Pass-Through Drugs 101: Understanding the Reimbursement, Compliance, and Quality Impact

In Episode 1 of our Summer Series, learn the fundamentals of pass-through status, current ophthalmic examples, coding considerations, financial implications, and how these therapies intersect with MIPS and value-based care.

This summer, Ophthalmology Reimbursed is taking a deep dive into one of the most important and often misunderstood areas of ophthalmology reimbursement. Join us for our three-part podcast series: 

Beyond the Bundle: Understanding Separate Reimbursement for Drugs, Devices, and Tissues in Ophthalmology

As innovation continues to reshape ophthalmic care, practices are navigating increasingly complex reimbursement pathways for drugs, devices, biologics, and tissues that may qualify for separate payment outside traditional bundled reimbursement models.

Throughout this series, our consultants will discuss the opportunities, challenges, and compliance considerations surrounding these payment methodologies and how they impact physician practices, ambulatory surgery centers, and hospital outpatient departments.

Transcript

Welcome back to Ophthalmology Reimbursed. I'm Rebecca Greenlaw. And I'm Mary Pat Johnson.

We're excited to kick off our summer series, Beyond the Bundle, where we'll be exploring some of the unique reimbursement pathways that exist for drugs, devices, and tissue products in ophthalmology. For our first episode, we're focusing on a topic that continues to generate questions throughout the ASC community, and that's past their drugs. When a new ophthalmic product enters the market, most of the conversation is understandably centered on the clinical benefits and patient outcomes.

But from an ASC perspective, there's another equally important question that needs to be answered, and that's how the product is going to be reimbursed. Pass-through status has become increasingly important as ophthalmology continues to see innovation in pharmaceuticals, biologics, and surgical technologies. Understanding how these products are reimbursed can impact not only financial performance, but also decisions around adoption, inventory management, and long-term planning.

Today we're going to discuss what pass-through status is, how long it lasts, current ophthalmic examples, common reimbursement pitfalls, and why ASCs should pay close attention to what happens when pass-through status eventually expires. We'll also spend some time discussing the relationship between pass-through drugs, the cataract cost measure, and the growing emphasis on value-based care. So let's jump in with the basics.

What exactly is pass-through status, and why was it created? Well, thank you, Rebecca, and this is a great topic, I think, to start our series. Most ophthalmic ASCs have dealt with pass-through drugs in some way over the last several years, and we have seen innovation in ophthalmology. It's in retina care, it's in cataract surgery, certainly there have been changes in the ophthalmic pharmaceuticals, and along that line, or along with all those changes, reimbursement has evolved and has to continue to stay current with what the scientific side, the medicine side, of ophthalmology is bringing to the table.

One big misconception, I think, Rebecca, you'll agree, that we encounter when we talk with clients is that assumption that reimbursement simply follows FDA approval, and in a perfect world, that would be a one-two punch, but in reality, there really are several layers involved here. Codes have to be established, reimbursement methodologies must be understood, and the ASCs should monitor the changes as these products move through the reimbursement lifecycle, when they go from FDA approval to having an established pathway for reimbursement, having established codes. Pass-through status is a temporary reimbursement designation.

CMS assigns that for certain new drugs and biologics, some devices, that are reimbursed in an outpatient setting, so they're reimbursed under the hospital outpatient prospective payment system, and using that APC model in terms of the payment rates, and the purpose here is to support the provider so they can adopt the new innovation or those innovative therapies, while at the same time, Medicare takes the opportunity to gather that cost data, so eventually, they can incorporate these products into a standard payment system. So, in simple terms, Medicare recognizes that some new products do have significant acquisition costs that weren't really considered when the associated facility fee was set, so rather than immediately package those costs into an existing fee schedule, CMS allows separate payment on a temporary basis for a defined period of time, so this helps reduce the risk to the ASC, allows them to gain some experience with a new technology without taking on that financial risk of insufficient facility fee payments, and again, CMS needs the time to collect the data. The word temporary here is important, so pass-through status generally lasts between two and three years.

Again, Medicare is looking at utilization and cost information and trying to sort out what the future payment methodology is going to be for that particular device or product, and so again, this is why ASC leaders need to understand not only where reimbursement stands today, but where it may be headed tomorrow and assign someone to kind of monitor the devices and products they're using so that they're on top of those changes. So, let's look at some current ophthalmic examples, and let's make this practical. When ASC administrators hear the phrase pass-through drug, they often want to know which ophthalmic products we're actually talking about.

Several ophthalmic products have recently received or maintained pass-through reimbursement status, and examples of those would include Isorvay, Cyforvery, and Triessence, depending on the site of service and CMS payment period. These products have generated significant interest because they represent newer treatment options with substantial acquisition cost and reimbursement implications. Agreed, yeah, and this is why ASCs need to stay vigilant.

So, we've got new drugs on the market. Providers are interested in offering them, but admittedly can't absorb the cost of some of these products, either in their facility fee or into the fee that's billable to insurance. So, the key here isn't, has this product or device been assigned a pass-through status? The key question is, does the product have pass-through status today? So, where along that evolving reimbursement policy change is this particular product? Now, CMS gives us updates.

There are quarterly updates published, again, because reimbursement policies and HCPCS codes change. So, it's important to stay current with these. A reimbursement strategy that worked for you six months ago really might not work now.

You may need some adjustments today, and that leads us into why pass-through drugs matter to ASCs. For ASCs, pass-through status often becomes part of the larger strategic conversation. When a new drug, biologic, or device becomes available, surgery centers have to evaluate not only the clinical benefits, but also the financial implications of adopting that technology.

Separate reimbursement can help offset the cost of innovation during pass-through period, making it easier for ASCs to offer new treatment options while maintaining financial sustainability. Exactly, exactly. And for many ASCs, this pass-through reimbursement policy serves kind of as a bridge between the innovation they want to adopt and then the long-term reimbursement policy.

So, as I stated prior, the ASC leaders really should be paying attention not only to the current reimbursement, but also to what it looks like for future reimbursement transitions. Yeah, which, whenever we're discussing reimbursement, coding naturally becomes a part of the conversation. So, let's talk some coding and billing considerations.

One of the most common sources of underpayments is incorrect coding. New therapies often receive specific HCPCS codes, and those codes may evolve as products mature in the marketplace. ASC billing teams need processes in place to monitor updates from CMS and from the MACs. 

Another area that deserves attention is units reported. A correct code paired with an incorrect unit can create the same reimbursement problems as using the wrong code altogether. Agreed.

And really, this is where operational discipline becomes important. So, it's more than, do I have the right code? We don't want you to assume that once you find a drug that your physicians decide to use, upload those codes into your billing system, that your work is done. You need to continue conducting regular reviews of the process, of the staff, of the documentation, to verify the coding accuracy, the reimbursement updates.

Are we current on what the current version is and following the instructions in the most recent update? Look at the payer requirements for various providers. I know we tend to reference Medicare frequently, but there are a lot of Medicare Advantage plans, and some of your patients may have just commercial insurance. All of those get to set their own policies.

Also, monitor the claim's processing outcomes. Did the claim get processed appropriately? Did it get rejected or denied? What are our denial or reason codes? What's our follow-up mechanism on these codes? We've seen situations where a simple coding oversight resulted in months of underpayments before anyone recognized it. By the time they recognized it, those modest underpayments per claim added up to a significant amount of revenue.

In our ASC audits, we frequently uncover a disconnect between what the center expects to be reimbursed and what's actually being paid. So, even when a claim is paid, take a look at it. Confirm the amount was correct, the number of units billed, and the reimbursement back to the facility were both correct.

So, this is kind of a trust but verify position. We don't be so trusting as to say we received some payment, so it must be accurate. Continue to verify that the details are precise.

And this is why periodic reimbursement audits and revenue integrity review can be so valuable. Again, look at your coding, look at the number of units reported, look at the expected versus the actual payments received, and then the payer behavior. Are they asking for medical records? Are they denying claims based on either bundles or diagnoses or timely filing? They each have their own set of edits that you need to confirm.

This will hopefully help you identify revenue leakage before it becomes a significant financial loss. So, now let's look at some common pitfalls. There are several reoccurring challenges we see across ASCs.

The first is failing to verify whether pass-through status is still active. The second is inadequate documentation. Even in the ASC setting, documentation must support medical necessity, product utilization, and services provided.

The third issue is failing to monitor reimbursement performance after implementation. Many centers spend significant time evaluating whether to adopt a product but very little time verifying whether reimbursement is performing as expected after adoption. Excellent point.

As mentioned, even when a product is clinically successful and the claims appear to be being processed, there's really no guarantee that that reimbursement is optimized. The most successful surgery centers continually evaluate performance after implementation. They verify the accuracy of reimbursement, again monitor payer trends, and assess the financial impact of all technologies over time.

These are the organizations who, with very detailed monitoring, tend to make better adoption decisions and avoid unpleasant surprises when reimbursement policies change. Good point. Another question we've been hearing recently is whether any of the current ophthalmic pass-through drugs affect the cataract surgery cost measure.

Well, here we have some good news for ophthalmology, and that is that the current ophthalmic drugs that are most commonly associated with pass-through reimbursement, such as Isorvay, Biforay, Levizumab, that you mentioned earlier, Rebecca, those drugs are not likely drivers on the cataract surgery cost measure. So these products are generally associated with retina disease management, so they're likely attributed differently under the cost measures. You should still continue to understand how these products are reimbursed, but you generally don't need to worry about them impacting your cataract cost performance.

That is good news. Okay, so as we wrap up, let's leave our listeners with one practical recommendation. Create a pass-through reimbursement tracking tool.

It doesn't have to be complicated. A spreadsheet can be incredibly effective. Track the product name, the HCPCS code, when the effective reimbursement date is, what the pass-through expiration date is, the expected reimbursement, the actual reimbursement, and key payer considerations.

That sounds ideal, and I would add to that assigned ownership. Designate someone in the practice or someone on your team who's going to take charge. It'll be their responsibility to review all the CMS communications and share that communication within your organization.

Leadership needs to understand changes, update the billing staff, make sure the operational teams, whoever's ordering and stocking the drugs, and please don't forget to communicate with a surgeon. If resurgents are in the OR using devices or products that are quite costly, presuming they're being reimbursed, they certainly want to know if that changes. Absolutely.

Yeah, so just make monitoring and communication part of your overall culture throughout the organization. It's not really about reacting to change. It's really more important that you anticipate the change and prepare for it.

I couldn't agree more. So in closing, today we discussed what pass-through drugs are, why they matter in the ASC setting, examples of current ophthalmic products associated with pass-through reimbursement, common coding and reimbursement pitfalls, and why surgery centers should be preparing now for reimbursement changes that occur when pass-through status expires. Yeah, we got a lot covered in this short session.

Thank you, Rebecca. In our next episode, we'll move beyond pass-through drugs and explore other reimbursement methodologies such as the non-opioid pain management product, any other separate reimbursement opportunities where they exist, and teaser, next time we'll be joined by a guest who's going to comment on payment for these products and drugs from a manufacturer's perspective. Looking very much forward to that.

As always, thank you for spending time with us today. If your ASC is preparing for payer audit or looking for an independent review of coding, billing, and reimbursement performance, our team is here to help. At Corcoran Consulting Group, we work with ophthalmic ASCs across the country on coding and reimbursement audits and compliance reviews.

To learn more, call us at 1-800-399-6565 or visit us at corcoranccg.com. We look forward to connecting with you. Thanks for listening to Ophthalmology Reimbursed, brought to you by Corcoran Consulting Group, the experts in coding, reimbursement, auditing, and education for the ophthalmic community. Be sure to follow and leave a review wherever you listen to podcasts.

Until next time, thanks for listening to Ophthalmology Reimbursed.