Drug Vial Sizes, Waste and Recovering Costs

FOR SEVERAL years, payers and providers have discussed how to remedy the issue of unused or wasted drugs from single-use vials, but manufacturers have mainly stayed on the periphery. Some of the points raised include oversized vials with excess drug compared to common and usual doses, the lack of a variety of single-use sizes to better accommodate dosing, and manufacturers’ reluctance to innovate packaging after initial U.S. Food and Drug Administration (FDA) approval. What’s more, frustration continues to grow since most of these medications already are available in other countries in vials containing smaller quantities.

How Single-Use Vials Are Billed

Many years ago, rather than allowing for the common practice of billing on an entire single-use vial, the Centers for Medicare and Medicaid Services (CMS) moved to mandatory billing for the actual dose administered expressed in billing units with a billing unit assigned to each product. This benefited patients who no longer were paying for the excess amount in the single-use container.

To accomplish this, each facility created or acquired from a vendor a crosswalk that linked the healthcare common procedure coding system (HCPCS) code/ CMS assigned billing unit to the actual dose of the drug to calculate the number of billing units to be submitted. This allowed pharmacies to choose whatever type/size packaging they wanted to use and provided them flexibility in operating their IV rooms, used pooling or other methods of preparation. Other payers followed suit and since then, billing for an entire single-dose vial when the entire number of billing units in that vial totaled more than the actual dose was considered overbilling.

However, shortly thereafter, a barrage of complaints were filed by facilities, clinics, physician offices, etc., claiming they were being financially penalized either when there was only a single-use product available or they didn’t have enough use to warrant a multidose container. The compromise was to allow the payer to bill for the unused remainder of the single-use labeled amount as waste (billing for overfills as waste is forbidden) with no impact for the patients who were not charged for the wasted amount.

Remember that CMS reimburses facilities for 80 percent of the payment, and patients (co-insurers) are responsible for 20 percent. Using that logic, CMS reimburses for 80 percent of the waste dollars, but patients are not charged a co-pay for waste.

The REFUND Act

Making the change to more appropriate-sized vials is easier said than done since each change to packaging and labeling, materials used, etc., needs to be reapproved by FDA, as does any rewording on a package insert.

Frustrated that no concrete action had been taken to make pharmaceutical manufacturers change the single-use vial size closer to usual patient doses, in 2019, U.S. Senators Dick Durbin (D-IL) and Rob Portman (R-Ohio) took action. They introduced a bipartisan bill designed to reduce egregious wasted spending on discarded medications that result from excessively large, single-use drug vials. This effort eventually progressed to the Recovering Excessive Funds for Unused and Needless Drugs (REFUND) Act of 2021, which requires drug manufacturers to issue rebates to CMS for discarded amounts (i.e., amounts remaining after administration) of single-dose vial drugs that are covered under Medicare. Manufacturers that fail to comply are subject to civil penalties. CMS must determine rebate amounts based on payment claims from providers. (Currently, providers may receive payment under Medicare for discarded amounts of single-dose vial drugs through the use of a specific claims modifier.)

Thereafter, the infrastructure bill (H.R.3684 — Infrastructure Investment and Jobs Act) that passed on Nov. 15, 2021, included a drug waste provision from the REFUND Act that requires manufacturers to rebate the amount wasted back to CMS effective Jan. 1, 2023. Specifically, this bill requires drug companies/manufacturers to reimburse Medicare for certain single-dose container/ package drugs payable under Part B of the Medicare program for discarded amounts (leftover portions) of the drugs. Exclusions to this include 1) drugs or biologicals that are either radiopharmaceuticals or imaging agents; 2) drugs or biologicals approved by FDA for which dosage and administration instructions included in the labeling require filtration during the drug preparation process, prior to dilution and during administration, and require any unused portion of such drugs after the filtration process be discarded after completing the filtration process; or 3) drugs or biologicals approved by FDA on or after the date of enactment of the provision for which payment has been made under the provision for fewer than 18 months.

Further provisions require the U.S. Department of Health and Human Services (HHS) to aggregate the total amount of discarded Part B drugs quarterly using Medicare Part B claims and calculate refunds using the average sales price (ASP) (or wholesale acquisition cost if ASP is not available). Drug manufacturers will be required to provide a rebate to HHS for the total amount of discarded medication recorded, above a 10 percent low-volume threshold. Noncompliance to provide a timely rebate could incur civil monetary penalties.

Complying with the REFUND Act

To ensure compliance with this Act, audits are a guarantee. Audits may be of the manufacturers’ compliance, the accuracy of the aggregated amount calculated, comparisons of billed doses and billed wastage with the number of units sold, or any number of other methods to determine data accuracy and rule out fraud.

Therefore, facilities must review their waste billing programs. Many facilities may not have paid much attention to their programs since Medicare created billing for expensive waste in the outpatient prospective payment system shortly after switching to “billing units representing actual dose given” for reimbursement and away from the “whole vial” method of billing. While Medicare does not mandate billing for waste, it makes it possible to recoup lost dollars if a facility chooses to bill for it. To determine if a drug can be billed for waste, answer these four questions: 1) Is the drug being used for a Medicare outpatient? 2) Is it a single-dose vial/package? 3) Does the product have an HCPCS code? 4) Only when the answer is yes to all these questions can the facility bill for waste. If any answer is no, then it cannot bill.

Facilities can avoid pitfalls by not creating an automatic bill situation that doesn’t represent true actions. For example, if the vial contains 1 gram of the drug, and the infusion center uses 500 mg for each of two patients, nothing is wasted. But without carefully building this calculation into the system, the revenue cycle could assume two vials had been used and would erroneously process two waste charges, which would be fraudulent.

Zero-priced products (patient assistance and white bag/specialty pharmacy drugs) don’t qualify for waste billing since there is no charge for these products. Staff must understand the difference, know when a zero-priced product is being used and use the correct line item on the order entry.

Additional Billing Tips

• Facilities must understand their systems and its limitations. For instance, a system can be set up so the computer will calculate the amount given and the amount wasted, but how does this information become a line item on the medication administration record for the nurse to chart the waste? And, how does this information get converted into a waste line item bill with the appropriate modifier that accompanies the drug line item bill so the two are charged together on the same day? Documentation must be in the patient charts; automated dispensing records or other internal pharmacy records aren’t sufficient. Additionally, if facilities charge for a drug that is automatically dispensed from a cabinet, a system must be set up to consistently chart it in the medical record.

• Facilities must pay attention to revenue cycle orientation. Waste billing means there are two lines of billing for the same patient on the same day with the waste identified by the JW modifier. Consequently, the hard stops built into many of the revenue cycle processes that prevent this from happening must be adjusted.