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ESRD PPS Transitional Drug Add-on Payment Adjustment

The intent of the TDAPA, as implemented at 42 CFR 413.234(c), is to facilitate beneficiary access to certain qualifying, new injectable or intravenous products by allowing payment for these drugs and biologicals while the necessary utilization data is collected. This data will be used to incorporate the costs of these qualifying drugs into the End-Stage Renal Dialysis (ESRD) Prospective Payment System (PPS). This document provides the manufacturers of drugs and biologicals guidance on TDAPA policy. This document also provides information that must be sent to CMS when requesting the TDAPA for new injectable or intravenous drugs and biologicals. The goal is for CMS to have the information necessary for determining the functionality of new drugs and biologicals to determine eligibility for the TDAPA.

REFERENCES:

Refer to the final rule in the November 6, 2015 Federal Register (80 FR 69015 through 69027) and Pub. 100-02, Chapter 11, Section 20.3.1 for a discussion of the criteria and information regarding the drug designation process.

Calendar Year 2016 ESRD PPS Final Rule

Pub. 100-02 Medicare Benefit Policy Manual, Chapter 11 - ESRD

GUIDANCE:

On August 4, 2017, CMS issued guidance regarding the implementation of the Transitional Drug Add-On Payment Adjustment. 

Change Request 10065 - TDAPA Guidance

MM10065 [PDF, 276KB]  

TIMELINE FOR DETERMINATION:

Manufacturers should notify the Division of Chronic Care Management (DCCM) in CMS’ Center for Medicare of their interest for eligibility for the TDAPA at the same time a submission is made for a Healthcare Common Procedure Coding System (HCPCS) code. Our goal is to provide payment of qualifying drugs and biologicals to ESRD facilities in a timely manner. CMS aims for an effective date for payment one quarter after the code’s effective date. This timeframe allows the necessary time for analysis, decision-making, and system changes. The effective date for the TDAPA will be communicated to the industry through administrative guidance with instruction to the ESRD facilities for reporting the drug or biological on the claim.

Please Note: TDAPA status may or may not be effective one quarter after the code’s effective date as described above. A longer evaluation period may be necessary due to a number of factors, including a request for further information, or the need for a more extensive evaluation to determine eligibility.

Payment Limits for TDAPA Eligible Drugs and Biologicals

Please see Drugs and Biologicals Eligible for TDAPA (Updated 12/7/18) [PDF, 95KB]  for quarterly pricing updates.

FREQUENTLY ASKED QUESTIONS REGARDING THE TDAPA

Has CMS established a minimum and/or maximum number of days of oral medication that can be supplied to beneficiaries?

CMS interprets “number of days of oral medication supplied” as the amount dispensed to the patient either directly by the ESRD facility or under arrangement with a pharmacy. CMS has not established a policy that discusses the minimum or maximum number of days that an oral medication can be supplied to a beneficiary. However, CMS has established a policy that only the amount of medication expected to be taken during the claim billing period (that is, the calendar month) can be reported on that month’s ESRD claim, and the total number of units reported on the claim cannot extend past that month. For example, if a patient is dispensed a 60-day fill on January 3rd, the ESRD facility can only report the quantity expected to be taken for the remaining days in the January billing period, that is 29 days. The remaining quantity is to be reported in the following calendar month. ESRD facilities should use the best information they have to determine the amount of medication expected to be taken in a given month, including prescription fill information from the pharmacy and the patient’s plan of care.

Who bears the risk if a patient receives a multi-day supply of an oral medication and the patient dies?

CMS has established a policy that only the amount of medication expected to be taken during the claim billing period (that is, the calendar month) can be reported on that month’s ESRD claim, and the total number of units reported on the claim cannot extend past that month. ESRD facilities should use the best information they have to determine the amount of medication expected to be taken in a given calendar month, including prescription fill information from the pharmacy and the patient’s plan of care. However, in the circumstance when an ESRD facility furnishes a supply of an oral medication to a patient and that patient dies, Medicare will pay for the supply that the patient was expected to take for the calendar month in which they died. CMS expects the facility to report on the claim the quantity of the medication the patient was expected to take during the calendar month had the patient not died. For example, if a patient was furnished a supply of oral calcimimetics (which are taken daily) on January 3rd and died January 10, the ESRD facility may still report on the claim the quantity that was expected to be taken during the 29 days in January.

How should changes in prescription dosing requirements be reported if a patient is furnished a 30-day or greater supply of an oral medication?

CMS has established a policy that only the amount of medication expected to be taken during the claim billing period (that is, the calendar month) can be reported on that month’s ESRD claim, and the total number of units reported on the claim cannot extend past that month. ESRD facilities should use the best information they have to determine the amount of medication expected to be taken in a given calendar month, including prescription fill information from the pharmacy and the patient’s plan of care. However, in the circumstance when an ESRD facility furnishes a 30-day or greater supply of the drug expecting that the patient would continue to take the prescription and then the patient’s dosage changed at some point in the calendar month, the facility should report the supply furnished (not to exceed the number of days in the calendar month) for the initial prescription. The ESRD facility should then report an additional line item for the amount of the medication at the different dosage expected to be taken during the remainder of the calendar month. The patient’s medical record should reflect the change in dosage.  

How should ESRD facilities bill Medicare if an oral medication is sent to a beneficiary’s home, the beneficiary indicates he/she never received it, and a new supply is sent? Can the facility bill Medicare for the second supply?

Medicare does not pay for oral drugs that have not been received by the patient. ESRD facilities might consider addressing this situation in their contractual agreement with the supplying pharmacy.

What types of drugs and biologicals are appropriate for the TDAPA?

New injectable or intravenous drugs or biologicals whose end action effect is the treatment or management of a condition or conditions associated with ESRD and for which there is not an ESRD PPS functional category.

What types of drugs and biologicals are NOT appropriate for the TDAPA?

New injectable or intravenous drugs or biologicals whose end action effect is the treatment or management of a condition or conditions associated with ESRD and for which there is an ESRD PPS functional category. The new injectable or intravenous product is considered included in the ESRD PPS bundled payment and no separate payment is available.

The ESRD PPS functional categories are:

  • Access Management,
  • Anemia Management,
  • Bone and Mineral Metabolism,
  • Cellular Management,
  • Antiemetic,
  • Anti-infective,
  • Antipruritic,
  • Anxiolytic,
  • Excess Fluid Management,
  • Fluid and Electrolyte Management Including Volume Expanders, and
  • Pain Management.

Refer to Pub. 100-02, Chapter 11, Section 20.3.A for more information regarding the ESRD PPS functional categories.

What are the criteria that a drug or biological must meet to be eligible for a TDAPA?

The new injectable or intravenous product must be:

  1. Approved by the Food and Drug Administration (FDA) under section 505 of the Federal Food, Drug, and Cosmetic Act or section 351 of the Public Health Service Act;
  2. Commercially available;
  3. Assigned a Healthcare Common Procedure Coding System code;
  4. Identified as having an end action effect that treats or manages a condition or conditions associated with ESRD;
  5. Identified as not fitting into an established ESRD PPS functional category; and
  6. Designated by CMS as a renal dialysis service under §413.171.

Who makes the determination on when a new injectable or intravenous product is or is not included in an ESRD PPS functional category?

CMS would designate injectable and intravenous products as renal dialysis services under the ESRD PPS by analyzing the information in the FDA-approved labeling, the HCPCS application information, and a review by CMS medical officers and medical personnel, in addition to reviewing clinical studies submitted. In all three of these steps, physicians assist in the determination as to whether a new drug is a renal dialysis service as well as whether the new drug fits into one of the functional categories.

To be considered for the TDAPA, is the drug or biological required to have received prior approval for an alphanumeric Level II Healthcare Common Procedure Coding System (HCPCS) code?

Yes, the drug or biological must be assigned a HCPCS code. An HCPCS workgroup meets at regularly scheduled meetings to discuss applications and determines the assignment of codes. The workgroup’s membership includes representatives from all government and non-government insurance sectors; including Medicaid, Medicare, the Private Insurance sector and The Department of Veteran’s Affairs.

HCPCS Application Form and Instructions

Does having a Level II HCPCS code mean that Medicare will automatically qualify the drug or biological for payment under the TDAPA?

No. Having a Level II HCPCS code simply qualifies the drug or biological as being eligible for the TDAPA. After a thorough review of the responses and materials provided by the manufacturer, CMS will make a final determination.

Due to the review required, we plan to provide guidance in the quarter immediately following the effective date of the HCPCS code. After CMS makes the final determination, we will issue administrative guidance to ESRD facilities on how to report the drug or biological.

If CMS assigns a Level II HCPCS code to a drug or biological in order to allow payment under the ESRD PPS, does that mean that the drug or biological is approved for use in settings other than ESRD facilities?

No. If the drug or biological is FDA approved for indications that include uses other than for the treatment of ESRD and could be used in other settings, for example, a physician’s office, the manufacturer should consider submit two applications for a Level II HCPCS code. One code would be used in the facility setting with a descriptor of “for ESRD” and another code for other settings with a descriptor of “for non-ESRD”.

How long is a drug or biological eligible for payment under the TDAPA?

The TDAPA is paid until sufficient claims data for rate setting analysis for the new injectable or intravenous product is available, but not less than two years. Once sufficient claims data is available, CMS will use notice-and-comment rulemaking to revise or adopt a new functional category and to make any changes to the ESRD PPS per treatment amount to account for the new drug or biological.

What pricing methodology will be used for determining the payment limit of the drug or biological eligible for payment under the TDAPA?

The TDAPA is based on pricing methodologies under section 1847A of the Social Security Act. Manufacturers should send pricing compendia data on Wholesale Acquisition Cost (WAC) as soon as possible after the product is approved by the FDA. Drug manufacturers should follow the guidance provided for the reporting of Average Sales Price (ASP) and WAC data.

How will CMS pay the drug or biological eligible for payment under the TDAPA between the time the HCPCS is assigned and prior to the TDAPA?

Under the ESRD PPS, there is no payment mechanism to pay for drugs and biologicals eligible for the TDAPA until guidance is issued by CMS.

 

MATERIALS REQUIRED FOR CMS DETERMINATION PURPOSES

To enable CMS to make an appropriate determination that the submission meets the criteria for the TDAPA, the following information should be submitted.

  1. Identify the Drug or Biological:
    1. Trade or brand name.
    2. Generic drug name (active ingredient).
    3. National Drug Code
    4. Composition and clinical indication(s) approved by the FDA.
    5. Dosage(s).
    6. Route of administration.
    7. Package insert (label).
    8. How supplied.
    9. Suggested title and rationale for formation of new ESRD PPS functional category, based on physiologic end-point activity.
  2. Provide the Food and Drug Administration (FDA) Approval:
    1. Submit the FDA’s approval letter.
    2. Summary of safety and effectiveness.
  3. Submit clinical trials and peer reviewed articles as supporting evidence for ESRD management/treatment.
  4. The Healthcare Common Procedure Coding System (HCPCS) Application.
  5. Marketing:
    1. Date of US market availability and documentation discussing delay between FDA approval and market availability (if applicable).
    2. Date of international market availability and information on the sales and utilization (if applicable).
  6. Manufacturer Contact Information:
    • Manufacturer Name:
    • Name of Corporation/Organization:
    • Mailing Address (street):
    • City, State, Zip
    • Telephone Number and Extension:
    • FAX Number:
    • E-Mail Address:
  7. Contact Information for the Person Responsible for the Information Provided:
    • Name:
    • Name of Corporation/Organization:
    • Mailing Address (street):
    • City, State, Zip
    • Telephone Number and Extension:
    • FAX Number:
    • E-Mail Address:

      If different than the requester, give the contact information of the person that CMS should contact for any additional information that may be needed for evaluation. Please be sure that your system can receive emails from cms.hhs.gov.

  8. Other information
    1. Provide any other necessary information that the manufacturer believes CMS may need to determine eligibility for TDAPA.

 

WHERE TO SEND RESPONSES AND MATERIALS:

Send the information via email to ESRDPayment@cms.hhs.gov. Emailed versions of the materials must be compatible with standard CMS software such as Adobe Acrobat DC for 2015 or Microsoft Word 2010. Questions pertaining to the TDAPA process may also be sent to the electronic mailbox noted above.

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