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Medicare OPPS changes may impact pharmacy

Pharmacy Regulation Resource, October 13, 2004

Hospitals will have to evaluate the impact of a payment change in the 2005 Outpatient Prospective Payment System (OPPS) for certain high-risk or high-cost drugs from both a revenue and a patient-flow standpoint.

Medicare will reimburse pass-through drugs-high-cost or high-risk therapies such as chemotherapy-at average sales price (ASP) plus 6%, the same payment rate for the physician setting, according to the proposed OPPS, published in the August 16 Federal Register. In the 2004 OPPS, Medicare reimbursed pass-through drugs at 85% of average wholesale price (AWP).

The ASP reimbursement is typically lower than the AWP reimbursement because different pricing data is used to determine the rates, says Jugna Shah, MPH, president of Nimitt Consulting in St. Paul, MN, and contributing writer to Briefings on APCs, a sister publication of HPRR.

Private-practice physicians are dealing with this change for Part B drugs in the 2005 Physician Fee Schedule, which the Centers for Medicare & Medicaid Services (CMS) proposed in August. Hospitals will now have to determine how the changes impact their revenue and how patient volume may increase if physicians cut their losses and send patients to hospitals for costly chemotherapy treatments, says Ernest Anderson Jr., MS, pharmacy director at the Lahey Clinic in Burlington, MA.

"There is a lot of noise that [physicians] may be sending people back to a hospital-based setting," Anderson says. "Rural areas may be affected more. Hospitals may have gotten rid of some [chemotherapy] clinics, and now they have no capacity [to treat chemotherapy patients] at the hospital."

For example, the American Society of Clinical Oncology (ASCO) told Congress on September 8 that 73% of cancer practices will spend more money than Medicare for epoetin, used to treat anemia. Medicare reimbursement will also fail to cover costs for pamidronate, used to treat bone metastasis in advanced cancers, in 70% of cancer practices, according to the ASCO.

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