Medicare Reform Advisor, March 15, 2005

March 15, '05 Vol. 2, No. 10 Weekly news and analysis

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© 2005 HCPro, Inc.

ASP forces rheumatologists to stop infusions
Geriatricians share perspective on Part D

"We're watching cautiously," says Dr. Joseph Flood, an Ohio rheumatologist and professor at Ohio State, referring to the emerging rules regarding Medicare drug coverage. "We're extremely interested in what the formularies will be, what the key drug list includes. We haven't yet seen any pharmacy benefit managers say here's our formulary." Flood, chairman of the American College of Rheumatology government affairs committee, said his colleagues adopted primarily a "wait and see" position regarding the 2006 changes-which, he added, given the late and missed deadlines surrounding implementation of the Medicare Modernization Act of 2003, may be later than expected.

"We're concerned that the bill for this keeps going up and up," says Flood. "We hope the cost doesn't preclude our patients' ability to get the drugs they need." For example, Flood explains, some rheumatologists have recently ceased administering infusion therapy because they were losing money on the reimbursement at the average sales price plus 6% rate. "Solo practitioners can't get the benefit of the volume discounts HMOs have," says Flood. (For more details, see this week's "Drug Payment Reform" below).

Meanwhile, geriatricians and primary care physicians dealing with a large Medicare population echo the concerns about how many drugs will be accessible, but, in general, don't see the MMA substantially changing their practice. For instance, says Dr. John Wolfe, a geriatric specialist in internal medicine who runs a 12-doctor managed care practice, half of which are Medicare patients, "we've been tracked for drug costs per member/per month all along, and we do real well. I don't see where the Medicare change will mean we suddenly start setting limits, or start prescribing more."

One unintended consequence, adds Wolfe, whose clinic in Gloucester, MA, is part of the Partners HealthCare network, which operate the prestigious Harvard teaching hospitals in Boston, is a shift from new, expensive drugs to generics because the doctors will rely less heavily on samples. "The truth is, we've got a lot of people hooked on brand names," he says, "although the samples we provide are not the drugs we would prescribe. They would be-and will be, it seems-generics. Some patients may not react well to the shift." Wolfe says that in addition to dispensing samples, his office has tried to cut costs for the Medicare patients by utilizing state-sponsored advantages, as well as managed care drug benefits (such as from Secure Horizons). "Still," he says, "we see patients taking their pills every other day to save money, or claiming they have a side effect to justify stopping the medication. One hopes the Medicare coverage will put an end to that."

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Conversation: CAP worries rheumatologist
The proposed competitive acquisition program (CAP) for Part B drugs and biologics "could be good" for some doctors losing money on Part B drugs, according to Dr. Joseph Flood. "Although we have issues with Part B," he said. "There are few drugs covered, although we did convince [CMS] to include Remicade," he said, referring to the new and expensive arthritis drug. Basically, "we don't want to be middlemen," says Flood, "but we have to see the final rule."

Under the planned CAP-"an unfortunate acronym," notes Flood-Part B drugs and biologics could be acquired by patients from specialty pharmacies, with the pharmacy collecting the Medicare reimbursement, as well as the co-pay and deductible. The doctors would be reimbursed for administering the drug.

Flood said rheumatologists worry that with so many of the treatments for their patients (such as Enbrel, Remicade and Humira) so costly, as much as $13,000-14,000 a year, the Medicare coverage may fall short. "It's getting caught in the hole in the doughnut," he says. Citing the use of a Medicare sliding scale for co-pays and a ceiling on payments, lower- and higher-income people get a break, but "for the people in the middle, it can be too expensive." A recent $500 million government demonstration project of how the Medicare drug coverage for infused medications might work was significantly under-subscribed, says Flood, because the patients-some 38% of whom were rheumatoid arthritis sufferers-anticipated their "expenses would go up."

Because this project roughly approximated the benefit from the Medicare-reform law, "when we realized so few signed up for it," says Flood, "we worried about how the MMA pharmacy benefit would operate. We worry about what will be on the individual formularies-we would want aspirin and naproxen included, even though there are 26 varieties. And we wonder who will participate-some of the big pharmacy companies have said they want no part of it. We want the coverage, we want older people to have state of the art care-and that's what the promise is, but we're watching cautiously."

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Congress may extend specialty hospital moratorium
Medicare's payment advisory group wants Congress to extend the moratorium on the development of physician-owned specialty hospitals until January 2007, according to Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission. The initial moratorium was to run through June 8, 2005. But Hackbarth told the House of Representatives' Ways and Means Committee March 8 that his commission needs more time and information. "The commission is concerned with the issue of self-referral and its potential for patient selection and higher use of services."

A spokesman for the Ways and Means Committee says the recommendation is currently under advisement.

The Medicare commission made some initial recommendations, however. In his statement, Hackbarth urged the Congress to allow the Department of Health and Human Services to do the following:

• Align physician and hospital incentives through gainsharing, which allows physicians and hospitals to share savings from more efficient practices and might serve as an alternative to direct physician ownership.
• Remedy payment inaccuracies, which result in Medicare paying too much for some diagnosis related groups (DRG) relative to others, and too much for patients with relatively less severe conditions within DRGs.
• Improve the accuracy of the payment system to help make competition more equitable between community hospitals and physician-owned specialty hospitals, whose physician-owners can influence which patients go to which hospital. It would also make payment more equitable among community hospitals that currently are advantaged or disadvantaged by their mix of DRGs or patients. Some community hospitals have invested disproportionately in services thought to be more profitable, and some non-physician owned hospitals have specialized in the same services as physician-owned specialty hospitals.

MedPAC conducted site visits and analyzed hospital Medicare cost reports and inpatient claims from 2002 for its research.

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Care management gaining in popularity
A recent Towers Perrin survey shows that care management programs are proliferating, according to company principal Paula Wickland. The study showed that these programs cut 2% off the average cost increases of employers who implemented them. Wickland noted that more employers say they will adopt these programs in 2005. Care Management is designed to improve employees' health by providing 24-hour nurse hotlines, disease management programs for things like diabetes and heart problems, wellness programs, and health risk assessments. The MMA has a three-year program underway called the Chronic Care Improvement Program designed to test the effectiveness of care management.

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LTC Operators Worry About Medicaid Shift
"Part D coverage is touted as a voluntary outpatient benefit, but it isn't voluntary for dual recipients" of Medicaid and Medicare, points out Kay Weidner, director of pharmacy services for the huge long-term-care operator, Extendicare. Under the government's MMA proposal, people eligible for Medicaid will have to get their drug benefits through Medicare.

In addition, whereas under the state plans now governing Medicaid benefits, there are small formularies, but physicians can prescribe non-preferred drugs. Under the federal Medicare plan, it's possible that a so-called closed formulary would comprise more drugs but allow only those drugs. In essence, she says, the difficulty with the proposed Part D coverage for Medicaid beneficiaries is that "when you expand the formulary, you restrict access."

The drug benefits for the dual eligibles, as Medicaid/Medicare beneficiaries are known, "who are the majority of our residents," says Weidner, "are now managed and reimbursed by the states, which have their own limited, preferred-drug lists. Even though the states have gotten more sophisticated over the past three or four years, as it stands, within one state and one facility, you know the list. As of January 1, when these people shift onto Medicare-under a variety of prescription drug benefit plans-the possibility exists that they will be managed by multiple formularies. This will make it ever so much more complicated for the staff, requiring an even closer working relationship with the institutional pharmacies and the prescribing physicians, creating many levels of concern."

Nursing homes traditionally have contracts with long-term-care pharmacies to provide drugs. Under the proposed Prescription Drug Plan (PDP), patients would be able to pick a provider. A further complication could occur with dual eligibles because there is a limited co-pay ($1-3); this results in a disincentive to use generic medicines, which are less costly and thereby provide a greater margin of profit for the drug companies.

Because the nationwide benefits managers have a lot more "savvy," as Weidner puts it, regarding the makeup of formularies to get the greatest rebates from the big pharmaceutical companies, many more drugs, even OTC drugs (see sidebar on AMDA) may be on the preferred lists. "It's really a privatization of Medicare," says Weidner.

"The challenge is for the nursing staff, which will have to be very alert to cues about what's covered."

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