Practice Manager Insider

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.

New at CMS: Software for Remittances, CAP Information Posted

The Center for Medicare & Medicaid Services (CMS) has posted on its website an article explaining its new Medicare Remit Easy Print software. Practices can use this software to view and print Electronic Remittance Advice (ERA) that complies with the Health Insurance Portability and Accountability Act (HIPAA). CMS had previously announced its plans to reduce the number of Standard Paper Remittance Advices (SPRs) printed and mailed, and to increase use of the electronic remittances (ERA). To use the easy print software, practices must receive HIPAA-compliant ERAs. Contact your carrier to find out more about how to obtain the software or how to receive HIPAA-compliant ERAs.

In other CMS news, the slides and audio from a May 11 teleconference about the Competitive Acquisition Program (CAP) for Medicare Part B drugs and biologicals are  posted on the CMS website. The teleconference program was called “Ask the Contractor.”

CMS Reports Last-Minute Stampede to Join Part D

The final day of the first 6-month window to enroll in Medicare Part D was May 15, and the Centers for Medicare & Medicaid Services (CMS) estimates that well more than 1 million beneficiaries signed up during the final week. CMS is still tabulating final enrollment numbers but has processed 872,000 enrollments from the final week. Many more from what it described as the “last-minute enrollment surge” are backlogged. This includes more than 500,000 persons who signed up online since May 7 – 143,875 of them on May 15. CMS estimates that more than 90% of Medicare beneficiaries—totaling more than 38 million people—now have some sort of prescription drug coverage.

Beneficiaries may have been motivated by the 1% per month penalty to be assessed permanently on the premiums of those who put off signing up until subsequent open enrollment periods. The next such window opens on November 15 and lasts for 6 weeks.

A bipartisan group of senators is sponsoring legislation to waive that penalty for the upcoming enrollment period. CMS already has waived the penalty for eligible beneficiaries choosing the low-income plan during the year 2006. The bill also would appropriate an additional $18 million for counseling to state-based programs such as the Area Agencies on Aging and Senior Health Insurance Information Programs.

OIG: CMS Over-Reimbursing for Part B Drugs?

The Office of the Inspector General (OIG) has issued its second report this year stating that the Centers for Medicare & Medicaid Services (CMS) has been paying too much for some Part B medications—by at least $161 million during the period evaluated.

CMS appeared to dispute some of these findings in a letter appended to the OIG report. It noted that the OIG analyzed data from third-quarter 2004. By CMS analysis, more than 92% of the OIG’s estimated savings do not persist when examining data from later periods. CMS did not indicate whether it plans to act on the OIG findings.

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 average manufacturer prices (AMPs) in order to identify medications for which the ASP exceeds the AMP by at least 5%. For any such medications, the Department of Health and Human Services (DHHS) can reimburse based upon 103% of the AMP rather than 106% of the ASP.

The OIG analyzed ASPs and AMPs for 364 Healthcare Common Procedure Coding System (HCPCS) codes. It found that volume-weighted ASPs exceeded volume-weighted AMPs for 34 of those codes. Reimbursement based on the higher ASP amount led to CMS overpaying physician practices by $161 million, according to the OIG. The amount of overpayment rose when the OIG considered its earlier finding that CMS is miscalculating the ASP.

CMS Q2 Part B ASPs: The Cancer-Specific Changes

The Association of Community Cancer Centers has posted a comparison of first–quarter and second–quarter average sales price (ASP) for 78 commonly used anti-cancer and supportive care drug HCPCS codes.

Medicare reimbursement fell by a median of 2.6% for 40% of these agents from Q1 to Q2. It stayed the same or rose for the remaining 60%, for a median increase of 1.5%. Some of the largest differences were: bleomycin (J9040), from $44.939 to $24.592; vinorelbine tartrate (J9390), from $38.351 to $22.254; and ifosfamide (J9208), from $33.563 to $54.710.

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.