Medicare Reform Advisor, February 10, 2004

February 10, 2004 Vol. 1, No. 1 Weekly news and analysis

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© 2004 HCPro, Inc.

From the Advisory Panel on Medicare Education - February 5 Meeting, Washington, DC

Senior advocacy groups are worried that Medicare drug debit cards, which will officially be available in June, will be an invitation for fraud. Some seniors in New York state have already reported receiving letters for fake cards touting "Medicare approved" information. The Centers for Medicare & Medicaid Services (CMS) is concerned, but agency officials made it clear February 5 that the debit card program will last "just 18 months," so CMS' job now is to pick the best sponsors and gear up for the 2006 drug benefit.

DOJ to enforce 'drug card' regs

The Department of Justice (DOJ) and a handpicked CMS "program safeguard" contractor will make sure drug card sponsors, their pharmacy benefit managers, and network pharmacies follow Medicare Modernization Act (MMA) rules, according to Michael McMullan, CMS' deputy director for beneficiary education.

CMS will pick the sponsors by March from 106 applicants (the agency could choose all 106). Under MMA, these sponsors must secure rebates and discounts on covered drugs and then pass on a share of the savings to seniors who are enrolled in the debit card system. All sponsors must implement a grievance process; expect the DOJ and Office of Inspector General (OIG) to use complaints to help it identify abuse and noncompliance. The OIG has authority to impose civil money penalties or revoke a contract if it can prove noncompliance, according to the MMA.

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Sales average payment system may change

The good news: The perplexing average wholesale price system to reimburse for drugs administered in the outpatient setting will go away in 2006. The not-so-good news: The new MMA system based on acquisition costs that you're expecting may change before it starts.

"The new average sales price system will likely be adjusted, perhaps in the next 12 months," said former CMS administrator Tom Scully on January 14 during a private meeting of pharmaceutical companies in Washington, DC. But many expect the 2004 presidential election to get in the way of any significant changes to the legislation.

However, Mick Kolassa, PhD, managing partner at Medical Marketing Economics, predicts some bumps in the road."CMS wants a net-based, actual acquisition cost system, but current reporting services such as First Data Bank don't provide that and aren't equipped to do so. Wholesalers could provide this, though."

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Ambulance

The following two big changes to improve access to medical emergency ground transportation service take effect July 1:

1. Ambulance providers that start trips in ZIP codes chosen by CMS to be critical rural areas will receive increased payment. Contractors must identify rural areas that qualify for the bonus with a "B" on the national ZIP code file. Effective through 2009.

2. A 25% bonus applied to the Medicare ambulance fee schedule for each mile that providers drive above 50 mi for trips that originate in rural and urban areas. Effective through 2008.

Part A coverage

Medicare summary notices must list the number of remaining days in a patient's Part A skilled nursing benefit. These include skilled nursing claims for post-hospital extended care services under Part A. Effective July 6.

Hospitals

Hospitals have until July 1 to submit data to their quality improvement organizations (QIO). Data must be reported in the three disease categories: heart attack (acute myocardial infarction), heart failure, and pneumonia cases. Hospitals with incomplete submissions will have a 30-day grace period. Missing the deadline means a hospital's Medicare payments will drop by 0.4% in 2005. Two warnings from a CMS staffer: Register with your QIO by June 1 and make sure your data cover all patients in the three disease areas, not just Medicare patients. CMS will check to ensure that data are in the proper format. Some hospitals will see a 2.5% point increase in their ranking for the wage index reclassification if they submitted quality data in 2003 under Medicare's National Voluntary Hospital Reporting Quality Initiative.

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What new treatment regimens could look like for practices

Even with a transitional payment of 32% in 2004, physician practices that see large revenue from drug administration may need to look for new service lines beginning in 2005. Many practices already plan to shift treatment regimens due to the MMA. For example, some plan to hold infusions during lunch. Others will shift to treatments with lower infusion time. Peyton Howell, MHA, president of the Lash Group in Charlotte, NC, offers the following lung cancer (carbo/taxol) treatment regimen scenario. Consider how it will look under Medicare reform:

Regimen: Carboplatin AUC = 6 and Taxol 175 mg/m2 Administration: Carboplatin, 1 hour infusion and Taxol, 3 hour infusion

For a total of three hours, assume use of the codes 96410/94612.

With the transitional assistance in 2004, the drug brings in $2,159.98, the administration would be $313.95, up from $147.50 in December 2003. That's a total of $2473.93. The patient's copay for this regimen would be $494.79, less than 2003.

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Managed care plans must create fraud and abuse control

Much of the MMA mandates practices that some managed care plans already do, but there are also a host of "new" requirements. Three big changes are that drug plans must

• inform patients, doctors, and pharmacies when they remove from a formulary or change the status of a covered Part D drug.
• create and monitor a fraud and abuse control program.
• create a drug benefit that includes the standard Part D coverage, or something actuarially equivalent to the law. Expect to see many different drug benefits by the time the plans are set in 2006.

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ED docs order tests without denial worry

If a patient presents with leg pain in a hospital emergency department (ED) and the physicians want to rule out thrombus (a blood clot), under the MMA, they can order a lower extremity Doppler study without worrying whether the insurance payer will deny the claim. This is good news for ED physicians who, under the Emergency Medical Treatment and Labor Act, must treat and stabilize all presenting patients.

Medicare contractors must pay for this test, no matter the outcome. Under the old Medicare rules, the payer would deny the claim if the Doppler study showed that the patient did not have thrombus. A data quality coordinator for a hospital in the southwest says EDs should consider these tests as regularly covered. "In the old days, these tests were going in the uncovered column, [but] that doesn't need to happen anymore," says the coordinator.

For the first time, payers must decide whether the item or service ordered by the ED physician is reasonable or necessary based on the same information that the ED physician has at the time of treatment-information such as presenting symptoms and complaints.

What's more, payers can no longer take into account the frequency with which the physician provides the item or service before or after the admission or visit. There's no real threat of abuse here, says Diana Luca, MS, chemistry lab supervisor at St. Vincent's Hospital in Bridgeport, CT. "They're ordering these tests already-there's no blanket ordering of panels."

From a practical standpoint, hospital EDs should work closely with their fiscal intermediaries to make sure they are both are on the same page. Also, hold inservices with your physicians, medical record reviewers, and coders so each group understands the new rule.

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Bryan Cote
Executive Editor
E-mail address: bcote@hcpro.com