Practice Manager Insider

COA: Medicare 2007 Fee Schedule Cuts $400 Million From Cancer Care

The Community Oncology Alliance (COA) has posted on its website an analysis of how the Medicare Physician Fee Schedule for 2007 will affect oncology. COA concludes that changes in the fee schedule would reduce reimbursement for community cancer care by at least $400 to $500 million. Some of this reduction stems from the 5% decrease in physician reimbursement.

COA lists significant payment changes from 2006 to 2007 by CPT code for services relevant to oncology. Examples include the following, list by CPT code. Specific fees may vary by geographic area.

38221  Bone marrow biopsy          -12.7% (-$26.05)
96413  Chemo, IV infusion, 1 hr    -8.76% (-$15.13)
96422  Chemotherapy, infusion     -10.78% (-$20.79)
           method
96440  Chemotherapy,                  -12.12% (-$48.61)
           intracavitary
96445  Chemotherapy,                  -13.10% (-$51.59)
           intracavitary
96450  Chemotherapy,                  -12.17% (-$39.58)
           into CNS

Although the work component for relative value units (RVUs) assigned to evaluation and management codes increased, COA found that reimbursement value for all but 2 codes decreased. A 10.1% budget neutrality factor was applied to all RVUs. The evaluation and management codes for which reimbursement will increase relate to office/outpatient visits for established patients: 99213 (+7.07%, or $3.73) and 99214 (+3.54%, $2.92). Reimbursement for new patient visits, office consultations, and critical care will fall from 2006 to 2007, according to COA.

http://www.communityoncology.org/Portals/coa/Documents/PFSFormalAnalysisIII3.pdf

MedPAC to HHS: Clarify ASP Reporting Requirements for Drug Bundling

The Medicare Payment Advisory Commission (MedPAC) at its November meeting discussed a draft recommendation that the Secretary of Health and Human Services (HHS) should clarify requirements for reporting the impact of drug bundling in calculating the average sales price (ASP). The Centers for Medicare & Medicaid Services (CMS) had sought comment about how drug bundling affects ASP calculation and sales of Part B drugs but took no action on this issue in its recently released final 2007 Medicare Physician Fee Schedule.

Rather than recommending a specific allocation method, MedPAC staff and members expressed interest in preserving the integrity of the ASP-based system for reimbursement of Part B drugs. They also commented that bundling could affect oncologists’ treatment decisions. “Some physicians believe that the practice is hurting their ability to choose a product based on clinical decisions” rather than financial incentives, according to Joan Sokolovsky, PhD, a MedPAC staff analyst who reported on this issue.

Specifically, “many oncologists spoke about a particular example of…bundling that created a problem for them,” said Dr. Sokolovsky. A pharmaceutical firm that makes product A in a crowded therapeutic category may discount a unique, single-source agent to oncology practices that choose product A over its competitors. This creates a financial incentive for oncologists to choose a particular product for which there are alternatives.

MedPAC’s draft recommendation, to be voted on next month, states, “Discounts should be allocated in a way that does not create inappropriate financial incentives for clinicians…and ensures that the ASP reflects the true average transaction price.”

http://www.medpac.gov/public_meetings/transcripts/1108_1109_medpac.final.pdf

How CMS Final 2007 Medicare Physician Fee Schedule Affects Oncology

The final rule released by the Centers for Medicare & Medicaid Services (CMS) summarizes the 2007 impact of the following changes on the various physician specialties: work and practice expense relative value units (RVUs), the Deficit Reduction Act adjustments for imaging services payments, and the estimated 5% reduction in the Medicare physician fee schedule. The combined impact of these changes leads to a 2% reduction of allowed charges for hematology/oncology and a 5% reduction for radiation oncology. The rule takes effect on January 1, 2007.

These decreases occurred despite an increase in the value of the work component of several evaluation and management services. The work and practice expense RVU changes alone result in a 3% increase in allowed charges for hematology/oncology, and a 1% rise for radiation oncology, in 2007. Adding in the adjustments to imaging services payments led to a 0% increase (ie, no change) for radiation oncology, and did not affect the 3% increase for hematology/oncology. Incorporating the 5% reduction in the Medicare physician fee schedule produces the reduction for both fields.

Oncologists are not alone in taking a loss under this rule, however. Only 4 of 54 specialties listed in the CMS rule stayed the same or showed an increase after inclusion of the 5% physician fee reduction, compared to 26 of 54 who met those criteria before consideration of the 5% fee reduction.

In other news, CMS took no action on how to allocate price concessions across drugs sold under bundling arrangements in calculating the average sales price (ASP). The agency had sought comment about how bundling affects the ASP calculation and the sales of Part B drugs but indicated in the rule that “we do not yet fully understand the variety of bundling arrangements that exist.” As Practice Manager Insider board member Larry Oday said, “They’ve kicked the can down the road.”

This does not mean that CMS has passed on this issue. The rule also states that CMS may provide “more specific guidance in the future.” Said Oday, a former official of CMS’ predecessor agency, “This is not over.”

http://www.cms.hhs.gov/PhysicianFeeSched/PFSFRN/itemdetail.asp?filterType=none&filterByDID=0&sortByDID=4&sortOrder=descending&itemID=CMS1188377

CMS Issues Final 2007 Medicare Physician Fee Schedule

The final rule, released by the Centers for Medicare & Medicaid Services (CMS) last week, includes a 5% reduction in Medicare payment rates for physician-related services. It also increased the value of the work component of several evaluation and management services. Changes take effect on January 1, 2007.

The rule also increases the work component for the relative value units (RVUs) for evaluation and management services. This is the result of a review of RVUs that is conducted every five years with the American Medical Association's Relative Value Update Committee (RUC). CMS estimated that changes from the review would increase expenditures by approximately $4 billion in a year. CMS accepted all of the RUC's recommendations on the 400 codes that physician groups suggested for review and the 150 suggested by CMS.

For example, the work component for RVUs associated with an intermediate office visit, the most frequently billed physician’s service, is increasing by 37%. The work component for RVUs for an office visit and for a hospital visit requiring moderately complex decision-making increase by 29% and 31%, respectively.  Both of these services rank in the top 10 most frequently billed physicians’ services out of more than 7,000 types of services paid under the physician fee schedule.

Extension of the oncology demonstration project offered in 2005 and 2006 “remains under consideration,” according to the published rule.

http://www.cms.hhs.gov/PhysicianFeeSched/PFSFRN/itemdetail.asp?filterType=none&filterByDID=0&sortByDID=4&sortOrder=descending&itemID=CMS1188377

http://www.accc-cancer.org/MEDIA/media_newsfeed.asp

http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=2044

How Are Your Peers Responding to Medicare Changes? COA Reports

An ongoing data collection by the Community Oncology Alliance (COA) reports that more than 75% of 163 practices participating in their study send patients to hospitals for chemotherapy – up from 10% of practices prior to 2006. More than 45% of those practices are experiencing delays in treatment. This problem did not exist prior to this year.

The COA encourages practices to respond weekly to the same questions in an effort to track trends in the impact of Medicare changes on community cancer care. These are some of its most recent findings:

• Nearly every clinic is evaluating its ability to continue participating in the Medicare program. All accept Medicare patients currently, but 19% do not take patients without secondary or Medigap insurance. Others shift chemotherapy to the hospital setting, as noted above. About 15% of practices have no facility in their community to which Medicare patients can be referred for chemotherapy.
• About 60% of practices precertify Medicare Part D medication for patients.
• Medicare Advantages plans are having minimal impact on most practices reporting to COA. Practices in Richlands, VA and New York City were exceptions.
• Most practices reported losing revenue under the 2006 reimbursement allowances mandated by the Medicare Modernization Act.
• About 42% of practices reported that at least some of their patients were denied medication through Medicare Part D.

http://communityoncology.org/Default.aspx?tabid=68&ctl=Details&mid=386&ItemID=801

New ACS Analysis: Which Part D Plan is Right for Your Patients?

The Medicare Part D plan that patients choose greatly affects their out-of-pocket cost for cancer therapy, but not always as one might expect. Figures from a recent analysis by the American Cancer Society (ACS) and Avalere Health reveal, for example, that a patient receiving standard first-line treatment for lung cancer (non-small-cell type) could pay more than four-fold more in out-of-pocket costs depending upon the Part D plan chosen.

The information is timely, as open enrollment for Part D 2007 plans begins on November 15. ACS intends to use the data to update its primer about Part D coverage of cancer therapies. The report includes specific cost data and comparative bar graphs.

ACS and Avalere calculated and compared Medicare beneficiary out-of-pocket drug therapy costs for each of 7 standard, first-line regimens for certain cancers: breast cancer, metastatic breast cancer, metastatic colon cancer (2 different regimens), high-grade lymphoma, low-grade lymphoma, and non-small-cell lung cancer. The study considered patient costs in 12 Medicare drug plans, including 4 Medicare Advantage options. Analysts considered premiums, copays, coinsurance, and other elements of patient cost (eg, the gap in coverage referred to as the “donut hole”). It also examined Part B coverage for the same regimens.

Part D plans studied covered nearly all agents that are elements of the regimens examined. Patient cost sharing varied widely, however. Findings include the following:

• Part D plans with copays can be more costly than those using coinsurance.
• Patients reached the aforementioned coverage gap (ie, $2250 total medication spending) in only 3 protocols—those for breast cancer, metastatic breast cancer, and non-small-cell lung cancer.
• A Part D plan that offers medication coverage during the “donut hole” period usually, but not always, would substantially lower beneficiary costs for persons using the 3 aforementioned protocols that would reach the coverage gap. Examples of cases where gap coverage did not yield lower out-of-pocket costs include plans that charge relatively high copays before the gap threshold is reached, and those that exclude brand-name agents from their formularies.
• Higher-premium plans do not always result in lower out-of-pocket costs for the cases examined. Patients receiving protocols with fewer Part D drugs (eg, those for colon cancer and lymphoma) were most likely to incur higher costs with higher-premium coverage.

A key finding regarding Part B coverage is that supplemental insurance is crucial for patients receiving the treatment protocols examined in this study. Premiums for the most popular so-called Medigap plan examined varied by locality but were thousands of dollars less than the patient’s Part B liability without the insurance. 

http://www.avalerehealth.net/research/docs/ACS_Cost_Sharing_For_Cancer_Patients.pdf

http://www.kaisernetwork.org/Daily_reports/rep_hpolicy.cfm#40639

How Fast Are Your Peers Adopting IT for Clinical Uses?

Physicians have been slower to use email to communicate with patients about clinical issues compared to the speed with which they have adopted other clinical applications of information technology. This finding comes from the Center for Studying Health System Change (HSC) Community Tracking Study Physician Survey, a nationally representative telephone survey of continental US physicians. It was reported in last month’s HSC Data Bulletin.

About 24% of respondents reported using email to communicate with patients about clinical issues in the 2004-2005 survey, compared to 20% in 2000-2001. In contrast, reported use of IT to access patient notes and write prescriptions increased by 38% (36.6% to 50.4%) and nearly 100% (11.4% to 21.9%), respectively, according to an earlier Data Bulletin. Physicians in staff or group HMO practices reported the highest rates of email use for to communicate clinically with patients, with 47% using email in this way. Practices for who Medicare constitutes at least 50% of revenue were less likely to report using email for patient clinical communications compared to those with less revenue from Medicare (18% vs 26%, respectively). About 22% of medical specialists responded that they use email in this way, compared to 28% of surgical specialists and 24% of primary care physicians.

HSC cites several possible reasons for the lag in adoption of email for patient clinical communication. These include the cost of implementing a secure messaging system, concern that email will add to workload rather than substitute for phone or in-person consultation, and lack of reimbursement for email consultations.

http://www.hschange.org/CONTENT/875/875.pdf

http://www.hschange.org/CONTENT/848/848.pdf

Obtaining Reimbursement for Preventive Counseling Services

An article in the most recent issue of the Journal of Oncology Practice discusses Medicare and private payer coverage of cancer prevention counseling for persons in certain risk categories. Authors, including Practice Manager Insider’s own Elaine Towle, surveyed medical directors for 6 private payers and 4 Medicare carriers about coverage of cancer prevention counseling. Following are some of the other findings:

• Few formal Medicare coverage policies on cancer prevention counseling exist at either national or local levels. The exception is national coverage for a smoking cessation counseling benefit under two conditions: if the beneficiary has an illness caused or complicated by tobacco use, or if the effectiveness of the beneficiary’s medication(s) is complicated by tobacco use.
• Medicare carrier medical directors interviewed believed that cancer prevention counseling would be covered for a patient with an established cancer diagnosis, a precancerous condition, or a high risk of familial cancer.
• Most private payers do not have formal coverage for preventive counseling but do pay for cancer preventive counseling delivered to a patient with a precancerous condition or a personal or family history of cancer.
• Cancer prevention counseling by a medical oncologist generally will be billed using established evaluation and management (E/M) codes, said both Medicare and private payer medical directors. The exception for Medicare carriers would be that intermediate and intensive smoking cessation counseling should use the new codes provided for those services.
• Neither Medicare nor private payer medical directors require specific documentation in the patient medical record for cancer prevention counseling. Both referred to the CPT guidelines for reporting E/M services, which must justify the level of service billed. Medicare’s policy states that time is the key determinant of E/M level of service when >50% of the face-to-face patient/family-physician encounter is dedicated to counseling.

http://jop.stateaffiliates-asco.org/September06Issue/214.pdf

Part D Plans Cover 75% of Cancer Treatments, Health Affairs Study Reports

Medicare prescription plans cover 75% of agents used to treat cancer, according to an analysis published in the current issue of Health Affairs. The study, by Bowman and colleagues of Avalere Health, reviewed cancer drug coverage offered by nearly 3,000 Medicare Part D plans’ formularies in January and February. The Washington-based health care advisory group self-funded the study. It did not examine data for infused chemotherapy drugs, agents used primarily in supportive care, or oral cancer drugs covered by Medicare Part B. It also did not evaluate beneficiaries’ access to drugs during the so-called “doughnut hole” gap in coverage.

Coverage differs significantly, however, and people with cancer should review prior authorization and other policies when choosing a plan, researchers cautioned.

Under a 2003 Medicare statute, Part D plans must cover “all or substantially all” antineoplastic agents. The study reported that plans cover 75% of anticancer treatments—99% to 100% of generics and about 70% of brand name offerings. Other findings include the following:

• The 20 most commonly prescribed anticancer agents were covered almost universally.
  
• About 10% of agents require prior authorization.
  
• Less than 5% of plans limit the amount of drug that a patient can obtain at one time.
  
• No plans require step therapy, in which patients must try lower-priced drugs before receiving coverage for more expensive options.
  
• Copays of $5 to $40 are more common than coinsurance. When coinsurance is applied, the most common proportion is 25%. Erlotinib is an example of an agent with a median copay of $40.

http://content.healthaffairs.org/cgi/content/abstract/25/5/1240

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?hint=3&DR_ID=39925

http://www.avalerehealth.net/wm/show.php?c=1&id=724

A First: Higher Earners Pay More for Medicare Part B in 2007

For the first time, higher-income beneficiaries will pay a larger share of their premiums for Medicare Part B in 2007, according to Mary Agnes Carey, associate editor of CQ HealthBeat. Carey discussed this issue in “HealthCast,” a weekly series of audio reports by kaisernetwork.org.

The change to requiring higher-income enrollees to pay more was part of legislation passed in 2003. The Centers for Medicare & Medicaid Services (CMS) recently released 2007 premiums and deductibles for Medicare beneficiaries.

The government typically pays 75% of the premium for Medicare Part B while beneficiaries pay the remainder. In 2007, individuals earning more than $80,000 and married couples earning more than $160,000 will pay a higher proportion – up to 80% of the premium by the end of a 3-year phase-in period. The standard Medicare Part B monthly premium for beneficiaries with incomes below those thresholds will rise by $5 or 5.6% in 2007, to $93.50. The increase in the standard premium is the smallest since 2001, according to CMS. It also is lower than the 11% projected in the July mid-season review of the President’s 2007 budget. The premium for Part B is adjusted annually based on formulas set by statute.

An estimated 4% of Medicare Part B enrollees will pay higher-than-standard Part B premiums in 2007 based on their incomes. Higher premiums will range from $106 to $162.10, depending upon income.

The Part B deductible also will rise to $131 in 2007. This represents a 5.6% rise over the 2006 figure of $124. The deductible is indexed to the increase in the average cost of Part B services for aged beneficiaries.

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1917

http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1958