Life Sciences

Infusion reimbursement drop would shift Medicare patients to hospitals

Medicare & Reimbursement Advisor Weekly, July 15, 2009

by Bryan Cote

If Medicare has its way, it will eliminate all the gains achieved several years ago in infusion reimbursement for physician offices. The infusion codes were revised a few years ago to help offset average sales price (ASP) reimbursement, but it appears they would take a hit due to redistribution of practice expenses based on the AMA’s supplemental physician survey. Using the chart below, you can see that reimbursement for infusing chemotherapy for the first hour would drop 39.7%; other biologics would drop significantly in 2010 as well, likely redirecting at least some portion of Medicare beneficiaries to the hospital setting, says Joel Brill, MD. This could have a ripple effect in further straining hospital formularies, reducing access, and creating higher plan costs. This is an “if” scenario since the reimbursement rates here are proposed. A final fee schedule is due in November.

The use of orals and injectables could, in theory, benefit in a lower infusion reimbursement market. As we’ve reported, the effect of a shift of Medicare beneficiaries to hospitals produces tighter margins and indirectly affects pharmacy and medical spend, says Faye Satterly, director of Martha Jefferson Hospital’s cancer center in Charlottesville, VA. The changes in physician office infusion reimbursement would hit at the same time as a drop in hospital reimbursement to ASP+4%.

In the wake of the 2003 Medicare reimbursement changes, we studied the potential impact in our report, What If Cancer Care Shifts to the Hospital Outpatient Setting? Our conclusions could be helpful in understanding the effects these changes may have on access and quality of care: Thirty-eight percent of 302 responding physicians said it would help to have drugs that allowed more infusions per hour, and 78% of 54 hospitals surveyed said they would consider being more aggressive in urging physicians to select “cheaper drugs” for infusions, based on tightening margins.

Editor’s note: If you are interested in studying the potential effect of these proposed changes, please contact me to discuss. –BC (860/712-8960)