Practice Manager Insider

OIG to CMS: Cut Payment for 5 Part B Cancer Drugs

Medicare could save up to $67 million this year by lowering the reimbursement rate for 5 Part B oncology drugs, according to a report by the Department of Health and Human Services Office of the Inspector General (OIG). This is the third time this year that the OIG has told the Centers for Medicare & Medicaid Services (CMS) that it is overpaying for Part B drugs. This report specifically focused on 9 oncology medications.

CMS reimburses physician practices for most Part B drugs at 106% of the volume-weighted average sales price (ASP) for the code corresponding to each medication. The law requires that the OIG compare ASPs to the widely available market price in order to identify medications for which the ASP exceeds the market price by at least 5%. For any such medications, the Department of Health and Human Services (DHHS) can reimburse based upon 103% of the average manufacturer price (AMP) rather than 106% of the ASP. The OIG did this in April and found that volume-weighted ASPs exceeded volume-weighted AMPs for 34 of 364 Healthcare Common Procedure Coding System (HCPCS) codes.

The June 28 OIG report focused on HCPCS codes for 9 oncology Part B medications. For 5 of these codes, the difference between the ASP and the widely available market price ranged from 17% (granisetron HCl) to 185% (carboplatin). Paying the AMP rather than the ASP for these drugs could save as much as $67 million this year, according to the OIG report. The other 3 drugs for which ASP exceeded market pricing by at least 5% according to the OIG are vinorelbine tartrate, dolasetron mesylate, and dexamethasone sodium phosphate.

As with the April OIG report, CMS disputed these findings. This is because the OIG analysis focused on fourth-quarter 2005 reimbursement amounts and therefore does not reflect the subsequent downward trend in drug pricing and Medicare reimbursement for some drugs. Medicare payment rate for carboplatin has declined by 60% in the 2 quarters since the OIG examination. This is the drug for which the OIG found the largest difference between ASP and market pricing.

CMS Posts Third Quarter Medicare Part B ASPs

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. The July ASP pricing file is available on the CMS website.

CMS reports that a comparison of the third quarter 2006 with the prior quarter reveals that most drug prices remained stable. Payment amounts across all drugs and across the top physician-administered drugs increased on average by slightly more than .5%. For 28 of the top 50 higher-volume drugs, payment amounts change 2% or less. Payment amounts for 30 of the top 50 drugs increased; payment for 3 remained the same.

Payment for intravenous immune globulin (IVIG) is increasing -- by 11.9% for the powdered lyphilized form and by 3.5% for liquid IVIG. Advocacy groups and providers had expressed concern about inadequacy of Medicare payment amounts for this substance.

MedPAC Agrees with CMS: Reduce Physician Payment for 2007

The Centers for Medicare & Medicaid Services (CMS) has estimated that it will reduce physician payment by 4.6% for 2007, the maximum cut allowed according to a formula in the law. In a recent report, the Medicare Payment Advisory Commission (MedPAC) concurred with this CMS estimate. MedPAC noted that this is the third estimate of such a large so-called “negative update” but no such reduction has occurred since 2002 because Congress has overridden the formula.

To calculate the update, CMS estimated that the volume of physician services grew by 7.5% in 2005. This follows a growth of 8% in 2004. Volume growth exceeding growth in the economy is an important factor leading to payment cuts. MedPAC is preparing a report for release next year reviewing alternatives to the current update formula.

MedPAC Suggests Ways to Improve Medicare Quality and Value

Medicare needs to improve provider accountability for quality and cost of care, and increase the accuracy of its method for calculating practice expense payments. These were 2 of several recommendations from the Medicare Payment Advisory Commission (MedPAC) to Congress in a recent report.

Regarding practice expenses, MedPAC noted that at least some of the data sources that the Centers for Medicare & Medicaid Services (CMS) uses to calculate these are outdated or otherwise inaccurate. It suggests that Congress fund collection of updated practice cost data as this would improve the accuracy of Medicare payments.

For example, CMS calculates the per-service cost of medical equipment assuming that the equipment is operated 50% of the time. MedPAC’s survey of imaging providers in 6 markets found that MRI machines are used >90% of the time; computed tomography equipment is used >70% of the time. CMS’ incorrect assumption could result in overpaying for this service.

Measuring physician resource use is the next step toward increased physician accountability, according to the report. MedPAC examined the use of commercially available episode groupers to assess physician resource use. This method links all care that a beneficiary receives related to a particular episode of illness and adjusts for patient characteristics. The commission plans to address in a future report the question of whether a physician should be held accountable for episode resource use and quality.

MedPAC discussed 2 strategies for coordination of fee-for-service care of chronically ill beneficiaries. One would include a care manager who usually would be a nurse in a group practice; the other would involve an information system operated by a management organization. MedPAC suggested that CMS could pay a beneficiary’s primary physician or group for time spent with the care manager. In both models, the care managers would agree initially to guarantee some level of cost savings as a condition of payment.

CMS Edits its Proposed Medically Unbelievable Edits

Medically Unbelievable Edits (MUE) represent the Centers for Medicare & Medicaid Services’ (CMS) plan to detect and avoid paying for medical errors and implausible claims submissions (eg, a hysterectomy performed on a man). An initial proposal would have restricted the units of services that could be billed per patient per day for more than 10,000 CPT and HCPCS level II codes. Some medical societies objected that the unit limits “contradict current well-established, evidence-based medical practice,” according to a letter to CMS signed by more than 90 medical societies, including the American Society of Clinical Oncology. There also was no procedure for modifying or appealing an edit. CMS initially intended to implement the MUEs by July 1, 2006.

CMS later agreed not to implement MUEs before January 1, 2007. At the most recent meeting of the CMS Practicing Physicians Advisory Council (PPAC), a CMS official announced that a small subset of MUEs will be published for public comment in the fall and implemented on January 1, 2007. This subset will focus on identifying anatomical and typographical errors in claims submissions.

PPAC recommended that CMS allow modifiers for clinical outliers and allow appeals from claims denied under the MUE program. It also advised CMS to release background about the context and rationale for the MUE program and data regarding the estimated percentage of errors that CMS hopes to address. These moves would address objections raised by the medical societies in their letter to CMS.

About 1.7% of Medicare claims paid in error relate to mistakes in billing and coding, said Lisa Zone, deputy director of the Program Integrity Group in the Office of Financial Management at CMS. This amounts to billions of dollars. A link to the transcript of the most recent PPAC meeting can be found on the CMS website.

No Medicare Payments for Last 9 Days of Fiscal Year

The Centers for Medicare & Medicaid Services (CMS) will postpone payments normally due September 22–30, 2006, the last 9 days of the Federal fiscal year. Claims that normally would have been paid then will be paid on October 2, 2006--the first business day of the new fiscal year. This is a provision of the Deficit Reduction Act of 2006. Practices should plan for the impact on claims submission and cash flow.

Contractors should hold all paper and electronic claims which would have been paid during the 9-day period in question. CMS will pay no interest or late penalty for any delay caused by this one-time hold on payments. Contractors should continue to apply CMS regulations for the 14-day electronic claim payment floor and the 29-day paper claim payment floor. Staggered payments are not permitted. No advance payments during the 9-day hold are allowed. CMS will consider accelerated payments using normal procedures. Contractors can make adjustments on a case-by-case basis after October 1 if providers raise extenuating circumstances. An example would be not charging interest on an overpayment for the days for which offsets could not be made due to the hold of payments.

For this one-time notification, CPT Standard Reports are being waived for the month of October.

Do You Have Your National Provider Identifier?

The National Provider Identifier (NPI) is a 10-digit, numeric identifier administered by the Centers for Medicare & Medicaid Services (CMS). Providers must obtain one in order to bill CMS as of May 23, 2007. This is because the Health Insurance Portability and Accountability Act of 1996 (HIPAA) required that the Department of Health and Human Services adopt a standard, unique number for healthcare providers, and the department chose the NPI. All HIPAA-covered providers must use an NPI to identify themselves in HIPAA standard transactions as of May 23, 2007. Large health plans and healthcare clearinghouses also must use only the NPI to identify covered providers in standard transactions as of that date. Small health plans have another year to convert to using only the NPI – until May 23, 2008.

    

The Lash Group recommends using obtaining and using an NPI along with appropriate legacy identification numbers before the NPI is required. One advantage of the NPI is that it replaces all legacy identification numbers. Practices no longer will have to keep track of different identifying numbers for each health plan and for CMS. The number also does not expire or change; it follows a provider who switches jobs or location.

    

CMS has established the following timeline for phasing in usage of the NPI:

Now through October 1, 2006:  Providers must use their existing legacy Medicare number on claims. Including an NPI is optional. CMS will reject claims bearing only an NPI.

October 2, 2006 through May 22, 2007: CMS will accept either the NPI or an existing legacy Medicare number on claims. CMS strongly recommends that providers include both numbers in case issues arise with the NPI during this time. If there is an issue with the provider’s NPI and no Medicare legacy identifier is submitted, the provider may not be paid for the claim.

May 23, 2007 onward: CMS will accept only claims with NPI numbers from all but small health plans.    

    

The CMS website contains information about how to apply for an NPI and about whether a provider with subparts needs multiple NPIs.

Deadline for CAP Enrollment Extended to June 30

The Centers for Medicare & Medicaid Services (CMS) approved this extension on May 31, two days before sign-ups had been scheduled to close on June 2. Physicians who sign up during the extension period will begin participation in the Competitive Acquisition Program (CAP) on August 1, 2006. Sign-up is defined as local carrier receipt of physician election forms postmarked no later than June 30, 2006. Implementation of the Competitive Acquisition Program (CAP) for those who have already registered is still scheduled for July 1, 2006. Medicare carriers’ mailing addresses are available on the CMS website. CMS anticipates holding another as-yet unscheduled “Ask the Contractor” call for physicians before the conclusion of the extended physician election period. The date will be posted on the CMS website.

Are Private Payers Adopting ASP?

Most commercial insurers have not switched to Medicare’s average sales price (ASP) basis of reimbursement for physician-administered drugs, according to a report in the current issue of Oncology Now, a newsletter published by the Lash Group. Representatives of some physician practices attending local International Oncology Network (ION) conferences note that some payers are moving to ASP-based reimbursement—most commonly ASP plus 12%.

At least three Blue Cross and Blue Shield plans have adopted ASP, according to Oncology Now and Specialty Pharmacy News, Blue Cross and Blue Shield of Nebraska, Blue Cross and Blue Shield of Texas, and Anthem Blue Cross and Blue Shield of Colorado.

Elyse Freeman, RPh, PharmD, and director of private payer strategy at the Lash Group, recommends that practices analyze their costs in preparation for contract negotiations with payers – including treatment administration, pharmacy preparation, and related care management costs. It also is prudent to identify the basis of the payer’s fee schedule (eg, ASP, average wholesale price, etc.).

State Medicaid programs are starting to adopt Medicare’s ASP-plus-6% reimbursement policy, according to Oncology Now. Those who have moved to this formula include Alabama, Michigan, North Carolina, New Mexico, Ohio, Washington, Wisconsin, and West Virginia.