Practice Manager Insider

Standardized Part D Exceptions Request Form Available

This form, available on the Centers for Medicare & Medicaid Services (CMS) website,  allows enrollees to seek drug exceptions or prior authorizations. It is 1 page long and includes a provision to request expedited (ie, 24-hour) review of requests. Standard review time is 72 hours, according to the form. The American Medical Association (AMA) and America’s Health Insurance Plans (AHIP) collaborated to produce the document. The previous process to request exceptions required multiple, lengthy forms, according to the AMA. The form cannot be used to request biotech or other specialty drugs for which drug-specific forms are required.

CMS Issues 2007 Final Guidelines for Part D Formularies

Some key elements include requiring plans to include at least 2 drugs in each approved therapeutic category and class. The Centers for Medicare & Medicaid Services (CMS) may require more than 2 drugs if additional agents “present unique and important therapeutic advantages” and if excluding “may substantially discourage enrollment…by beneficiaries with certain disease states.”

The guidelines allow Part D plans to place “very high cost and unique items” in a specialty tier outside of the usual tiered cost-sharing. CMS indicates that specialty tiers must meet the following criteria for approval:

• Only 1 tier is exempted from cost sharing exceptions
• Only Part D drugs with plan negotiated prices exceeding $500/month can be placed in the specialty tier
• Cost sharing in the specialty tier is limited to 25% in the initial coverage range (or the actuarial equivalent for plans with decreased or no deductible basic alternative benefit design)

A recent evaluation of Medicare drug plans by the Kaiser Family Foundation found that most plans use these specialty tiers and some charge patients more than the 25% recommended by CMS. Eight of the 35 plans evaluated charged beneficiaries 30% to 33% of the cost of agents in the specialty tier. For at least one agent (etanercept for rheumatoid arthritis), a plan covered the drug but charged enrollees 75% of the cost – for a patient share of $1276.

ACCC to MCAC: What Makes a Good Drug Compendium for Off-Label Use?

The Centers for Medicare & Medicaid Services (CMS) is considering adding to the drug compendia used to determine off-label coverage. The Medicare Coverage Advisory Committee (MCAC) recently voted to recommend that CMS consider several desired characteristics when evaluating compendia. A major organization of cancer centers and providers, the Association of Community Cancer Centers (ACCC), disagreed with some of the MCAC-supported traits. ACCC did not support any particular compendium.

Both MCAC and ACCC endorse the following characteristics:

• Extensive breadth of listings
• Quick throughput from application for inclusion to listing
• Detailed description of evidence reviewed for every individual listing
• Use of prescribed published criteria for weighing evidence
• Use of prescribed published process for making recommendations
• Publicly transparent process for evaluating therapies

ACCC advised against using the below MCAC-recommended characteristics (quotes are from ACCC’s written statement to MCAC):

• Net clinical benefit analysis based on potential harm and potential benefit. ACCC stated that this analysis is “impossible to perform meaningfully because individual comorbidities require a different assessment for each patient.”
• Explicit listing and recommendations regarding therapies, including sequential use or combination in relation to other therapies. “Different sequences for different patients are appropriate, and indeed needed,” said ACCC.
• Explicit “equivocal” listing when validated evidence is equivocal. ACCC advocated that a compendium remain silent when evidence is equivocal so that carriers can cover a use on a case-by-base basis, pending further data. Not doing so “could cause carriers to deny coverage” of a use “for all patients.”

MCAC to CMS: Advice About Adding a New Compendium for Off-Label Coverage

The Centers for Medicare & Medicaid Services (CMS) has received requests to add to the number of drug compendia used to determine coverage of off-label drugs and biologicals in anticancer chemotherapeutic regimens. The Medicare Coverage Advisory Committee (MCAC) has evaluated the compendia under consideration. It did not explicitly recommend one compendium over another but outlined several characteristics for CMS to consider in its review.

Medicare covers off-label uses of cancer medications when supported by citations in approved drug compendia or by clinical evidence in peer-reviewed literature. One of the three currently approved compendia is no longer published.
MCAC evaluated these six compendia:

• American Hospital Formulary Service (AHFS) - Drug Information (AHFS)—currently approved
• United States Pharmacopeia - Drug Information (USPDI) —currently approved
• DRUGDEX Information System
• Facts & Comparisons
• National Comprehensive Cancer Network (NCCN) Drugs & Biologics Compendium™
• Clinical Pharmacology (by Clinical Pharmacy Associates)

Of the four compendia seeking approval, NCCN’s offering received the highest rating for having adequately stated evidence-based criteria, then adhering to those criteria in making recommendations. DRUGDEX received the second-highest ratings.
MCAC then rated the NCCN, DRUGDEX, and AHFS compendia on the characteristics it supported for CMS consideration in a compendium. Again, NCCN consistently received the top rating, with the exception of once tying with AHFS.

The Meds and Methods Behind the Alleged CMS Miscalculation

A recent report from the Office of the Inspector General (OIG) concludes that Medicare last year overpaid providers for some Part B prescription drugs, and underpaid for others, due to a calculation error. Here is how the possibility for error occurs, according to the report. The law specifies a way to calculate a volume-weighted average sales price (ASP) based on manufacturers’ information; this method assumes that the unit of ASP submission is the lowest possible quantity of the drug (eg, 1 tablet). The law also allowed the Department of Health and Human Services to establish a different unit for reporting ASPs. The Centers for Medicare & Medicaid Services (CMS) exercised this discretion and changed the unit of ASP submission to the amount of the drug represented by the national drug code (NDC) used in reports from manufacturers.

This introduced inconsistency and error for several reasons. It meant that there was no longer a standard unit across NDCs to calculate a volume-weighted ASP for each Healthcare Common Procedure Coding System (HCPCS) code. This is because the amount of drug represented by one NDC may differ from the amount of drug represented by another NDC. It also may differ from the amount of drug specified by the HCPCS code. Therefore, said the OIG report, “CMS’s equation may not always yield a volume-weighted ASP that is consistent with the volume-weighted ASP derived from calculations set forth in the law.”

The OIG developed an equation that it characterized as mathematically correct and consistent with the results of the calculation set forth in the ASP legislation. For 46% of the HCPCS codes reviewed, the OIG concluded that CMS’ incorrect calculation led to overpayment – by $115 million in 2005. For 13% of HCPCS codes, providers were underpaid by $5 million in 2005. For the remaining 41% of HCPCS codes, there was no difference between the CMS reimbursement amount and the amount calculated by the OIG.

Practice Manager Insider editorial board member Patricia P. Falconer, MBA, extracted the cancer-related HCPCS codes in the OIG report to determine the effect of CMS’ alleged error on oncology practices. She concluded that CMS underpaid for these codes by a net of $2.5 million. Oncology drugs for which the OIG formula yielded a higher number than the CMS equation were bleomycin, docetaxel, filgrastim, idarubicin, ifosfamide, irinotecan, mesna, ondansetron, pamidronate, rituximab, and topotecan, she said. Of these, the most commonly used by community cancer centers are docetaxel, pamidronate, and topotecan. These agents also comprise three of the four drugs for which the dollar difference between OIG and CMS calculations is the largest. Idarubicin is the fourth such drug.

Oncology drugs for which the OIG formula yielded a lower number than the CMS equation were alfa interferon-2a, bevacizumab, cisplatin, cyclophosphamide, cytarabine, dacarbazine, daunorubicin, diphenhydramine, doxorubicin HCl liposome injection, etoposide, heparin, methotrexate, pemetrexed, potassium chloride, rIFN-alpha 2b, vinblastine, and vincristine. Of these, Falconer said, the most commonly used by community cancer centers are cytarabine, dacarbazine, daunorubicin, and methotrexate. These are also the agents for which the dollar difference between OIG and CMS calculations is the largest, she added.

The OIG report recommended that CMS adopt an alternate equation for calculating volume-weighted ASPs that is mathematically correct and consistent with the results of the calculation in the legislation (section 1847A[b][3] of the Social Security Act). CMS indicated that it will consider the report’s findings.

Did CMS Overpay Providers But Underpay Oncology Practices for Medications?

The Office of the Inspector General (OIG) concluded recently that Medicare overpaid providers last year for medications by $110 million because of a calculation error. Practice Manager Insider editorial board member Patricia P. Falconer, MBA, analyzed the effect of Medicare’s alleged error on oncology practices. She found that, using the OIG’s equation, Medicare underpaid oncology providers by $2.5 million.

The OIG recently reported that the method used to calculate the volume-weighted average sales price (ASP) for Medicare Part B prescription drugs does not yield the same result as the method specified in the law. Overall, the discrepancy has led to Medicare overpaying providers by $115 million in 2005. The incorrect method also led to Medicare underpaying providers by $5 million, according to an OIG report.

The OIG reviewed Centers for Medicare & Medicaid Services (CMS) calculations for 459 Healthcare Common Procedure Coding System (HCPCS) codes. The report’s appendices show the HCPCS codes for which CMS overpaid, underpaid, and paid appropriately, according to the OIG. “Many of the codes evaluated by the OIG are for drugs used regularly by oncology practices,” said Practice Manager Insider editorial board member Elaine L. Towle, CMPE. However, most overpayments affected specialties other than oncology and hematology, Falconer explained. Check the report to see if your practice uses these codes.

Specifically, applying OIG’s calculation to the oncology-related codes for which CMS overpaid would reduce total provider payments by roughly $589,000 for 2005, Falconer said. Applying OIG’s calculation to the cancer-related codes for which CMS underpaid would increase total provider payments by about $3.1 million, she said. Therefore, oncology practices would have received an additional $2,511,000 last year if the OIG formula had been used to calculate ASPs. “The OIG methodology favors community-based cancer centers,” concluded Falconer, president of Health Options in Los Altos, CA. An upcoming Practice Manager Insider post will detail the oncology medications affected.

Be prepared for the OIG’s revised calculation method to become the new CMS calculation, advised Practice Manager Insider editorial board member Larry A. Oday. “It is noteworthy that CMS did not dispute the OIG's findings. CMS is not hesitant to disagree with OIG on these types of things when it feels it is in the right. Consequently, I would expect to see CMS adopt this new formula in the upcoming annual rulemaking,” said Oday, who is also a partner at Vinson & Elkins in Washington, DC.

CMS Posts Second Quarter Medicare Part B ASPs, Provider Updates

The average sales price (ASP) used to calculate what Medicare pays providers for Part B drugs has been posted on the Centers for Medicare & Medicaid (CMS) website. The ASP is recalculated each quarter based on sales and price data from pharmaceutical manufacturers.

CMS reports that a comparison of the second quarter 2006 with prior quarters reveals that most drug prices have remained stable. For most of the higher volume drugs (36 out of the top 50), the payment amounts changed 2 percent or less, and for 32 of these drugs the change is about 1 percent.

Click here for a CMS page including multiple downloads, including the April 2006 ASP pricing file.

CMS also has posted second quarter provider updates. Click here for the page listing links to the updates.

Have Your Say about Medicare Coverage – Join the Medicare Coverage Advisory Committee

The Medicare Coverage Advisory Committee (MCAC) is looking for a few good members -- specifically, 50 members. MCAC advises the Centers for Medicare & Medicaid Services (CMS) about the adequacy of the scientific evidence used in determining whether certain medical items and services are reasonable and necessary under the Medicare statute. MCAC performs only an advisory function; final decisions rest with CMS.

MCAC members are chosen by the Secretary of the Department of Health and Human Services, or that person’s designee, from among authorities in several fields. These include administrative medicine, healthcare data, information management and analysis, patient advocacy, and healthcare economics, among other backgrounds. Persons involved in all clinical medicine specialties, medical ethics, epidemiology, biostatistics, and trial design methodology are also welcome.

The committee reviews and evaluates medical literature and other documents regarding products or services eligible for coverage or covered under Medicare. The positions will open as of December 2006. Three openings are for nonvoting consumer representatives, and four are intended for nonvoting industry representatives. Click here to learn more about the documentation required for nomination. Click here for more information about MCAC.

So, if you wish to influence coverage decisions, nominate yourself or urge someone you respect to seek membership! Nominations must be postmarked by April 23, 2006 and mailed to the following address:

Michelle Atkinson, Executive Secretary, Centers for Medicare and Medicaid Services, Central Building 01-09-06, 7500 Security Boulevard, Baltimore, MD 21244. Contact Ms Atkinson at Michelle.Atkinson@cms.hhs.gov, 410-786-2881.