Transcript Drug Reimbursement and the Bottom Line

Drug Reimbursement and the
Bottom Line: Update 2009
Anne Jarrett, MS, RPh
ATJ Consulting, LLC
www.drugreimbursement.org
Disclaimer
I have no relationships with any
commercial interests related to my
presentation.
A Real Fairy Tale
A long, long time ago, no one had to worry about the
bottom line. Money was plentiful across the land.
Drugs were cheaper. We got paid based on
AWP.Everyone lived happily ever after.
CF?
Med A?
Med B?
DRG?
ICD-9?
CMS-1500?
Med C?
Inpatient?
IPPS?
OPPS?
FI?
UOM?
PAL?
Medicaid?
Outpatient?
OPD?
M.D. owned?
UB-92?
Pass –thru?
SCOD?
SS?
NOC?
CDM?
IMS?
Dialysis?
HCPCS II ?
Med D?
SI?
2nd payer?
APC?
Add B
ASP?
MS?
Carrier?
Outlier?
Packaged?
Rev Code?
Self adm?
Objectives
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2009 IPPS and OPPS
The bottom line
Why you should care
Specific knowledge and use
Key relationships and data
True or False?
• No drug administered to a Medicare
inpatient is separately reimbursed.
• Medical coders look at the drugs
patients receive while in the hospital.
• No MS-DRGs mention drugs.
• There are no HCPCS codes that are
useful in quality measurement.
True or False?
• Day hospital patients are inpatients and
covered by Medicare A.
• Physician owned clinics/offices use
HCPCS codes and fiscal intermediaries.
• In-house dialysis centers and hospitals
share a Medicare number.
Objectives
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2009 IPPS and OPPS
The bottom line
Why you should care
Specific knowledge and use
Key relationships and data
2009 Final Rules
Inpatient
Prospective
Payment System
(IPPS)
IPPS 2009
• 3.6% in national standardized rates
• High-cost outlier threshold to
$20,185
• Final 2 year transition to MS-DRGs
• Will not reimburse hospital to which a
pt. has been transferred for tPA if given
at transferring hospital
IPPS 2009 (con.)
• Additional quality measures
• Never events, present on
admission(POA), readmission rates
• Will continue to reimburse separately
for blood clotting factor products when
given for approved indications
Value Based Purchasing
• Align payment with quality of care
across settings
• Never events
• Present on admission (POA)
• Readmissions
• Repeat visits
2009 Final Rules
Outpatient
Prospective
Payment System
(OPPS)
OPPS 2009
• ASP + 4% for separately payable, nonpass-through drugs
• ASP + 6% for pass-through drugs
• Pass-through drug list updated
• ASP + 6% for physician offices
• No more pre-administration fee for IVIG
OPPS 2009 (con.)
• Packaging threshold = $60.00
• Drug administration’s APC structure
decreased from 6 to 5 APCs
• CMS decided against separating drugs
& biologicals into 2 cost centers (high
and low) to reflect overhead costs
ASP + 2%?
• CMS calculated ASP + 2% to be
“actual”cost of drugs & biologicals
• Includes acquisition plus pharmacy
overhead costs
• 6%
5%
4%
• Future rate?
Objectives
2009 IPPS and OPPS
• The bottom line
• Why you should care
• Specific knowledge and use
• Key relationships and data
The Bottom Line Equation
Drug prices & usage
+
Reimbursement
________________
REVENUE
=
Novation’s National Economic
Impact Survey 2009
• Current and future impacts over next 12
months
• 60% of responding hospitals have
already been impacted
• 47% foresee staff cuts
Novation’s National Economic
Impact Survey (con.)
• 73% have seen costs due to meeting
patient safety standards
• 84% plan to spending with 49%
anticipating a 6-10% reduction
• 44% will product utilization
Health Leaders Media
Industry Survey 2009
• 70% of hospital CEOs concerned that
reimbursement cuts will have a
“strongly negative effect”
• # 1 wish? “Find a solution to
reimbursement cuts.”
American Hospital
Association Study
• “Report of the Economic Crisis: Initial
Impact on Hospitals”
• January 2009
• 736 CEOs responded
AHA Study Results
• 59% of hospitals plan on cutting
administrative costs
• 53% Reducing staff
• 27% Reducing services
• 12% Divesting assets
• 8% Considering merger
• 21% Other
Thomson Reuters Study
• “Impact of recession on hospitals”
3/2/09
• Median profit margin of U.S. hospitals
has declined to ZERO
• Balance sheets of over 400 hospitals
nationwide
• Included all sizes and types of
hospitals
Out of money
experience
BAILOUT
Example A- Epo
• Audit performed on reimbursement of
erythropoietin (epo) given in the hospital
outpatient department over four months.
• Performed by Patient Financial Services,
Pharmacy and Compliance
• Successful reimbursement rate for Medicare
patients = 30%
• Estimated loss of revenue = $100,000
annualized to $300,000
per year
Why Was Revenue Lost?
Audit showed*:
50% charged as NESRD when ESRD
25% lacked a lab report
25% charged with wrong billing units
10% charged with expired HCPCS codes
15% charged under incorrect Medicare
provider number
*Some bills had multiple errors
Example B-Remicade
Infliximab (Remicade®) 100mg vial
• Usual dose = 100mg
• 1 billing unit = 10mg ($55.85)
• If bill for 1 (vial)
$55.85
• If bill for 10 billing units
$558.50
• Conversion factor = 10
Example C- Botox
• Patients in non-hospital owned
pediatric clinic administered Botox
• Clinic ordered Botox from hospital
pharmacy
• Hospital pharmacy charged patients for
drug
• Hospital gave away thousands of
dollars of free drug
Example D - Blood Factor
Products
• Hemophilia patient covered by
Medicare suffered a fall at his home
• In ICU in a coma for 3 months
• Administered $1.7 million of Factor VIIa
• Hospital did not realize eligibility of
reimbursement for inpatients
BFPs (con.)
• Filed an adjustment claim with
Medicare
• The hospital made a couple of million
dollars that would have been written
off.
Objectives
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2009 IPPS and OPPS update
The bottom line
Why you should care
Specific knowledge and use
Key relationships and data
Would you like fries with
that?
Objectives
2009 IPPS and OPPS
• The bottom line
• Why you should care
• Specific knowledge and use
• Key relationships and data
Knowledge
Don’t kid yourself. You’re just a deer in the headlights..
Can you answer these
questions?
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Can we?
Will we?
How much can we?
Did we?
…..get reimbursed for drug X?
Pt.
Location
Status
Ind.
Payer
Billing
Unit
Drug
Rev.
Code
The Decks
HCPCs
Code
ICD-9
codes
Flow Of Drug Through Purchasing,
Billing, I.S. To Inventory Valuation
Have to know (Hospital)
• Fiscal intermediary/carrier/MAC
• Medicare/Medicare numbers
• Information Services (all applicable
computer programs)
• Payer mix
• Contracts
• Key players
Have to Know (Pharmacy)
• Budget
• Acquisition costs
• Purchasing /GPO contracts/ Wholesaler
substitutions
• Information/billing system/staff
• Responsibility reports
Contracts
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Per diem
Charges -%
Carve outs
Specialty drugs
Have to Know Where to Find
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Drug /administration payment rates
HCPCs codes
ICD-9 codes
MS-DRGs/APCs
Specific patient information
Changes
Trans
Code
Desc
Ins
Cov
Ch
In
Bill
CD1
Bill
CD2
Rev Price
CD
The Ivana Moore Money Health System
GOOD► 1/2010
THRU
You can’t get reimbursed without it.
ChargeMaster
• Who is the master of your
chargemaster? Has “make or break”
effects on revenue capture- could spell
disaster
• Multiple chargemasters?
• Hospital chargemaster
Coverage
• International Classification of Diseases,
ninth edition (ICD-9 diagnosis codes)
• Approved indications for drugs
• Local Coverage Determinations (LCD)
• National Coverage Determinations (NCD)
• Pre-approval
• Medical necessity
Pegfilgrastim- LCD
(Palmetto GBA)
• ICD-9 codes that support medical necessity:
– 205.00 Acute ALL w/o remission
– 205.01 Acute ALL w/ remission
– 205.10 Chronic ALL w/o remission
– 205.11 Chronic CLL w/ remission
– 238.7 Neoplasm of uncertain behavior of other
lymphatic and hematopoietic tissues
– 288.0 Agranulocytosis
– V42.9 Unspecified organ or tissue replaced by
transplant
– V59.8 Donors of specified organs or tissue
– V66.2 Convalescence following chemo
– V66.5 Convalescence following other treatment
Other Payers & Coverage
Did you know?
• Medical coders do not look at drugs
when looking through an inpatient’s
chart?
• Day hospital pts are considered to be
outpatients?
• In-house dialysis units have a separate
Medicare number?
Did you know?
• MS-DRGs mention drugs?
• HCPCS codes for quality measures?
• Different drug reimbursement given in
hospital outpatient departments,
physician owned clinics & ASCs?
Did you know?
• Medicare will reimburse hospitals
separately for blood factor products
given to hemophilia patients? (Specific
ICD-9 diagnosis codes required)
• Med D has and will continue to affect
hospitals?
MS-DRGs That Mention Drugs
• Acute ischemic stroke with use of
thrombolytic agent
• Craniotomy with major device implant
or acute complex CNS principal
diagnosis with MCC or
chemotherapeutic implant (Gliadel®
wafers)
HCPCS Codes for Quality
Measurement involving drugs
Does your hospital use them?
Example:
G8006 – Acute myocardial infarction
(AMI) patient received Aspirin at
arrival
Quality Measure HCPCS
Codes (con.)
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G8006- AMI pt recd aspirin at arrival
G8012- Pneum pt recv antibiotic 4h
G8027- HF pt not elig for Bblocker
G8214- Clini not doc order VTE
Hospital Outpatient Departments
versus Physician Owned Clinics
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Claim forms
Addendum B
Part B Average Sales Price
HCPCS codes
Fiscal intermediary
Carrier
Ambulatory Surgical Centers
• In 2008, CMS started OPPS-like
payment
• 65% of OPPS reimbursement rate
• Added 790 ASC procedures
• In 2009, CMS added 30 surgical
procedures payable in ASC settings
How Has MED D Affected
Hospitals?
• Manufacturers’ Medication Assistance
Programs
• Former program patients can’t afford their
co-pays, don’t take meds (e.g transplant
meds after 3 years)
• Re-admissions and E.D. visits
• Donut hole by July
Resources?
• Fiscal intermediary, carrier, MAC
• Medicare website
http://www.cms.hhs.gov
FUTILITY
Finding the needle is easy.
Finding the right haystack? Impossible!
Have to Think About
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Appropriate use
Collaborative guidelines
Replacement programs
Charge for wastage?
Patient Assistance Program
LOS and outpatient drug affordability
Pharmaceutical
Reimbursement Specialist
• Do you have a pharmaceutical
reimbursement specialist?
• If you have a business person on staff,
does he or she “speak” pharmacy ?
Watch For
• Drug reps distributing information to
M.D.s about off-label/ new drug use
• GPO contracts
• Wholesaler substitution
• “Gray market”use
• New drugs without a HCPCS code
Readmissions and E.D.Visits
• Annals of Internal Medicine, 2/3/2009:
“Pharmacists follow up helps cut
hospital readmissions and E.R. use by
30% at a Boston hospital”
• Patient Assistance Programs
• Replacement programs
• Cost of drug vs. cost of admission
Rounding Doses
• “Minor decrease in calculated doses
result in substantial cost savings
without more risk to patients”
Oxaliplatin (Eloxatin)
•
$17,905/year stage III advanced
colorectal CA
• $25,876 for stage IV
• Wastage avoided
(Presented @ GI Cancer Symposium (ASCO), January 19, 2009)
Specialty Pharmacies &
Exclusivity
• Some payers restrict certain high cost
drugs to specialty pharmacies
• In contract—get involved!
• Some manufacturers grant exclusivity
of purchasing to certain entities
Objectives
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2009 IPPS and OPPS update
The bottom line
Why you should care
Specific knowledge and use
Key relationships and data
PUT THE PUZZLE TOGETHER
PHARMACY
PHYSICIANS
BILLING
MEDICAL
CODING
INFORMATION
SERVICES
REIMBURSEMENT
ACCOUNTING
PERSISTANCE
Go ahead. Give yourself permission to be irritating.
In the Know
– Finance department
– Reimbursement accounting
– Billing and Collections
– Social work
– Medicare/Medicaid
– Contracting
– CFO
– Compliance
Challenges CFOs Face
• MS-DRGs
• Charge to cost based
• Medicare Recovery Audit Contractor
RACs Audits
• ICD-10-CM
• Pay for performance
• Consumer directed health care
Data
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Information systems
Payer mix
Co-pay collection rate
Contracts
Reimbursement rate
Indigent and charity care
Need to Know
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Negotiated carve-outs
Top MS-DRGs/APCs by dollar
Outlier payments
Benchmarks
Cost to charge ratio
Base payment
Stay ahead of the train
Finally you see the light at the end of the tunnel.
It’s a train coming down the tracks.
Keep Up
• Make yourself aware of all the
numerous changes in a timely manner
The only thing that stays constant is
change.
The Future?
Healthcare Reform
This is your
government
This is your
Government on
drugs
Government Efficiency
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