Where drug is administered affects billing (home vs clinic vs hospital)
• Hospital outpatient billing has higher reimbursement rates

Billing Challenges

• Payers may deny claims due to high costs
• Medical vs. pharmacy benefit coverage inconsistencies
• Require reauthorization for ongoing treatment

Accurate coding and detailed documentation is critical for getting reimbursed for these expensive drugs. Having a streamlined process for prior authorizations and financial assistance programs is also key.

There are certain billing codes that are commonly used for specialty drugs and biologics:

J-Codes: Used for injectable/intravenous drugs administered by a healthcare professional. Examples:

• J1745 Injection, infliximab, 10 mg (Remicade for rheumatoid arthritis)
• J9355 Injection, trastuzumab, 10 mg (Herceptin for breast cancer)

C-Codes: Procedure codes for administering injectable or infused drugs. Examples:

• C9399 Unclassified drugs or biologicals (used if no J-code exists)
• C9026 Injection, bortezomib, 0.1 mg (Velcade for multiple myeloma)

Q-Codes: Codes for cancer chemotherapy drugs. For example:

• Q2040 Injection, doxorubicin hydrochloride, 10 mg (Adriamycin chemotherapy)

ICD-10 Codes: Diagnosis codes to document the associated medical condition requiring the specialty medication.

HCPCS Codes: Identify drugs, services, products and supplies. One commonly used for specialty drugs is:

S-Codes: List drugs not included in other code categories. For example:

• S0142 adalimumab injection (Humira for autoimmune disorders)
  

Due to their high costs, specialty drugs often face coverage and reimbursement difficulties:

• Non-covered drugs – Payers may exclude certain expensive specialty drugs from coverage
• High co-insurance – Patients pay 20-50% or more in coinsurance versus flat copay
• Medical vs pharmacy benefit inconsistencies – Each has different rules for utilization management, patient cost sharing
• Step therapy requirements – Must try cheaper therapies first and fail
• High prior authorization denial rates – For cost control and utilization management
• Lower reimbursement for clinics/hospitals – Makes it financially challenging to stock and administer specialty drugs
• State Medicaid restrictions – Varying coverage, utilization limits, and reimbursement rates

Providers must be prepared to spend substantial time and resources managing insurance coverage and appeals for specialty medications. Having financial counselors to help patients with copays and financial assistance is also imperative.

Due to extremely high prices, strategies for controlling specialty drug spending are important for providers and payers:

• Strict utilization management – Prior authorization, quantity limits, step therapy
• Contracting with limited pharmacies – For affordable access and distribution
• Copay maximization programs – Setting copays at insurance maximums allowed
• 340B drug discount program – Requires drug manufacturers to provide outpatient drugs to eligible health care organizations at significantly reduced prices
• Evidence-based prescribing – Following guidelines for appropriate use
• Biosimilars – Using lower cost alternative versions when possible
• Outcomes-based contracts – Contracts link payment for medications to improved patient outcomes
• Coupon adjustments – Removing value of manufacturer copay coupons from insurer payment
• Site of care management – Using lower cost sites, like infusion centers instead of hospitals