CMS proposes removing a coding prerequisite from Medicare’s drug pass-through application

CMS is proposing a small but concrete paperwork change for applicants seeking transitional pass-through payment for new drugs, biologicals, and radiopharmaceuticals under Medicare’s hospital outpatient payment system. The change appears in a Paperwork Reduction Act notice published October 5, with comments due December 4, 2026—and it could make the application sequence a little less circular.

What It Is

Medicare’s outpatient prospective payment system provides temporary pass-through payments for certain new products while CMS gathers the information needed to fold them into the regular payment structure. Hospitals, pharmaceutical companies, physicians, and other interested parties use CMS’s application process to seek that status. CMS then evaluates whether the product meets the statutory and regulatory criteria, including a cost-significance test, and whether an interim Healthcare Common Procedure Coding System code is needed.

The current notice is not a payment rule or a new coverage policy. It is a proposed revision to the information collection identified as CMS-10008, under OMB control number 0938-0802. CMS estimates that 40 applicants will submit 40 responses annually, totaling 640 burden hours.

What’s Changing

CMS says it has reworded parts of the application for clarity and more clearly specified the information applicants should provide so the agency can evaluate cost significance and estimate the associated pass-through payment. More notably, CMS says it has eliminated the requirement that an applicant obtain a national Level II HCPCS code before seeking pass-through eligibility—or provide CMS with a copy of its HCPCS code application.

That is a process change, not an eligibility shortcut. CMS will still review the requested information, determine whether the product qualifies, notify the applicant, and reflect approved products in a scheduled quarterly outpatient payment update.

Why It Matters

The revision could remove an awkward sequencing constraint for developers and hospitals preparing pass-through applications. Applicants would no longer need to finish, or document, a separate coding step before CMS considers the payment application. That may reduce duplicative paperwork and let the payment and coding questions move on more practical tracks, although the notice does not promise faster decisions, approval, coverage, or a particular payment amount.

For clinicians and health systems, the significance is indirect but real: pass-through status can shape how newly introduced products enter hospital outpatient workflows, while coding and payment administration often determine whether “available” technology is operationally usable. Here, the sober reading is also the useful one—CMS is revising an application, not rewriting Medicare payment policy.

The proposal is tucked inside a routine information-collection notice, where consequential process details often go to practice their camouflage. Comments on the collection are due December 4. Read the CMS notice in the Federal Register (https://www.federalregister.gov/documents/2026/10/05/2026-20352/agency-information-collection-activities-proposed-collection-comment-request).

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