Medicare Reform Advisor, September 28, 2004

Sept. 28, '04 Vol. 1, No. 31 Weekly news and analysis

SUBSCRIBE
to Medicare Reform Advisor

© 2004 HCPro, Inc.

Off-label enforcement could turn to docs
CMS strongly encourages physicians to clearly document and justify off-label use in their Part D enrollees' clinical records. "CMS may be sending a subtle message with this," Mark McAndrew, an attorney with Wiley Rein & Fielding in Washington, DC, told attendees September 21 at the Pharmaceutical Education Associates conference in Philadelphia. "Regulators may seek to hold prescribers responsible for any wrongdoing associated with impermissible off-label prescribing of drugs for which Medicare payment will be sought." Prescription drug plans and Medicare Advantage plans may assign an FDA-approved drug to a category based on an "off-label use" of the drug. McAndrew says CMS seems intent on setting a policy for covering off-label uses. This will make it more difficult for regulators to assert that a claim for reimbursement for a particular off-label drug is false. However, it's not all roses: ! Drug plans will invariably hold different formularies, which could mean different coverage policies. Meanwhile, drug plans, pharmacy benefit managers, and insurers will most definitely be an enforcement target as the government has said it will pursue appropriate false claims cases related to off-label use.

Back to top

How to build a new business model for generic explosion

A senior brand-name drug company official told Medicare Reform Advisor that her manufacturer is "in talks" about establishing a three-way generic drug venture with a wholesale distribution partner and a national drug store dispensing partner. "This is not in response to reports about our pipeline, but I can tell you discussions about a venture like this are underway," the official confirmed. All three players in the venture-the generic drug maker, the wholesaler, and the pharmacy chain-would share ownership. MRA will announce the deal in this newsletter if it's completed; the official could not project a date, though indicated early 2005 as a possible launch. "Pharma marketers and executives need to learn very quickly that they're either going to get 25% on generics or they will lose volumes very quickly," said Sander Flaum, who teaches at the Fordham Graduate School ! of Business. Physicians are being urged by insurance case managers to prescribe generics. And about 80% of all drugs for hypertension, antibiotics, depression, allergy, insomnia, and hypercholesteremia will soon be written or dispensed generically.

Back to top

New cancer billing code may fall short
There's a provision in the reform law allowing oncologists to bill a new CPT code, but the American Medical Association has to approve it. A panel of oncologists told Medicare Reform Advisor on Friday that there's little to no chance the code will make it through. "We approached Senator Kerry's campaign on the issue but they never got back to us," an oncology group in Connecticut told Medicare Reform Advisor. Congressman Chris Shays (R-CT), who voted in favor of the reform law, said he's interested in helping, but nothing has happened. The new code would have on average given most practices an additional $175,000 to $225,000 in revenue annually. Clinical oncology groups are currently lobbying regulators and Congress to change the pending average sales price reimbursement for 2005; the deadline for persuading a change is early October and insiders tell Medicare Reform Advisor that several deals are o! n the table, but that a change is unlikely until after the election.

Back to top

Increased payments pointing to Medicare Advantage plan expansion

Recent shifts in payment policies to encourage expansion of Medicare Advantage managed care plans may be doing the trick, according to speakers at a September 22 Capitol Hill forum sponsored by the Alliance for Health Reform.

With new provisions in the Medicare Modernization Act (MMA), all Medicare Advantage plans in every county in the United States will be paid more than the average fee-for-service cost in 2005: about $2.7 billion in total extra payments-or about $546 more for the average enrollee, said Brian Biles, a professor of health policy at George Washington University and former staff director of the House Ways and Means Health Subcommittee.

The plans also will be paid extra amounts in 2005 due to the decision by the Centers for Medicare and Medicaid Services (CMS) to implement an improved risk-adjustment system based on a budget-neutral policy: this means another $1.4 billion in total extra payments-or about $281 more for the average enrollee. Biles said that plans would continue to be paid extra amounts that they had previously received due to the enrollment of healthier, less costlier beneficiaries.

CMS Deputy Administrator Leslie Norwalk, who has been overseeing many of the changes to be implemented by MMA, said, though, that with Medicare Advantage plans, the total out-of-pocket costs for 2004 are on average $700 lower-once the difference in health status is adjusted. "Not only do you have lower out of pocket costs than you would in Medicare fee for service but we also see things like drug benefits, dental benefits, vision benefits, additional preventative benefits."

"We've seen expansion of service in 26 states covering 9 million people" since the MMA was enacted, said Karen Ignagni, president and CEO of America's Health Insurance Plans, a trade group that represents managed care plans. This does not include 35 applications for 2004 service area expansions currently pending with CMS.

The expanded benefits will permit Medicare Advantage plans to expand their offerings, Ignagni said. "We are providing a safety net. We are providing choices with a range of products as a result of MMA."

Report from Washington, DC, correspondent Jan Simmons.

Back to top

Section 406 creates new payment system possibilities for rural hospitals

Rural community hospitals may qualify for payments on a reasonable cost basis to help CMS determine whether it's feasible to establish a separate reimbursement system for the inpatient services these hospitals provide, according to MMA section 406, which calls for a five-year study starting this October. Up to 15 hospitals per state may participate in the study. Hospitals must be located in rural areas of states with low population densities. Participating hospitals will be paid on a reasonable cost basis for the first year of the demonstration. Thereafter, they will be paid the lesser of reasonable costs or a target amount. The program begins with the cost-reporting period starting October 1. For more information, contact your CMS representative or e-mail Editor Bryan Cote.

Back to top

Medicare announces automatic enrollment of low-income beneficiaries

One of the pressing questions Medicare officials have faced since opening up the drug discount card program for enrollment nearly four months ago is whether-and when-low-income beneficiaries will be automatically enrolled. On September 22, Department of Health and Human Services Secretary Tommy Thompson said during a Washington briefing that at least 1.8 million of those beneficiaries are automatically "going to get a card in the mail next month."

They will be able to start using the card November 1 and will qualify for a $600 credit both this year and next. This year's credit can be carried over to 2005 if the beneficiary enrolls this year. The letters are going to beneficiaries who receive state assistance to pay premiums under Medicare savings programs.

Beneficiaries who do not receive Medicaid assistance for prescription drugs and have annual incomes below $12,569 for singles and $16,862 for married couples are eligible for the credit. To use the cards, the beneficiaries will be required to call either Medicare (at 800/Medicare) or the drug card sponsor to verify eligibility. Seventeen nationwide drug card sponsors (with 19 cards) are participating, but beneficiaries can switch the randomly selected cards at their request.

"This is an approach that we think can work quickly to get the assistance to the beneficiaries who need it the most," said CMS Administrator Mark McClellan, MD, PhD, during the briefing. Part of the delay in moving toward automatic enrollment "was identifying who they were."

"We're going keep looking at other ways to potentially identify and get to other beneficiaries who qualify for this assistance," McClellan said. Of the 1.1 million low-income beneficiaries who are enrolled in the program (out of the current 4.4 million card enrollees), only 100,000 to 200,000 enrolled on their own. (The remainder of those beneficiaries was enrolled through initiatives such as state pharmacy programs or Medicare Advantage programs.)

Access group responds
The goal is to get to 5.5 million low-income beneficiaries enrolled by 2005, said James Firman, president and chief executive officer of The National Council on the Aging, and chair of the Access to Benefits Coalition, a group of 80-plus nonprofit organizations focused on helping low-income beneficiaries optimize their Medicare prescription drug benefits.

To aid in this process, the group announced last week that it has launched a new online service to help beneficiaries find and enroll in 340 prescription government and company savings programs. The coalition also has formed 52 local groups in 34 states to educate and enroll Medicare eligible seniors and younger individuals with disabilities who need assistance. (See www.accesstobenefits.org for more information.)

Report from Washington correspondent Jan Simmons.

Back to top

Bryan Cote
Executive Editor
860-232-6367
E-mail address: bcote@hcpro.com