Medicare Reform Advisor, June 29, 2004

June 29, 2004 Vol. 1, No. 19 Weekly news and analysis

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Replacement drug project delivers glimpse of Part D benefit
The world will get its first glimpse of how Medicare will cover prescription drugs this fall as the government extends for the first time coverage for certain drugs and biologicals that people can take at home. Drugs for treatment of such diseases as rheumatoid arthritis, multiple sclerosis, pulmonary hypertension, and a variety of cancers will be included in the new demonstration. These drugs replace drugs those currently covered under Medicare Part B when given in a doctor's office.

The demonstration, required by section 641 of the Medicare-reform law, will cover 50,000 beneficiaries who lack comprehensive prescription drug coverage. (See below for enrollment information.) For those accepted, drug coverage will run through December 2005. At that point, beneficiaries must choose a prescription drug plan if they want to continue taking the drugs at home.

"In some cases, by avoiding the need for doctor visits and intravenous injections, [we may reduce] costs and medical complications, and access and ease of treatment will increase," projects Mark B. McClellan, MD, PhD, CMS administrator.

Project to cover four main treatments
The following are four examples of estimated annual savings for enrollees:

1. Patients with chronic myelogenous lymphoma (a cancer) using Gleevec could save nearly 90% or $40,654 annually by enrolling in the demonstration. Gleevec has an estimated annual cost of $45,952, but patients in the project will pay $5,298.
2. Patients with multiple sclerosis could save 75% or $12,260 annually on medicines that cost an estimated $16,298 a year. They would pay $4,038.
3. Patients with rheumatoid arthritis could save 75% or $11,975 annually on medicines that cost an estimated $16,000. They would pay $4,025.
4. Patients with pulmonary hypertension using Tracleer could save 86% or $31,255 off of a cost that otherwise could reach $36,136. They would pay $4,881.

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AWP reimbursement limits down for two drugs
Payment limits for two drugs-the precancerous skin-lesion treatment known as Aminolevulinic acid hcl top and an injector for hormone receptor-positive metastic breast cancer, Fulvestrant-are down to 85% of average wholesale price (AWP) for the remainder of 2004, according to Medicare transmittal 90 released June 25.

Two payment limits took effect for services on January 1:

1. Aminolevulinic acid hcl top, HCPCS code J7308: $111.47
2. Injection, Fulvestrant, HCPCS code J9395: $81.57

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Replacement drug demo: Eligibility and application rules
To enroll in the replacement drug demonstration project, beneficiaries must meet the following criteria:

1. A beneficiary must be enrolled in Medicare Part A and Part B
2. Medicare must be the person's primary payer
3. The beneficiary cannot have comprehensive drug coverage through other sources (e.g., TriCare, Medicaid, or an employer or union sponsored plan)
4. A beneficiary must have a signed certification from a doctor that he or she requires one of the drugs covered under the demonstration for the indicated disease

The application period runs from July 6 to September 30. Applicants may apply for early decision by sending in their information before August 16; if accepted, a beneficiary would have coverage by September 1.

Enrollees can acquire their drugs at local retail pharmacies or via home delivery from Caremark, Trailblazer's subcontractor for administering the drug benefit.

How to find the drugs covered
To read a list of the drugs CMS will cover, go to www.cms.hhs.gov/researchers/demos/Benefic_new2_1.pdf and scroll down to the chart.

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CMS clears specialty hospital construction project
Gives rare approval during reform law's moratorium

CMS gave approval June 23 to a physician-owned orthopedic and neurological surgery hospital that began construction in 2003 on a four-story building expected to have between 60 and 70 private beds, 10 surgery suites, and associated ancillary support departments. The hospital asked CMS to rule whether it was legally under development before November 18-the cutoff date Congress imposed in section 507 of the Medicare-reform law. The law forbids new construction of specialty hospitals until June 2005. The 18-month moratorium was one of the most controversial provisions in the Medicare-reform law. CMS is studying the effect specialty hospitals have on the industry and will report its findings by next spring.

"Although the hospital is exempt from the specialty hospital moratorium, a referring physician's ownership or investment interest in the hospital must comply with the remaining terms of the hospital ownership exception in section 1877(d)(3) of the Social Security Act," CMS said in its advisory opinion.

A CMS spokesperson could not say whether the hospital was in compliance with this exception.

The hospital, a joint venture between 20-30 orthopedic surgeons and neurosurgeons, is, according to one source, an "established national operator" of ambulatory surgery centers and specialty hospitals. Equity funding totaled more than $750,000 with help from two physician investors in January 2003. CMS would not disclose the amount the physician investors own in hospital stock.

CMS said the hospital met the following conditions for the exception:

• Its architectural plans were completed
• Funding was received
• Zoning requirements were met
• It received necessary approvals from appropriate state agencies

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AMA could use data to bolster physician lobby
The American Medical Association is circulating a survey to examine the effects Medicare reform will have on community-based physician practices. Results may be used to lobby for higher physician payments. Representative Nancy Johnson (R-CT) encouraged oncologists to participate.

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Cancer Clinical Trials: Two agencies lay out collaboration plan
When he headed the Food and Drug Administration (FDA), Mark McClellan, MD, PhD, placed emphasis on opening up communications with the National Cancer Institute (NCI) to share data regarding the safety and effectiveness of cancer treatments. Now that he heads the Centers for Medicare and Medicaid Services (CMS), McClellan said that CMS also should be collaborating with NCI to "get that same kind of assistance-added to our expertise-to support judgments about coverage.

"We want to help make sure that patients are getting quick access to the most effective cancer treatments. We want to help to develop better evidence on when doctors and patients-working together in the Medicare and Medicaid programs, with financing from us-can use these new technologies as effectively as possible," McClellan said at a forum in Washington, DC, last week discussing access to quality cancer care.

To help move in this direction, McClellan said he has been working with NCI Director Andrew von Eschenback, MD, to develop a joint memorandum of understanding of how the agencies can work together in several areas to "improve science, technology, and patient care involving patient treatment." The major points are:

• Developing a joint process to identify high priority clinical questions about the best use of new cancer technologies and the creation of a process to support post approval studies to make sure the questions are answered.

• Defining a systematic process for consultations between CMS and NCI experts when evaluating new diagnostic and therapeutic cancer technologies for the purposes of payment and coverage decisions.

• Developing more efficient and less expensive methods to collect clinical evidence on new cancer technologies and strategies for making this information more widely available to patients, clinicians, and researchers. CMS and NCI will look at including CMS claims data on the NCI bioinformatics grid (CA BIG) to make this information more easily available for research on outcomes, on comparative utilization of existing treatments, and other evaluations.

• Developing a joint process to identify and evaluate new technologies-such as molecular imaging-so reimbursement policies can anticipate "promising cancer technologies" and help improve their adoption in the marketplace.

• Identifying areas for research that can improve the quality of care for cancer patients and address additional concerns such as cancer health disparity issues, variations in treatment patterns, and improvement in palliative and end-of-life care.

One of the issues likely to come up in a collaborative with NCI is the off-label use of various medications for cancer treatment, McClellan said. "There is a lot of uncertainty out there about whether the treatments really work or not. And the best thing that we can do for our patients-and probably for Medicare spending as well-is to figure out the answers to those questions."

Report from Washington correspondent Jan Simmons.

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