Practice Manager Insider

Only 18 Oncologists Signed Up for CAP?

The recent House Ways and Means Subcommittee on Health hearing about Medicare Part B reimbursement offered a window into the early days of the Competitive Acquisition Program (CAP). This is because the CEO of the specialty medication distribution firm BioScrip, the sole CAP vendor, testified at the hearing. The CAP is a voluntary program that offers physicians the option of obtaining Part B drugs from vendors selected in a competitive bidding process, rather than buying and billing these drugs under the average sales price (ASP) system. Enrollment was extended until June 30 and the program began on July 1.

Some figures in the cancer care community have expressed skepticism about whether oncologists would sign up for the CAP. This view appears to have been well founded. Only 18 medical oncologists had signed up for CAP as of July 10, according to written testimony submitted by Richard Friedman, CEO of BioScrip. A total of 307 physicians in all specialties have registered, he said. Specialties with the largest concentrations of signups are ophthalmology (77) and allergy/immunology (69). However, oncology accounts for the largest share of Part B allowed charges.

Friedman mentioned the need to address issues with the CAP and to educate physicians about the program’s benefits. Testimony from two oncology representatives highlights the daunting nature of those tasks. Joseph S. Bailes, MD, of the American Society of Clinical Oncology (ASCO) mentioned that oncologists may avoid the CAP because CAP vendors can cut off access to drugs for patients who fail to pay their coinsurance within 45 days. Frederick M. Schnell, MD, president of the Community Oncology Alliance, characterized CAP in this way: “The oncology community at large (views) CAP as an untried and untested experiment. We will not expose our patients to the risks it presents. CAP will force the creation of individual patient inventories, increase the likelihood of treatment errors and delays, and place new and unreimbursed administrative burdens on our clinics.”

COA, ASCO Testify at House Subcommittee Hearing on Part B

Representatives of the Community Oncology Alliance (COA) and the American Society of Clinical Oncology (ASCO) were among those that testified about problems with the current system of Part B reimbursement at a hearing held by the House Ways and Means Subcommittee on Health. Written testimony submitted by those who testified at the July 13 hearing, along with a transcript of the session, is available at the COA website.

Frederick M. Schnell, MD, president of COA, testified that services reimbursement has decreased by more than 20% from 2003 to 2006. This is because demonstration projects and transition increases have expired, and new CPT codes for 2006 have been devalued.  He cited findings about problems with access to care from the organization’s survey (summarized in a July 13 Practice Manager Insider posting), and concluded that, “Community cancer clinics cannot operate when reimbursement continues to be ratcheted down while operating costs are increased by at least 4% per year.”  Some patients go untreated, he told the committee, “…because clinics cannot afford to provide treatment that is reimbursed less than cost.”

He suggested eliminating “prompt payment” discounts from calculation of the average sales price (ASP), removing the 6-month lag in ASP calculation (between price changes and their reflection in the ASP), creating payment codes for services that Medicare does not reimburse (eg, treatment planning, pharmacy facilities), and helping with bad debt remaining when patients cannot pay their 20% Medicare coinsurance. ASCO’s interim executive vice president Joseph S. Bailes, MD, concurred with most of these points.

COA is urging community oncology practices to submit written testimony about these issues. The subcommittee is accepting written testimony until July 27. Instructions about how to submit testimony are available on the subcommittee’s website.

CMS to Require More Data for Claims Payment

Providers sometimes will need to submit more patient data for claims payment so that the Centers for Medicare & Medicaid Services (CMS) can collect data for its Coverage with Evidence Development (CED) program. The revisions are part of changes to the National Coverage Determinations (NCDs). These modifications are now official, having been posted in draft form for comments on April 7, 2005. CMS made revisions based on public comments received before releasing this official CED guidance document.

The CED program generates data about the utilization and impact of the item or service so that Medicare can document the appropriateness of the item or service’s use, consider future coverage changes, and obtain clinical information to improve the evidence base upon which providers base their recommendations to patients. CED collects data in part to document outcomes of various services and items.

According to the official document, CMS may issue an NCD requiring that data be sent to a centralized database or registry. CMS also created 2 categories of CED – Coverage with Appropriateness Determination (CAD) and Coverage with Study Participation (CSP). A CAD is applicable when the item or service in question is deemed qualified for coverage but additional clinical data is needed to ensure that the item/service is provided appropriately. CSP allows coverage of certain items or services for which there is inadequate evidence to support reimbursement—if CMS determines that data-gathering in a clinical practice situation would yield important information about how the service or item affects beneficiaries’ health.

CMS already conditions Medicare coverage upon registry participation in 6 circumstances: PET for Alzheimer’s, PET for brain, cervical, ovarian, pancreatic, small-cell lung, and testicular cancers, implantable cardiodefibrillators, cochlear implants, an NIH colorectal cancer trial, and an NIH home oxygen trial. The CMS website lists more information about these requirements.

How Are Your Peers Coping With Medicare? COA Reports

Nearly 50% of practices submitting data to the Community Oncology Alliance (COA) reported sending at least 6 patients per week to a hospital for chemotherapy due to changes in Medicare reimbursement. This is one of several findings from data that COA has collected since February 2006.

COA posted a short survey on its website about 5 months ago and invited members to complete it weekly to document the impact of Medicare reimbursement policies on access to cancer care. A total of 139 practices in 37 states submitted responses at some point during the 5 months or so that data collection has occurred. Findings as of June 30 appear on the COA website and include the following:

• About 45% (62) of practices submitting data reported experience delays in scheduling patients for chemotherapy at other facilities.
• About 62% (86) of practices reported pre-certifying Part D medication; the others do not.
• About 37% (51) of practices reported patients being denied medication through Medicare Part D. Another 23% (32/139) are unsure; the rest report no denials.
• Most (86%; 119/139) practices have hospitals in their communities to which they can refer Medicare patients for chemotherapy. Practices in rural areas commonly do not have hospitals to which they can refer patients.
• Virtually all practices reporting to COA still accept Medicare patients (137/139). About 16% (23/139) do not accept Medicare patients without secondary or Medigap insurance.

CMS Proposes MD Fee Schedule Changes: Who are the New Winners and Losers?

The Centers for Medicare & Medicaid Services (CMS) has proposed changes in the relative value units (RVUs) affecting payment for physician services to Medicare beneficiaries. It also has put forth a revised method for calculating practice expenses. These changes are scheduled to take effect January 1, 2007.

The changes include a proposed increase in “evaluation and management” services reflecting time spent with patients. For example, the work component for RVUs associated with an intermediate office visit – the most commonly billed physician service – would increase by 37%.

The law requires a budget neutrality adjustment for Medicare if proposed changes exceed $20 million. The proposed work RVU changes alone would raise expenses by roughly $4 billion, according to CMS estimates. The agency therefore has suggested creating a budget neutrality adjuster applied to only the work RVUs. CMS has proposed a 4-year transition to the new practice expense RVUs.

What does this mean for physician practices? Practice Manager Insider board member Larry A. Oday explains, "the statutory constraint of budget neutrality puts CMS in a bind. Although CMS tries to be fair about the process, there are inevitably winners and losers. No other result is possible. If it is the right thing to do to increase payment for the E&M codes, why should other codes be cut to accommodate that?" Oday is also a partner in Vinson & Elkins LLP, a Washington-based law firm, and a former official at the Health Care Financing Administration.

How does oncology fare in this zero sum game? Oday analyzed the proposed rule for PMI readers. CMS projects that hematology/oncology that at full implementation of the changes in 2010, hem/onc’s reimbursement for work RVUs will rise by 3%. Its payment for practice expenses will fall by 1%. Overall, the combined impact of the proposed changes yields a net 2% increase, according to Oday.

Impact of work RVU changes for radiation oncology will result in a decrease of 2% but practice expense RVUs are expected to climb by 4%. This yields an estimated combined impact of +2%.

CMS is accepting comments about the proposals until August 21, 2006.

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.