Medicare Reform Advisor, August 17, 2004

August 17, 2004 Vol. 1, No. 26 Weekly news and analysis

SUBSCRIBE
to Medicare Reform Advisor

© 2004 HCPro, Inc.

USP's formulary guidelines due this week
Plans, PBMs will have power over pharmcos

Check out the United States Pharmacopeia (USP) Web site (www.usp.org) this week. The firm said Monday that it expected to post model guidelines by August 20 to help prescription drug plans and pharmacy benefit managers begin to build their drug formularies as required by the Medicare-reform law.

Plans will comply with the law if they use the USP model categories (though the reform law does not require them to). The guidelines will include categories of all FDA-approved drugs. CMS, meanwhile, must evaluate drug plan formularies based on whether the covered drugs go far enough to encourage enrollment among beneficiaries most in need.

Experts say that plans will have immense power to restrict formularies. They have the authority to limit formularies to two drugs only, the law says. "The standards should be a major aid to plans that want to restrict formularies, particularly for off-label uses," says Bill Sarraille, an attorney with Sidley Austin Brown and Wood in Washington, DC.

Conference call takeaways
Four companies who expect to bid to be drug plans said in a conference call August 16 held by Medicare Reform Advisor that comparative research of drugs will be "extremely important" for formulary decisions. All four agreed that this research will be essential in some cases.

Pharmcos will have a small window of time to influence a plan's initial formulary coverage decision. "You'll need to manage your resources very carefully during this period," Sarraille says.

Editor's note: CMS and USP will hold a meeting on the guidelines August 27. Medicare Reform Advisor will offer readers a special report with reaction in the August 31 issue. It will include the impact of the guidelines on providers, beneficiaries, and drug companies.

Back to top

Somavert in, Sandostatin out
Replacement drug program rolls on as CMS inches closer to "D"

CMS added two new drugs to its reform-law replacement program on August 11:

• Coverage for Somavert, a drug to treat the pituitary disorder acromegaly caused by excess growth hormones. Abbot's Somavert replaces the Medicare Part B drug Sandostatin, by Novartis.
• Bristol-Myers Squibb's Mesnex tablets, used to prevent some side effects in patients undergoing certain kinds of chemotherapy, replace the intravenous Mesnex.

Back to top

Morphing of B and D
Amgen's Jim Martin speaks for many. He wants to know whether Part B will move into Part D and whether drug companies ought to lobby for the change. The short answer: wait until 2005 when we know more about the average sales price reimbursement system. As more beneficiaries leave fee-for-service Medicare and migrate to Part C and the host of Medicare Advantage plans, prescription drugs will move as well. The question is whether some will stay in Part B? Right now, some experts say it's too early to tell whether pharmcos should lobby for Part B drugs to be covered in the Part D program. Some CMS executives have made statements indicating that B and D may merge. This we know: While about 75% of Medicare beneficiaries currently have drug coverage and some beneficiaries receive assistance through manufacturers and other assistance programs, beneficiaries without coverage may have to use Part B drugs even if they would pref! er the convenience of drugs they can take at home. The replacement demonstration program cited above-which many believe is Medicare's way of testing Part D--will not make participants ineligible for other manufacturer programs and state prescription-assistance programs that may also assist with drug costs.

Back to top

Most docs won't need scarcity bonus modifier
Unlike health professional shortage area rules, most physicians practicing in a qualifying scarcity area as defined by CMS won't have to do a thing to receive four 5% bonus payments next year, according to a reform law provision. "[Physicians] in some zip codes that crossover into another qualifying county will have to submit a modifier to receive the bonus, but most won't," said David Wargo, who's handling questions on the issue for CMS. Wargo said Monday that the agency will release instructions soon, including a list of the zip codes. Physicians in most zip codes will be eligible for quarterly checks.

Back to top

How to comment on '05 payment policies
To send CMS comments on the payment policies under the physician fee scheduled for 2005 (located at cms.gov), do the following:

Electronic comments

• Go to www.cms.hhs.gov/regulations/ecomments
• Follow instructions for submissions
• Mention file code CMS 1429-P in your comments
• Attach a file to make your point (CMS prefers Microsoft Word, though Excel is acceptable as well)

• Include three copies in your package
• Send to the Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1429-P, P.O. Box 8012, Baltimore, MD 21244-8012

Go to the CMS site to review the payment policies to strengthen your comments. You may also e-mail the Medicare Reform Advisor editor who will submit comments on your behalf.

Back to top

MMA reactions could prove pivotal in elections
Nearly half (47%) of seniors and nonelderly with disabilities who are Medicare beneficiaries said they had an unfavorable impression of the Medicare Prescription Drug, Improvement and Modernization Act (MMA). Only 26% had a favorable impression, while another 26% said they don't know enough to offer an opinion, according to a survey of 1,200 beneficiaries conducted in mid-July by the Kaiser Family Foundation and the Harvard School of Public Health. See this week's "Study" for the full story.

According to Harvard health policy professor Robert Blendon, ScD, these views could become critical in both the upcoming presidential and congressional elections. Although the economy, the Middle East, and terrorism will be dominant issues, Medicare will be important if it's a close election. And in competitive races for the House of Representatives, "it looks like this issue could be extremely important, particularly if you're in a district that has a disproportionate number of seniors," Blendon said during a Washington briefing.

Twenty-eight percent of beneficiaries in the Kaiser/Harvard study said the MMA would affect their vote in the presidential election. Among those, 5% said they would vote for Bush, 12% for Kerry, 3% other candidates, and 8% didn't know. This means that Kerry has a 7 point net lead among those voting on the issue of Medicare, Blendon pointed out.

Among other findings in the survey:

• 73% have a favorable overall opinion of Medicare
• 47% think the new law will do more to benefit prescription drug companies, while 32% said it will do more to benefit those on Medicare
• 53% said MMA will be very or somewhat helpful for people on Medicare with high prescription drug costs and for "a typical person on Medicare," but 29% said the law will be very or somewhat helpful for them personally
• 60% said they don't have enough information about the new law to understand how it will affect them personally, and 56% said they understand the new law "not too well" or "not well at all"

To review additional findings from the study Views of the New Medicare Drug Law: A Survey of People on Medicare, go to www.kaisernetwork.org.

Report by correspondent Jan Simmons

Back to top

Auditors cite hospital for 'retirement date' collection mistakes

CMS auditors, citing the Medicare Secondary Payer rules in the Medicare Manual (Paragraph 4, 20.1), told a staff trainer at a South Carolina hospital that its date of retirement data collection was wrong. In many cases, auditors found that registration staff did not collect the patient's correct date of retirement or assign benefits correctly. A CMS auditor provided the following example on condition of anonymity:

A patient works at his job beyond his Medicare entitlement date. During this time, he has coverage through a group health plan, but he cannot recall his precise date of retirement.

To handle this type of case, hospitals must train their staff to do the following:

• Find out whether it's been at least five years since the beneficiary retire
• If it has been, the hospital must enter the retirement date as five years retrospective to the date of admission
• If a beneficiary's retirement date-or spouse's, as applicable-occurred fewer than five years ago, the hospital must obtain the retirement date from appropriate information sources, such as former employers or supplemental insurers

These rules are among those outlined in HCPro's new Medicare reference--Medicare Basics: Your Guide to Parts A, B, C, and D. Several hospitals are giving out this reference to case managers, nurses, and front-end access/registration staff and financial counselors. The reference book is updated with a section on Medicare reform. For details or to order copies, go to "www.hcmarketplace.com/Prod.cfm?id=2666 or call customer service at 800/650-6787.

Back to top

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