Before you buy the high-priced drugs your surgeons like to use for their cases, make sure your facility will be reimbursed for them. There are a few questions you'll need to ask — as you'll see, the answer isn't always apparent.

1Does the drug function as a supply? If Medicare decides that a drug used during surgery "functions as a supply," you won't be paid separately for it. Under a relatively recent policy, CMS will package payment for drugs that function as supplies during a surgical procedure into the facility fee — regardless of the drug's cost.

2Does it cost more than $120? This next question is confusing to some. A 2018 Medicare ruling states it will pay separately (at cost) if the per-day drug cost exceeds $120 and that it won't make a separate payment if the drug costs $120 or less. The $120 threshold holds true — unless CMS decides that a drug "functions as a supply," in which case it will package the drug into the facility fee, regardless of the cost.

3Is the drug on "pass-through" status? To confuse you further, CMS will continue to reimburse separately for drugs that are on "pass-through" status, regardless of whether the drug functions as a supply. This is great news — for the 24 to 36 months that the drug is on pass-through.

A bit of background: Congress established the pass-through provision in the Medicare law to encourage advances in health care. As an incentive, CMS pays providers above and beyond the usual facility fee to use specifically designated "pass-through" drugs and devices, letting you bill for such products outside of the bundled payment in which they are used.

But it's a fleeting incentive. Statutorily, CMS can only grant pass-through status for up to 3 years. When a drug's pass-through payment status expires, so, too, does your ability to bill separately for the drug. While the "drugs-that-function-as-supplies" policy will not impact all drugs coming off pass-through status, it's important to have a sense of how CMS might view a new drug so you're not blindsided once the period to bill for this extra payment expires.

When pass-through passes away

The pass-through status expired recently for a couple drugs your ophthalmologists might use during surgery: Mitosol (mitomycin-c), which prevents scarring during glaucoma surgery, and Omidria (phenylephrine and ketorolac), which maintains pupil size during cataract surgery.

From 2013 to 2015, Medicare paid ASCs and HOPDs nearly $400 for every vial of Mitosol an ophthalmologist used during glaucoma surgery. In 2015, the last year for which Mitosol was separately payable, its reimbursement rate was $372.66 and the glaucoma code's national reimbursement rate was $960.36. But since its pass-through status expired in 2016, Mitosol has been technically "packaged" into the primary code amount. If your surgeon were to use Mitosol today when it's no longer separately payable, the cost of the drug would consume nearly 38% of the $991.95 reimbursement for the glaucoma surgery code.

As with Mitosol a few years ago, Omidria was deemed a "drug that functions as a supply" when its 3-year pass-through status expired at the end of 2017. During its last year of pass-through status, Omidria's reimbursement rate was $473.24 and the cataract code's national reimbursement rate was $978.21. In 2018, the cataract surgery code has a national reimbursement rate of $991.95, an increase of only $13.74 from last year.

Editor's note: The omnibus spending bill extended Omidria's pass-through for 2 years, but it doesn't kick in until Q4 (Oct 1, 2018).

Package more, pay less

With ambulatory surgery center (ASC) payment rates averaging about half of hospital outpatient department (HOPD) rates, the problem is exacerbated if ASCs use the drug more frequently than HOPDs. In many cases, it could be economically unfeasible for ASCs to host cases if they're not paid separately for drugs.

Legislation that allows pass-through for 5 years won't solve the problem, it will simply delay it. If CMS believes the drug functions as a supply when performed in a procedure or surgery, it will eventually package the drug into the reimbursement rate. True, it's nice to have an extra couple of years of pass-through payment, but it would be better to have adequate reimbursement for the long haul. But the trend at CMS has been to package more and to pay separately for less, so permanently reversing this policy remains an uphill battle. OSM