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Medicare & Reimbursement Advisor Weekly, July 15th, 2009

Medicare & Reimbursement Advisor Weekly, July 15, 2009


Infusion reimbursement drop would shift Medicare patients to hospitals

Greater payer MTM investment, reimbursement presents opportunities to make claims about drug profile

Reducing readmission: Can your products align with payer, hospital financial goals?

Access to meds difficult for Medicaid

Infusion reimbursement drop would shift Medicare patients to hospitals

by Bryan Cote

If Medicare has its way, it will eliminate all the gains achieved several years ago in infusion reimbursement for physician offices. The infusion codes were revised a few years ago to help offset average sales price (ASP) reimbursement, but it appears they would take a hit due to redistribution of practice expenses based on the AMA’s supplemental physician survey. Using the chart below, you can see that reimbursement for infusing chemotherapy for the first hour would drop 39.7%; other biologics would drop significantly in 2010 as well, likely redirecting at least some portion of Medicare beneficiaries to the hospital setting, says Joel Brill, MD. This could have a ripple effect in further straining hospital formularies, reducing access, and creating higher plan costs. This is an “if” scenario since the reimbursement rates here are proposed. A final fee schedule is due in November.

The use of orals and injectables could, in theory, benefit in a lower infusion reimbursement market. As we’ve reported, the effect of a shift of Medicare beneficiaries to hospitals produces tighter margins and indirectly affects pharmacy and medical spend, says Faye Satterly, director of Martha Jefferson Hospital’s cancer center in Charlottesville, VA. The changes in physician office infusion reimbursement would hit at the same time as a drop in hospital reimbursement to ASP+4%.

In the wake of the 2003 Medicare reimbursement changes, we studied the potential impact in our report, What If Cancer Care Shifts to the Hospital Outpatient Setting? Our conclusions could be helpful in understanding the effects these changes may have on access and quality of care: Thirty-eight percent of 302 responding physicians said it would help to have drugs that allowed more infusions per hour, and 78% of 54 hospitals surveyed said they would consider being more aggressive in urging physicians to select “cheaper drugs” for infusions, based on tightening margins.

Editor’s note: If you are interested in studying the potential effect of these proposed changes, please contact me to discuss. –BC (860/712-8960)

Greater payer MTM investment, reimbursement presents opportunities to make claims about drug profile

by Bryan Cote

As you may know, Medicare Part D MTM programs are changing again for 2010 to include more patients, with lower drug spend but more conditions. Here’s how the changes will play out in California with Kaiser Permanente (KP) and how its program has worked so far. KP’s MTM program used to target its entire eligible population, taking all comers in a more global approach. But many didn’t have significant interventions after their complete med reviews with the KP-employed ambulatory care pharmacist. Now, KP is trying to target special populations or use key patient lists by using its integrated EMR, KP HealthConnect, to identify where the most critical need is.

Patients will be eligible for the plan’s MTM services if they have any three of the core conditions in Figure 1 (see p. 3) and take a minimum of five medications from KP’s list of drug classes. Patients must have an annual minimum drug spend of $3,000, a drop from the current $4,000 cutoff. If patients meet these criteria, they must opt out if they do not wish to be contacted (as opposed to some plan MTM programs that use an opt-in model).

One targeted population is looking at patients discharged from the hospital in the past week. KP does this every week. It looks to its EMR from all of its California medical centers and gets a list, by center, of all discharges. The list can be broken out by type of discharge or admission, such as those for chest pain. The list is then compared to the eligible MTM population KP has for the program year, and any matches are referred to the KP-employed ambulatory care pharmacists for workup (med reconciliation, review of discharge orders, discussion of meds). To date, there have been fewer readmissions for the MTM group compared to those not receiving MTM services.

“Often, patients get new meds at discharge, so we can identify patients going home and reach out to them at an important time and prevent readmissions or address bigger-picture issues with their treatment,” says Erwin Jeong, RPh, a pharmacist at KP in Southern California.

Some KP ambulatory care pharmacists have signed collaborative practice agreements with doctors to allow them to adjust doses, switch medications, or initiate therapy.

Other examples of targeted populations include using KP’s lab data access to pull a list of anyone with LDL-Cs greater than 100 or using pharmacy data to pull lists of patients on drugs to be avoided in the elderly. Jeong says the program can help get patient LDLs, for example, under control. Eligible MTM patients in skilled nursing settings and hospice are enrolled into the program using the opt-out method.

Reducing readmission: Can your products align with payer, hospital financial goals?

by Bryan Cote

Reducing hospitalizations is one of the top benefits that plan medical directors look for when evaluating products for formulary adoption. And in terms of hospitals, there are indirect financial benefits for adopting products that keep patients from bouncing back after discharge.

For example, four readers from five different pharmaceutical companies recently asked me whether there’s any financial or reimbursement benefit to hospitals that keep patients out of the acute setting after discharge.

Although you don’t gain reimbursement by keeping the discharged patient out of the hospital beyond 30 days, you do avoid losing reimbursement if the patient is readmitted inside a month.


Medicare doesn’t want to pay for hospital readmissions. Under Medicare’s 9th Scope of Work rules, CMS’ fiscal intermediaries currently monitor hospital readmissions, and if a patient is readmitted at the same facility for the same diagnosis within 30 days of discharge, the intermediary flags and sends an electronic note to the state Quality Improvement Organization (QIO).

The QIO then contacts the hospital asking for documentation and background records (e.g., the patient’s discharge plan and care plan).

The QIO reviews the records and has the authority to deny payment for the readmission if it believes there’s enough evidence that the hospital could have avoided the readmission or if the documentation or discharge plan are not of good quality.

Generally, if the QIO determines that there was not a great effort to get the patient the best discharge at the next best level of care (i.e., a skilled nursing facility), the hospital will not be reimbursed for the second readmission.

QIOs may go beyond an electronic/distance

review if there’s a pattern at the same hospital.

If a hospital is not paid for readmissions and a pattern begins, we’re talking about a significant revenue loss.

What causes readmissions?

Hospitals such as St. Joseph’s in Atlanta are now tracking their readmissions and working to reduce their readmission rate and identify the chief causes. See the chart on p. 5 for analysis of St. Joseph’s June readmissions (also see the July 10 MRAW for readmissions data). One-third of the readmissions in June were related to a precipitating surgery, and 25 of those bounced back within five days, says Anne Pedersen, RN, the hospital’s care management director.

HeaRt FailuRe/CHeSt Pain examPle

The DRG for congestive heart failure is 293 (if the patient does not have other major comorbid conditions). Reimbursement under this DRG has a blended payment rate. For example, if a patient enters the hospital within 30 days of discharge for the same DRG, the average blended rate for hospitals concerning this DRG comes to about $4,500. But the cost of the second admission may be higher if you factor in two to three days’ worth of emergency department costs, supplies, and nursing time. The hospital eats these costs if the QIO determines that the discharge plan documentation or plan of care were not adequate.


If your product keeps the coronary artery stable and patients out of the hospital for more than 30 days, the drug indirectly helps hospitals avoid revenue/reimbursement loss. CMS’ goal is to help save $17 billion through these efforts. It wants to reduce so-called bouncebacks and have hospital staff work more in collaboration with the community (doctors, nurses, skilled nursing, etc).

Access to meds difficult for Medicaid

Medicaid’s cumbersome policies often lead to patients not getting or filling their prescriptions, receiving important diagnostic tests, or managing their chronic diseases, which will lead to more costs down the road, according to a new report released by the Association for Community Affiliated Plans (

Under current practice, the report estimates, Medicaid will cover 68 million people during the course of this year, but 13 million will not be enrolled in any given month mainly because their eligibility expired and they did not have a chance or the means to renew it. That results in lowered payments from the state and federal government to the providers and plans, whose officials say that getting those people eventually re-enrolled becomes an even bigger administrative and costly headache.

Officials from several health plans say creating policies that provoke churning is a common practice in states that are trying to reduce costs.

“States use the redetermination process to save money in times of tight budgets,” says Elaine Batchlor, MD, chief medical officer at LA Care, a Medicaid plan with 750,000 members. “They tend to increase the frequency of redetermination; that’s one way to decrease the number of people covered.” Direct medical home model offers healthcare without insurers

An insurance-free primary care “direct medical home” that requires patients to pay low monthly fees, but gives them 24/7 access and cheaper healthcare costs, has the potential to save hundreds of billions of dollars if it’s included in the national healthcare reform model, one advocate says (

Benefits consulting study on HMOs

Increases in healthcare costs for consumers aren’t likely to slow in 2010, with HMO rates projected to jump nearly 12%, according to a new study by benefits consulting firm Hewitt Associates. Although the study looks only at HMOs, it provides a snapshot at where companies are in negotiating 2010 rates with insurers (