July 2005 Practice Update

CMS Publishes Interim Final Rule for Competitive Acquisition Program (CAP) for Part B Drugs and Biologicals

July 6, 2005 - CMS published an interim final rule for a new competitive acquisition program (CAP) for physician-administered drugs.  Effective January 1, 2006, the CAP would serve as an alternative to the current system where physicians purchase drugs and then are reimbursed at an average sales price (ASP) determined by Medicare.  Physicians who select the new option could obtain most of their most commonly administered Medicare drugs through a vendor that then would be responsible for billing Medicare and beneficiaries for the drug.  Initially two to five national vendors and 169 drugs would be involved.   

In the rule, CMS responded to a number of recommendations made by ASH in its comment letter on the proposed rule, including decisions to:

• Make the program national in scope rather than phasing it in by region or specialty.
• Include most of the drugs that physicians administer to Medicare patients, particularly those that frequently cannot be purchased at the ASP. (The 169 drugs included in the program are responsible for 85% of Medicare spending on physician-administered drugs.)
• Require vendors to create plans for assisting beneficiaries who cannot meet the co-payments for their drugs.

ASH remains concerned about implementation of the new program and the Society will continue to urge CMS to make modifications, particularly reducing the administrative burden associated with participating in the CAP.

ASH will continue to work with other medical societies on the CAP.  We will also put out a detailed analysis of interim final rule and seek input from the Committee on Practice prior to its September 6th deadline.  If you have any questions, please do not hesitate to contact ASH Director of Government Relations & Practice Mila Becker at 202-776-0544. More information is also available on the CMS Website.

Senators Introduce Legislation to Add Pay-for-Performance to Medicare

June 30, 2005 – Senate Finance Committee Chairman Charles E. Grassley (R-IA) and committee ranking minority member Max Baucus (D-MT) introduced legislation, the “Medicare Value Purchasing Act of 2005” (S. 1356) that would establish a two-phase implementation of paying providers bonuses for delivering high quality care to patients. In the first phase, providers’ reimbursement would be tied to reporting quality data in much the same way hospitals were required to do under the MMA. In the second phase, Medicare providers would voluntarily participate in “value-based purchasing,” under which a portion of their payments would be set aside to create a quality pool. These funds would be given to providers meeting quality standards or those making progress toward meeting them. This phase would begin in 2008 for physicians.

Pay-for-performance (P4P) payments would begin at 1 percent of Medicare payments for each provider group, rising to 2 percent within five years. The P4P fund would be valued at about $2.5 billion initially, increasing to $7.5 billion annually by 2013. CMS would be charged with developing the quality measures, working with a new quality organization established under the bill, health care providers, and other organizations.

The P4P bill also includes a “sense of the Senate” resolution that changes need to be made to the Medicare physician payment system to prevent future reimbursement cuts, including the 4.3% reduction scheduled for next year.

ASH is very interested in developing appropriate quality measures for hematology and its Pay-for-Performance Task Force is working on developing viable performance measures to be used by CMS for practicing hematologists.  The work of the task force will be reviewed by the Quality Subcommittee and shared with the full Committee on Practice.

CMS Announces Third-Quarter ASP Prices

The Centers for Medicare and Medicaid Services (CMS) has released the third-quarter Average Sales Prices (ASP). The pricing file is available on the CMS Website.

The pricing file contains the payment amounts that will be used to pay for Part B covered drugs for the third quarter of 2005. The payment amounts are 106 percent of the Average Sales Price (ASP) calculated from data submitted by drug manufacturers. The quarter to quarter price changes are the result of updated data from the manufacturers of these drugs.

For most of the higher volume drugs (20 out of the top 40), the payment amounts changed 2 percent or less, and for 9 of these codes the change is less than 1 percent. Overall, the payment amounts for 18 of the top 40 drugs increased. While some payment amounts have increased and others have decreased, the payment amounts on average (weighted by Medicare expenditures) across all drugs have decreased by 2 percent. For the top physician administered drugs, drug prices paid on average have decreased by 2 percent. CMS reports there is little evidence of significant access problems for these drugs as a result of the Medicare drug payment reforms. Preliminary 2005 data for the top physician administered drugs suggests that overall utilization of these drugs appears to have increased compared with 2004 levels.

CMS also has provided an update of its ASP Frequently Asked Questions that practitioners may find helpful.

Legislation Introduced to Block Scheduled Physician Fee Cuts

Medicare payments to physicians are scheduled to be cut by 4.3% on January 1, 2006. This will be the first of a series of projected cuts from 2006 through 2011 that will reduce Medicare payments to physicians by 26%. The projected cuts result from the inherently flawed SGR payment update formula. The SGR, which is linked to the Gross Domestic Product, penalizes physicians and other practitioners by failing to reflect volume increases resulting from new coverage decisions and initiatives promoted by the Federal government.

In an effort to block these scheduled cuts, Senators Jon Kyl (R-AZ) and Debbie Stabenow (D-MI) introduced S. 1081, the “Preserving Patient Access to Physicians Act of 2005.” The legislation would halt scheduled Medicare physician payment cuts for two years and provide an opportunity for Congress to design a payment system that appropriately reflects the costs of practicing medicine. S. 1081 would provide for a physician payment update of not less than 2.7% in 2006, consistent with the recommendation of the Medicare Payment Advisory Commission (MedPAC), as well as a 2007 update based on the MedPAC recommendation that updates reflect physician practice cost inflation.

As concern mounts over the scheduled physician fee cuts, the Congress is expected to address this issue in conjunction with legislation addressing pay-for-performance (see above). However, it remains unclear if Congress will act on this issue this year. ASH is supporting this legislation and will keep members posted on further developments.

RUC 5 Year Review

Thanks to all ASH members who completed the E/M online surveys. Later this month ASH will meet with other specialty societies to review the survey data from the online survey and develop recommendations on E/M RVUs. In August, the RUC workgroups will meet, review the recommendations, and develop its own recommendations for the full RUC to review.