Medicare Compliance & Reimbursement

Oncologists aren't fans of new proposed rule.

The proposed physician payment rule for 2005 provides the first look at how Medicare's new method of paying for physician-administered drugs will affect reimbursements.
 
The preliminary results of the attempt in last year's Medicare Modernization Act to use more realistic prices? Large cuts for many medications widely used to fight ailments such as cancer and lung disease. Medicare Part B has long paid for these physician administered drugs, which are separate from the self-administered drugs that Part D will pay for beginning in 2006.
 
As dictated by the MMA, the proposed rule replaces a projected 3.7 percent 2005 payment cut for physicians with a 1.5 percent increase. (This year, a 4.5 percent cut was similarly transformed by the MMA into a 1.5 percent increase.) Total Medicare payments to physicians and other health professionals are expected to increase more than 4 percent, from $52.7 billion in 2004 to $55 billion in 2005.
 
Provider groups are already protesting the drug reimbursement cuts. In a July 27 conference call with reporters, however, Centers for Medicare & Medicaid Services Administrator Mark McClellan said that some of the cuts are balanced by increases in the fees physicians receive for administering them. Both physician groups and CMS have said these fees were sometimes too low, but, said McClellan: "Now, we have new tools to pay appropriately for each drug and the services that go along with them, rather than having an overpayment for drugs subsidize an underpayment for services."
 
McClellan said drug-administration fees would be 110 percent higher in 2005 than they were in 2003. However, because of MMA transitional add-on payments that decrease over time, the payments will actually decrease between 2004 and 2005.
 
CMS projects that, overall, the 2005 rule would save Medicare $530 million in 2005 drug-related payments. Of that, $270 million would flow to beneficiaries in lower Part B premiums and cost sharing. McClellan emphasized that numbers could change in the final rule depending on how CMS incorporates comments on the proposed version, which are due by September 24. The proposed rule is on the CMS Web site and will appear in the August 5 Federal Register.
 
Until now, Medicare has reimbursed physicians for Part-B drugs using "average wholesale prices" - industry-generated, artificially inflated figures that have been the source of more scandals than the voting on American Idol. In the MMA, Congress shifted to a methodology based on "average sales price," defined as the average price, net of rebates or discounts, for all sales of a drug in the United States.
 
Starting in 2005, Part-B drugs will be reimbursed at 106 percent of the ASP. In 2006 and beyond, physicians may choose between using the ASP system and obtaining medications through a [...]