Medicare Compliance & Reimbursement

Oncologists aren't fans of new proposed rule.

The proposed physician payment rule for 2005 provides the first look at how Medicare's new method of paying for physician-administered drugs will affect reimbursements.
 
The preliminary results of the attempt in last year's Medicare Modernization Act to use more realistic prices? Large cuts for many medications widely used to fight ailments such as cancer and lung disease.

Medicare Part B has long paid for these physician administered drugs, which are separate from the self-administered drugs that Part D will pay for beginning in 2006.
 
As dictated by the MMA, the proposed rule replaces a projected 3.7 percent 2005 payment cut for physicians with a 1.5 percent increase. (This year, a 4.5 percent cut was similarly transformed by the MMA into a 1.5 percent increase.) Total Medicare payments to physicians and other health professionals are expected to increase more than 4 percent, from $52.7 billion in 2004 to $55 billion in 2005.
 
Provider groups are already protesting the drug reimbursement cuts. In a July 27 conference call with reporters, however, Centers for Medicare & Medicaid Services Administrator Mark McClellan said that some of the cuts are balanced by increases in the fees physicians receive for administering them. Both physician groups and CMS have said these fees were sometimes too low, but, said McClellan: "Now, we have new tools to pay appropriately for each drug and the services that go along with them, rather than having an overpayment for drugs subsidize an underpayment for services."
 
McClellan said drug-administration fees would be 110 percent higher in 2005 than they were in 2003. However, because of MMA transitional add-on payments that decrease over time, the payments will actually decrease between 2004 and 2005.
 
CMS projects that, overall, the 2005 rule would save Medicare $530 million in 2005 drug-related payments. Of that, $270 million would flow to beneficiaries in lower Part B premiums and cost sharing. McClellan emphasized that numbers could change in the final rule depending on how CMS incorporates comments on the proposed version, which are due by September 24. The proposed rule is on the CMS Web site and will appear in the August 5 Federal Register.
 
Until now, Medicare has reimbursed physicians for Part-B drugs using "average wholesale prices" - industry-generated, artificially inflated figures that have been the source of more scandals than the voting on American Idol. In the MMA, Congress shifted to a methodology based on "average sales price," defined as the average price, net of rebates or discounts, for all sales of a drug in the United States.
 
Starting in 2005, Part-B drugs will be reimbursed at 106 percent of the ASP. In 2006 and beyond, physicians may choose between using the ASP system and obtaining medications through a competitive-bidding program administered by CMS.

Drugs For Lung Problems, Cancer Would Take Hits

CMS will compute final payment rates beginning with data from two quarters hence, but an illustrative table released by the agency shows reimbursement cuts for a majority of the 32 most commonly used drugs. The biggest losers are Albuterol and Ipratropium, inhaled drugs used in nebulizer machines by patients with lung conditions. Using current data, both would face cuts of 89 percent.
 
"For both of these drugs, the prices that Medicare was paying were significantly higher than health plans negotiated for their beneficiaries, and even more than people might pay if they were able to just buy the drugs on their own," McClellan said.
 
On the other hand, he added, "Medicare also hasn't paid much for the critical inhalation-therapy services that go along with the appropriate use of a nebulizer" through which the medications can be delivered.
 
McClellan said that CMS was remedying this deficiency in administration payments and that, per the MMA, CMS would in 2005 for the first time pay for respiratory drugs delivered through metered-dose inhalers, "disposable devices that are less costly and more portable" than nebulizers.
 
Cancer drugs would also face substantial decreases in reimbursement, some more than 50 percent, under the rule. In response, the American Society of Clinical Oncologists called on Medicare to freeze chemotherapy drug payments at 2004 rates through 2006, until three government-mandated studies of MMA's effect on cancer care are completed. "We fear that patients and their families may be deprived of critical community-based cancer care," ASCO said in a July 28 statement.
 
McClellan said CMS projects a decrease in oncologist revenues of between 2 and 8 percent. But he cautioned that this could change based on new data and potential revisions in the final rule.
 
He noted that the AMA's CPT panel is working on new coding for drug administration for oncology and other areas. "We have committed to looking closely at these codes, and making appropriate changes ... based on whatever new codes are created," McClellan said, expressing hope that the coding would be ready for use in the 2005 final rule.