What

Flexion Therapeutics (NASDAQ:FLXN) jumped 12.6% today after announcing in a regulatory filing that the Centers for Medicare and Medicaid Services (CMS) issued a product-specific Q code for Zilretta, Flexion's non-opioid sustained-release steroid injection for knee pain that was approved by the Food and Drug Administration in October.

A standing doctor examining a seated patient's knee

Image source: Getty Images.

So what

The product-specific Q code, which will go into effect on July 1, allows doctors to bill Medicare faster than when the claims have to be processed manually under a miscellaneous code that doctors currently have to use. Flexion estimates about half of the U.S. market for Zilretta will be administered to Medicare patients in doctors' offices.

Last month, Flexion got a product-specific C code for use of Zilretta by Medicare patients in hospital outpatient departments, which went into effect on April 1.

Don't discount the value of having a drug having a product-specific code. Doctors are ultimately running a business, so all things being equal, they're more likely to prescribe a drug that has a quicker reimbursement.

Now what

The ultimate CMS code is a dedicated J code, which Flexion has applied for. The list of drugs under consideration should be out by the end of this month. CMS will then hold a public hearing -- as the government is apt to do -- followed by a final list of J codes issued in the fourth quarter that will go into effect Jan. 1, 2019.

While the issuance of a product-specific Q code is a good sign that Flexion will get a dedicated J code, it's debatable whether the news is worth today's double-digit increase unless investors really thought there was a small chance of Flexion getting the code.