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Sept. 21, '04
Vol. 1, No. 30
Weekly news and analysis
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to Medicare Reform Advisor
| EXEC CORNER |
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Trouble: Drug plan regions
During the Health Plans Open Door Forum September 9, officials said the regions for prescription drug plans (PDP) and Medicare Advantage (MA) plans-formerly Medicare+Choice-would not be announced until after the election, probably by early December. Expect between 10 and 50 regions. A pharmaceutical company official in attendance told us privately that they want one PDP per state, due to Coordination of Benefits with state drug and Medicaid programs. Insurers would like to see one MA plan per state since the program is currently set up so you can pick and choose counties. A regional approach would create "more of a challenge in pricing to cover both the high density and rural areas with consistent benefits and premiums," says the head of a government subcontractor. Stay tuned.
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| LETTERS TO THE EDITOR |
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Send letters to bcote@hcpro.com. Include tips, ideas, questions, and problems related to Medicare reform. The editors reserve the right to edit letters for clarity. |
| DATEBOOK |
| October 2004--Rules on new Medicare appeals process due from CMS.
December 8--CMS must issue rules based on section 431 of the reform law by December 8. This section will allow hospitals to accept certain donations, good, services, and grants from others to help them increase the number of quality services to their medically underserved population. The donations can't increase a health center's revenue. Stay tuned.
December 8--A new rule takes effect allowing CMS to continue random prepayment reviews, but with restrictions. CMS may only identify a carrierwide or Medicare programwide error rate, not physician specific errors.
January 1--Physicians who are medical directors or employees of a hospice program may receive reimbursement starting January 2005 for counseling terminally ill Medicare patients. See the February 17 issue of Medicare Reform Advisor for details, or contact the editor. |
© 2004 HCPro, Inc. |
Pharma wins ASP concession
Drug payments should be more stable now in '05
In an effort to make payment allowances for Medicare Part B drugs more consistent from quarter to quarter, CMS changed the average sales price (ASP) reporting requirements this week, according to a final rule it issued Monday. In response to the pharma and physician lobby, CMS will allow drug companies to use a new formula to estimate their costs for volume discounts, prompt pay discounts, cash discounts, free goods, chargebacks, and rebates other than those under the Medicaid program. See "Final ASP formula creates payment stability" for an example and a link to the rule.
$10,000 false pricing penalty
Failure to report results accurately can lead to major penalties for each price concession. Manufacturers are required to submit ASP data to CMS four times a year under section 303 of the Medicare reform law. The next batch, due in October, will be used to calculate the Medicare Part B payment allowances beginning in January for certain drugs and biologics furnished incident to a physician's service, drugs furnished under the durable medical equipment benefit, certain oral anticancer drugs, and immunosuppressive drugs.
| MEDICAREMURMURS |
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- An advisory board mandated by the reform law will help CMS conduct its end-stage renal disease (ESRD) demonstration projects. On September 17, CMS released payment information for outpatient ESRD services to help physicians and dialysis centers handle the myriad of challenges. The notice includes coding instructions and case scenarios. (E-mail the editor at bcote@hcpro.com for a free PDF. Put "ESRD Report" in the subject line.)
- The new drug benefit will cover 53% of drug costs for a typical beneficiary, CMS Administrator Mark McClellan told the Senate Finance Committee last week. For someone without current coverage, that means their total spending on drugs would drop about $1,300, because of negotiated drug price discounts and selections of plans that give them better deals. This variety of choices is expected to reduce drug payments by an average of 15% initially, and eventually 23% within five years, he said.
- Nearly 35,000 uniformed services Medicare beneficiaries who are eligible for TRICARE Health Benefits will receive a refund on their 2004 premium surcharge and be automatically enrolled in Medicare Part B without having to pay a surcharge for late enrollment, according to a reform law provision that CMS rolled out yesterday. The Social Security Administration will automatically enroll affected beneficiaries in Medicare Part B this month. Most of these beneficiaries can change their enrollment date to any other month in 2004.
- Only about half of eligible Medicare beneficiaries are taking advantage of Medicare's colon cancer screening, "with the result that many are developing cancers that could have been treated if they just got the screening," McClellan said at last week's Senate Finance Committee meeting on the MMA. As a result, the agency plans "a major outreach effort" this fall to beneficiaries and to physicians emphasizing Medicare's "new orientation to prevention."
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Final ASP formula creates payment stability
The following is an example of the new formula CMS approved to help pharmaceutical manufacturers calculate their ASP. A manufacturer will add all of their price concessions for the most recent 12-month period available then divide that number by their total sales subject to the reporting requirements. Use the following data for the calculation: Total price concessions for a fake NDC equal $200,000 over the most recent 12-month period; total dollars for those same sales equals $600,000.
Calculation:
- Divide 600,000 into 200,000 = 0.33333 (you must carry five decimal places)
- Multiply 0.33333 by the total dollars for the sales subject to the ASP requirement for the quarter being reported-in this case, $50,000 for 10,000 units sold
- Subtract that number from $50,000. This gives you $33,334.
- Divide 10,000 into $33,334. This gives you $3.33. This is your ASP for this drug for this quarter.
For the full announcement from CMS, go to www.cms.hhs.gov/providers/drugs/cms1380f.pdf.
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CMS approves scan for dementia, Alzheimer's
In accordance with the first national coverage decision under the Medicare reform law, CMS now pays for positron emission tomography scans for two new groups: beneficiaries with suspected Alzheimer's disease and those at risk for the disease who enroll in a large and easily accessible CMS-approved clinical trial. "We ought to approve coverage for patients who've been worked up but whose diagnosis is uncertain," CMS Administrator Mark McClellan said Monday. Some say McClellan's comments are a glimpse at the agency's new commitment to covering promising technology if data and anecdotal evidence are compelling. Beneficiaries can now receive PET scans if they meet the diagnostic criteria for both Alzheimer's disease and frontotemporal dementia (FTD). Physicians must first complete an evaluation for specific alternate causes of dementia, and the cause of the clinical symptoms must remain uncertain for coverage. "The technology is promising for patients with early dementia but is only reasonable and necessary in the context of a peer-reviewed clinical trial that will ensure that the technology is properly used to help families and doctors to diagnose and manage their cases," said McClellan. In addition, CMS says it supports new studies to determine the value of PET scans for a broader population of Medicare beneficiaries who develop symptoms of dementia, says CMS' Chief Medical Officer Sean Tunnis, MD.
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ICD-9 codes may not work as drug category/disease state formulary model
A formulary expert has told the United States Pharmacopeia (USP) that it would make a mistake it if used ICD-9 diagnosis codes as a model for Medicare formularies. The final drug formulary for Part D will be announced in December, and USP is in charge of developing the therapeutic categories and drug classifications, according to the Medicare law.
"It's my experience that most health plans and hospitals use a very different system modeled somewhat on those used by the American Hospital Formulary Service, First DataBank, Medi-Span or Drug Facts and Comparisons," said Pete Penna, PharmD, of Formulary Resources in comments to USP, which CMS picked to write the guidelines.
Pharmacy and therapeutic committees (P&T) give a great deal of time to studying potential off-label uses and unlabeled indications, and Penna says use of ICD-9 codes raise several problems for P&T committees, including the following:
- ICD-9 codes are too granular to be discrete categories.
- Keeping the formulary current will be a major challenge given the pace of new drug developments.
- In order for it to effectively serve as a model, the formulary must address off-label uses. Keeping these up to date would be an even more onerous task, especially considering the judgments that must be made concerning the evidence that needs to be generated in order to justify a listing as a recognized off-label use.
The public comment period closed last week. USP must send its draft guidelines to CMS by mid-November.
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Group refutes negative talk about premiums
Medicare beneficiaries will get more for their money starting in 2006, according to a study by the Alliance to Improve Medicare. Based on estimated premiums and benefits when the drug benefit kicks in, the study found the following benefits for three age categories
- 65-74 years old: Good health, $63 more in benefits annually than premiums; weaker health, $2,145 more
- 75-84 years old: Good health, $315 more; weaker health, $3,114 more
- 85+ years old: Good health, $981 more; weaker health: $5,319 more
Editor's note: For the full study, Lifetime Financial Benefit of the New Medicare Prescription Drug Law, e-mail Executive Editor Bryan Cote at bcote@hcpro.com.
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CMS wants help with medication therapy management program by Oct. 4th
While there are still many questions to answer, the goal of medication therapy management is to optimize therapeutic outcomes by improving medication use in reducing adverse events--specifically for targeted beneficiaries, said Craig Miner, RPh, who is with CMS's Center for Beneficiary Choices in Baltimore. Miner and other CMS staffers spoke at a September 14 pilot open door forum sponsored by CMS in Washington, DC. They addressed quality issues under Titles I (the prescription drug benefit) and II (the Medicare Advantage Program) of the Medicare Modernization Act (MMA).
"The requirements that we've put in there [Part D of Title I] are that plans must have a medication therapy management program," said Miner. This means that the health plans must do these four things:
- Identify services or list of services that they considered to be their part of a medication therapy management program.
- Develop fees for their medication therapy management program that reflect the time and resources required to implement the services.
- Develop the programs in coordination with licensed and practicing physicians and pharmacists.
- Limit the medication therapy management to targeted beneficiaries.
In regard to the targeted beneficiaries, the three requirements they probably should meet are multiple drugs, multiple diseases, and a cost threshold. "But we haven't identified any of those and, in fact, we are leaning toward leaving those determinations up to the plans," Miner said.
"We've asked for comments--especially with regard to the cost threshold--because the statute does say that CMS needs to determine that," he said. But we certainly don't want to set a cost threshold that would be prohibitive to promoting effective medication therapy management programs."
As for the services themselves, CMS views them as "separate and distinct from the dispensing requirements that pharmacists have these days," Miner said. Also, medication therapy management is considered under this program an administrative activity--not a separate benefit. "That's because we didn't want it to be tied to any type of cost-sharing responsibilities [where] beneficiaries happen to pick up the full cost of the services."
A further discussion of medication therapy management appears in the Aug. 3 Federal Register. Comments on the program should be sent to CMS by Oct. 4.
Report from Washington correspondent Jan Simmons.
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Bryan Cote
Executive Editor
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E-mail address: bcote@hcpro.com |
