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