Medicare Compliance & Reimbursement

PPAC examines impact of Part B CAP.

The Centers for Medicare and Medicaid Services hadn't received a single bid from a vendor wanting to participate in the Competitive Acquisition Program for Part B drugs when it put the CAP on hold, CMS officials admitted. The CAP has now been delayed by six months.

However, at an Aug. 22 meeting the Practicing Physicians Advisory Council detailed its recommendations for CMS on how to fix the program.

First, PPAC requested that CMS allow physicians to join the CAP as individuals. Currently, physician practices must choose as a group whether to join. That rule could pose a problem for multi-specialty groups where only some specialties are able to work with the CAP.
 
PPAC also recommended that CMS remove the prices that vendors pay for drugs from its calculations of average sales price. Currently, CMS pays providers for Part B drugs based on ASP plus 6 percent. House Ways and Means Committee Chair Bill Thomas (R-CA) has been quoted as saying that CAP prices weren't supposed to be part of the ASP calculation.

Physicians who participate in the CAP program will have to order the drugs, receive them and store them with the specific patient's prescription information, and then notify the CAP vendor when they've provided the drugs. So PPAC asked CMS to admit that the CAP program really does include some administrative burdens. In addition, PPAC asked that CMS give practices 30 days, instead of 14, to bill for drugs.

"I have my doubts that this is going to work very well," PPAC member Peter Grimm says of the CAP program. Adding an intermediary between doctors and drug companies won't add more money to the system, and vendors will only participate if they can make a healthy profit, Grimm predicts. CMS recently decided to pay hospital outpatient departments ASP plus 8 percent instead of ASP plus 6 percent, to account for the extra overhead that pharmacies carry. PPAC asked CMS to give physicians equal treatment, and add an extra 2 percent to their drug payments as well.

Delay New PE-RVU Formula, PPAC Says

PPAC also requested examples of the new formula CMS plans to use to calculate practice expense relative value units. CMS said in the 2006 physician fee schedule proposed rule that it plans to start calculating PE-RVUs based on the costs to provide each service, instead of deriving the cost per-service from each specialty's overall costs. Because this drastic change could cause huge shifts in PE-RVUs for some codes, CMS said it would phase in the new system over four years. But PPAC recommended that CMS wait to start implementing the system until the American Medical Association and other societies have had a chance to study the issue.