Transcript Reimbursement Forum

Washington Update
2005 Medicare Payments for Office-Administered
Drugs
Payments for drugs in 2005 are based on 106% of
manufacturer’s average sales price (ASP)
 Manufacturers report the ASPs for their drugs to the
Centers for Medicare & Medicaid Services (CMS) within
30 days after the end of each calendar quarter
 Payment amounts for multiple-source drugs are
determined by weighting each drug’s ASP by its sales
volume
2005 Medicare Payments for Office-Administered
Drugs (2)
Payments are adjusted quarterly with 2-quarter lag
 E.g., payment amounts for July-September quarter are
based on ASPs for January-March quarter
New drugs are paid at 106% of wholesale acquisition cost
(WAC) until ASP data are collected
Principal Problems with ASP System
“Underwater” drugs
 Some drugs are not available to some physicians at the
Medicare payment amount
 No exceptions process for particular drugs
2-quarter delay in adjusting payment amounts to reflect
price increases
 may cause payment amount to be less than the current
drug price
 reduces any margin that might otherwise be available
Competitive Acquisition Program
Under CAP, physicians may annually elect to obtain all
Medicare drugs from a Medicare vendor instead of
purchasing them and seeking reimbursement.
Entire group practice must make same enrollment
decision.
Implementation of CAP delayed by CMS until July 2006.
CAP – General Process
Physician will order drugs from vendor for a specific patient and
date of administration. Physician could order entire course of
therapy at once but vendor may ship in segments.
Vendor will ship drugs with an identifying order number within 2
business days for standard shipments and 1 business day for
emergency shipments
Physician will file claim with Medicare for drug administration
services, list the drugs administered, and include the vendor order
number
When physician files claim, carrier will notify vendor that the drugs
had been administered, and vendor could then bill Medicare for the
drug and patient for the coinsurance
Principal CAP Issues
Administrative work associated with ordering and
tracking of drugs is significant.
Process for handling unused drug is vague negotiation
between vendor and physician
Vendors must offer assistance with coinsurance issues in
the form of referral to independent charities, a payment
plan, or waiver of coinsurance
Vendor may cease shipment of drugs for beneficiaries
with balance outstanding 45 days after billing date
Drug Administration Payments
Payments for drug administration services were
generally increased substantially between 2003 and
2004
In addition, a 32% transitional add-on payment applied
in 2004
 Transitional add-on was reduced to 3% for 2005 and is
eliminated for 2006 and later years
Revamped Drug Administration Codes
In response to MMA, AMA CPT Editorial Panel
extensively revised drug administration codes, and the
AMA Relative Value Update Committee assigned relative
values
CMS made the new codes effective for Medicare in 2005
by adopting them as temporary G-codes
AMA’s action is effective for the 2006 CPT book
Revised codes will be mandatory for all payers in 2006
when they are issued as CPT codes
2005 Demonstration Project
Centers for Medicare & Medicaid Services (CMS)
adopted a demonstration project for 2005
$130 payment for each chemotherapy encounter (push
or infusion) for reporting on claim form patient’s
assessment of nausea/vomiting, pain, and fatigue
Intended to increase payments related to drug
administration so that overall payment reductions would
be in line with 2003 congressional estimates
2005 Demonstration Project (2)
CMS released preliminary data from demonstration:
 minority of patients suffer significant symptoms –
 2% with substantial nausea/vomiting,
 8% with substantial pain,
 26% of substantial fatigue
 CMS plans to look at relationships between reported
symptoms and hospitalizations and ED visits
 CMS does not have evidence that MMA changes are
affecting access to care.
2005 Demonstration Project/CMS Fact Sheet
CMS has not yet committed to extending the
demonstration project. Issues under consideration are:
 More effective time frame for inquiring about patient
quality of life and symptoms
 More effective alternatives to collecting data on quality
of life than cancer patients receiving IV chemotherapy
 More effective measures related to quality of care
(evidence-based practice guidelines)
 Looking at the oncology demonstration program in the
context of physician payments.
House Resolution 261
On May 4, Rep. Ralph Hall (R-TX) introduced H. Res.
261
 Commends CMS for 2005 demonstration project
 Expresses sense of House of Representatives that CMS
should continue the demonstration project at least
through 2006, subject to any appropriate modifications
Bipartisan cosponsors and support of Energy and
Commerce Committee
Likely to move to the House floor in October
Private Payers
Some private payers are moving to the Medicare ASPbased payment rates
But they may not be offering increased payments for
drug administration services
Prospects for 2006 Medicare Payments
In the absence of any action:
 Demonstration project ($130/encounter) terminates
12/31/05
 3% add-on to drug administration codes ends
Prospects for 2006 Medicare Payments (2)
CMS appears interested in continuing some form of a
demonstration project
 May not be as broad as the current demonstration
 May not add as much funding to the system as the
current demonstration
Physician Fee Schedule Changes
2006 proposed rule published on August 1, 2005.
Annual Conversion Factor Update
 Change to conversion factor is based in part on
compliance with “sustainable growth rate.”
 Projected 4.3% reduction for 2006.
 Estimation of annual approximate 5% reductions each
year from 2006 through 2012.
 CMS requesting comments.
Physician Fee Schedule Changes (2)
Practice expense methodology
 CMS proposing change from top-down to bottom-up
methodology for direct practice expense.
 Would be transitioned in over 4 years.
 Oncologists would experience slight increase in
payments under new system (1.4% increase by 2009).
Payments for multiple imaging procedures in same
family of procedures on same day would be reduced (also
in HOPD).
ASCO Projects
ASCO contractor worked with practices to identify the
complete range of services for which there is no explicit
Medicare (or other) payment
Further work will seek to refine study to support new
codes and payment amounts
Pending MedPAC Report
Medicare Payment Advisory Commission is required to
review and report on changes in payments for drugs and
drug administration services
 Effect on quality of care and patient satisfaction
 Adequacy of reimbursement
 Impact on physician practices
Report due 1/1/2006
CMS is authorized to revise payments for 2007 taking
into account the MedPAC report
Pending OIG Report
HHS Office of Inspector General required to study the
ability of hematology and oncology practices to obtain
drugs at 106% of ASP
 OIG study has begun – OIG is currently visiting
practices to look at invoices
 Report and recommendations due to Congress by
October 1, 2005
Pending CMS Report
CMS is required to study prices paid by large purchasers
(e.g., HMOs, PBMs) compared to prices paid by
physicians
 Issue is whether prices paid by large purchasers should
be excluded from ASP calculation
 Study is being conducted by contractor, Abt Associates
 Report and recommendations are due January 1, 2006
Pay for Performance
Congress and the Administration are seeking to institute
Medicare reforms that would link payments to improved
quality of care
 Hospital payments are now reduced by 0.4 percentage
point for hospitals that do not report certain quality
indicators
Pay for Performance
Senator Chuck Grassley (R-IA) has introduced S. 1356,
“Medicare Value Purchasing Act of 2005.” Grassley has
indicated desire to link to SGR fix.
 Phase 1: Medicare updates tied to reporting data on
quality measures starting in 2006.
 Phase 2: Portion of total payments tied to quality
performance – providers rewarded for meeting thresh
hold measures.
 A portion of total payment phased in -- 1% in first year,
scaling up to 2% over 5 year period
 Would combine with health information technology
legislation.
Pay for Performance
Nancy Johnson (R-CT) introducing legislation that
would fix the annual SGR update and link the update to
quality measures.
 Phase 1: Would become effective in 2007 with reporting
of quality measures.
 Phase 2: Move toward physician profiling based on
meeting quality measures/improvement measures in
2009.
 Process outlined in legislation involves specialty groups
for determining measures.
Off-Label Drug Coverage
Medicare must cover off-label uses if accepted in:
 United States Pharmacopoeia Drug Information (USP DI)
 American Hospital Formulary Service Drug Information
(AHFS DI)
 American Medical Association Drug Evaluations (merged into
USP DI)
USP DI changed hands from USP to Thomson Micromedex in
spring 2004. Since then:
 Oncologic Drugs Advisory Board and expert review process
created with input from ASCO, ASH, and ACCC.
 Two new indications for oncology drugs have been published.
Off-Label Drug Coverage (2)
Current activities:
 ASCO encouraging Thomson Micromedex to conduct
timely reviews and ensure rapid publication of accepted
uses in USP DI.
 AHFS interested in enhancing oncologic drugs section of
AHFS DI.
 National Comprehensive Cancer Network (NCCN)
introducing new compendium and seeking recognition
by Medicare for coverage purposes.
Evaluating Drug Safety in Cancer Drugs
Unanticipated safety problems with FDA-approved drugs to
treat chronic conditions (Vioxx) causing policymakers to call
for increased monitoring and oversight of drug safety
 Considerations of safety cannot be separate from
overall risk/benefit analysis
 Risk/benefit assessment is different for oncology
drugs
 Congress should devote new funding to increase
ability to identify post-approval safety concerns
Administrative/Legislative Response
FDA’s response: Drug Safety Oversight Board, Drug Watch Web
Page, Health Professional and Patient Information Sheets
FDA Safety Act - S 930 – Sens. Grassley (R) & Dodd (D)
 Center for Postmarket Drug Evaluation & Research with
independent authority to remove drugs from market and to
require post-market studies
 Increased civil penalties and regulation of consumer drug ads
Senate HELP Committee
 Sen. Enzi opposed to separate center for drug safety because it
would weigh risks and benefits “on two separate scales”
House Energy & Commerce Committee
 Focusing on investigations of FDA and drug company’s handling
of data on antidepressants and COX-2 inhibitors
Hospital Outpatient Department
2006 proposed rule published July 25, 2005
Conversion factor to go up by forecast increase in
market basket index: 3.2%
Payments for drugs and drug administration:
 CMS will pay for drugs at ASP+6% with additional 2% to
account for pharmacy overhead costs.
 Drugs with $50/day cost or lower continue to be
packaged into administration.
 Hospitals will use 2006 CPT codes for drug
administration.
Hospital Outpatient Department (2)
Payments for imaging procedures:
 CMS proposes to reduce the payment for second and
subsequent imaging procedures within the same family
of procedures when performed in the same session.
 Each additional procedure would be paid at 50% of full
amount.
 Payment reduction affects only technical component
and not physician’s interpretation.
Overall effects of proposed changes:
 Estimated average increase to hospitals: 1.9%
Medicare Claims Appeals
Appeals process changes as of January 1, 2006
 Carrier hearing replaced by appeal to independent entity
 Deadlines imposed for action at each stage in the
appeals process
HHS administrative law judges will replace Social
Security Administration ALJs for appeals filed beginning
July 1, 2005
Medicare Contractor Reform
Carriers (Part B) and fiscal intermediaries (Part A) will be
merged into one entity called Medicare Administrative
Contractor (MAC)
 15 primary Part A/B MACs
 4 specialty MACs (home health and hospice)
 4 specialty MACs (durable medical equipment)
Primary A/B MACs will serve newly defined geographical regions
Issue of medical directors in each state unresolved
Contracts to be awarded December ’05 through September ‘08.
Transition from existing contractor to MAC: 6-13 months
QUESTIONS
??????
Contact ASCO’s
Cancer Policy
&
Clinical Affairs
Department
(703) 299-1050 / [email protected]