Oncology & Hematology Coding Alert

Find out what 85 percent AWP means for your practice

Your oncologist's chemotherapy drug reimbursement may take a hit in 2004 when you report anti-cancer drug codes such as J9062 and J9170, thanks to a decrease in Medicare payment rates that took effect Jan. 1. But you may be able to recoup some of the losses by comparing drug costs with reimbursement, coding experts say.
 
To calculate 2004 drug payment rates, Medicare now pays 85 percent of the average wholesale price (AWP) for most established chemotherapy and other injection drug codes. For 29 other drugs, the government will pay below 85 percent, says Carolyn M. Davis, CMA, CPC, CCP, CCS-P, CPHT, RMC, billing supervisor for Oncology Hematology West in Papillion, Neb., and a professional coding and continuing-education instructor at Iowa Western Community College.

J9062 Now Pays $22 Less

So, how will a 10 percent reduction of AWP affect your oncology practice? Let's say your oncologist administers chemotherapy treatments to a patient with ovarian cancer (183.0, Malignant neoplasm of ovary and other uterine adnexa; ovary). The physician used the drug Cisplatin, and you report J9062 (Cisplatin, 50 mg).
 
In 2003, Medicare paid a national average of $213.73 for J9062. This year, however, Medicare reimburses the drug at $191.23, according to the American Society of Clinical Oncology in Alexandria, Va. That's a loss of about $22 for each time you bill Cisplatin.
 
When your oncologist treats lymphoid leukemia (204.x), he or she often uses the drug fludarabine phosphate. To bill that code, you should report J9185 (Fludarabine phosphate, 50 mg).
 
Because of payment rate reductions, most Medicare carriers will pay about $292.30 in 2004. But last year, you would have received $326.69 for the same 50 mg of fludarabine phosphate.
 
"We fear that our oncology practice may make less money" this year because of the decreases in J code payments, says Valerie Puckett, CPC, director of billing and reimbursement at the UT Cancer Institute in Memphis, Tenn. For example, two of the drug codes her practice bills most often, J9170 (Docetaxel, 20 mg) and J9268 (Pentostatin, per 10 mg), both received cuts in reimbursement.
 
Medicare reduced J9170's average payment of $328 to $273. And the national average for J9268's reimbursement dropped from $1,926 to $1,723. In total, lower reimbursement for both J codes results in about $260 in losses.

How to Recoup Net Costs

To combat losses in drug reimbursement, oncology practices should compare the drug's cost with the insurer's reimbursement, Davis says.
 
If your practice finds that your carrier has paid below the net cost (the cost after rebates and incentives) that the practice incurred for using the drug, you should resubmit the drug codes. Make sure to include documentation of reimbursement and the invoice that shows your expenses.
 
Also, Medicare's increases in drug administration reimbursement may help offset some drug losses, Puckett says. But for some drugs, the government will pay her practice less than the costs to use the drugs. (See "Will 96400-96542 Payment Increases Help Your Office?".)
 
"Depending upon the dosage of drugs, this can be a substantial loss to try to offset with drug administration costs," Puckett adds.

Know Which J Codes the OIG Targeted

Your oncology practice may see even deeper cuts in payment for other "overpaid" chemotherapy drugs. For example, to treat a patient with breast cancer (174.x), the oncologist provides the anti-cancer drug Taxotere. To get paid for this drug, you should report J9170 (Docetaxel, 20 mg).
 
Using 2003 rates, you could have expected Medicare to pay about $328 for J9170. But in 2004, that rate dropped $55 to $273. One reason reimbursement for Taxotere dropped more significantly than for Cisplatin is that Medicare calculated J9170 payment based on 80 percent of the AWP, not 85, according to ASCO.
 
Code J9217 (Leuprolide acetate [for depot suspension], 7.5 mg) also took a hit in reimbursement. If you report J9217 when the oncologist uses Leuprolide to treat prostate cancer (185, Malignant neoplasm of prostate), you can expect $521.44. That's a $90 decrease in what Medicare paid for the drug in 2003. CMS reimburses J9217 at 81 percent of AWP.
 
CMS now pays below the 85 percent rate for certain drugs because either the General Accounting Office or the Health and Human Services Office of Inspector General  has designated the drugs as "overpaid," according to a Dec. 31, 2003, CMS press release. In other words, insurers have paid too much for the drug codes.
 
Note: The above drug-payment rates were based on national averages supplied by the American Society of Clinical Oncology in Alexandria, Va. Because payment rates vary by locality, you should check with your local carrier for specific pricing information.