Life Sciences

Medicare & Reimbursement Advisor Weekly, November 6th, 2009

Medicare & Reimbursement Advisor Weekly, November 6, 2009


Trends: PCPs putting mail-order fill decision in patients’ hands

Regence site averages 2,000 member messages

From the editor: Payer insight links

ASP: Is there an ideal reimbursement rate?

Trends: PCPs putting mail-order fill decision in patients’ hands

Two hundred twenty-six out of 752 primary care physicians (PCP) and internists that MRAW polled this month confirm that their practices are now giving their Medicare patients mail-order prescription forms to complete at home and mail with payment to the PBM. For example, a geriatrician’s practice in Wenham, MA, instructs his Medicare patients to send the form to CareMark to handle payment and medication delivery for 30- and 90-day supplies. This means that more elderly patients will be responsible for filling orders. The change in policy is mostly due, said about one-fifth of the 226 doctors, to PBMs losing prescription orders from the physician’s office, which added staff time. A smaller number of physicians, 16, said the move begins to give patients greater involvement in their healthcare, medications, and finances.

Regence site averages 2,000 member messages

Could Regence BlueCross BlueShield’s social Web site for members provide market intelligence and insight for customer discussions? Check it out at Regence has recently revised the site so that members can communicate with each other and with experts. The plan says the site generates 50,000 unique postings in message boards, averaging 2,000 messages per month.

Child insurance program pilot

Are any of your marketed products or prelaunch molecules indicated to treat children? If a pilot program under way in New Jersey is a success, no newborns at participating hospitals will leave the facility without health insurance coverage. Under the “Insured for Sure” Hospital Newborn Pilot Program, staff members from the participating hospitals will verify whether newborns have insurance coverage. The hospital will then submit data to the State of New Jersey Department of Health and Senior Services to confirm that the child is covered by his or her parents’ insurance. If the child is not, a NJ FamilyCare application is immediately submitted online to the state Department of Human Services. If the six-month pilot program is successful, it may be implemented at hospitals across New Jersey, then nationally, says Eliot Fishman, director of policy for the State of New Jersey Department of Health and Senior Services.

How hospitals think about comparative effectiveness

The federal bill that funded $1.1 billion for a comparative effectiveness initiative earlier this year is interesting because the bill states that results from the initiative cannot be used to deny coverage under Medicare. “That’s good, but certainly we know that there are a lot of other payers besides Medicare,” says Peggy L. Naas, MD, MBA, vice president of physician strategies at VHA, Inc., an Irving, TX–based national healthcare network. “So this may certainly influence coverage. Is that bad? It depends on the research on which it’s based.”

What’s going to be interesting for hospital leaders is whether, like evidence-based medicine guidelines, comparative effectiveness research (CER) can help in capital decision-making, common order sets, and decisions about what services to offer on an inpatient basis, Naas says. How does the hospital that follows CER make judicious decisions about capital and physician and other staff training? “What if hospitals invest in eye surgery suites, for example, and then research suggests a pill that could treat an eye malady where once surgery was the only option?” asks Naas. “That research becomes the basis for reimbursement denial.” Multiply that one decision across an entire health system and the uncertainty with which leaders view CER becomes much more clear.

Mortality stats released

Think about where your product’s indications and mortality prevention value may fall into these statistics.

The federal Agency for Healthcare Research and Quality analyzed 765,651 hospital patient deaths in 2007 and found that:

  • One of every three people, or 765,651 of 2,423,995 deaths, who died in the United States in 2007, died in a hospital
  • Although 1.9% of hospital admissions resulted in death, their care cost was 5.2% of all spending for hospital inpatient care by all payers, or $20 billion

The average hospital cost for a stay ending in death was nearly three times higher, about $26,000, than the cost of a patient who was discharged alive, which was $9,447. The cost for patients who died was higher because their stays were 8.8 days versus 4.5 days for those who lived.

The leading principal diagnosis for patients who died while receiving inpatient care was septicemia, or infection of the bloodstream. Those infections were responsible for 15% of all deaths, the leading principal diagnosis in hospital mortality. Of all patients diagnosed with septicemia in the hospital, 17% died in the hospital.

CMS and Avastin

Medicare has agreed to reimburse Avastin® again for off-label use to treat macular degeneration. “Even seniors who have insurance can’t afford the high copayments associated with Lucentis® … patients should have a choice,” Senator Herb Kohl (D-WI) said in a statement. View the full details at: http://www.

Biologic drug competition

A fast-growing category of prescription drugs that are among the most expensive on the market could, for the first time, face competition from generic competitors under the healthcare bills moving through Congress. Biologic drugs, those made from living organisms instead of from chemicals, are increasingly used to treat arthritis, cancer, diabetes, and other diseases. They’re also more expensive for drugmakers to produce and for patients to buy. The breast cancer drug Herceptin® can cost $48,000 per year, and the rheumatoid arthritis drug Remicade® can cost about $20,000.

From the editor: Payer insight links

I wrote a few stories recently that I’ve reported in pieces here, related mostly to oncology, but I thought the results might be applicable for many of you to better understand how customers are managing economic, policy, pathway, and managed care pressures.

Here are the links:

Call 860/232-6377 or write to the editor anytime to discuss.

ASP: Is there an ideal reimbursement rate?

There may be more incentive under an average sales price (ASP) reimbursement model to prescribe branded drugs, but life for many of your customers under ASP is hurting access to community care and driving physicians and patients to hospitals. Some private payers appear to be staying with average wholesale price (AWP) or some version of it before committing to ASP reimbursement. In oncology, most practices have told MRAW that some payers are using AWP, and others are using ASP.

Great-West Health Plan reimburses ASP +20% to one oncology group. Unicare pays 115% of AWP to some Houston practices, says Katherine Grigsby, director of contracting and practice development for oncology groups in that area. Grigsby says larger practices tend to have more favorable positions for better rates. Lawrence Shombert, the administrator at a Rockville, MD, practice, says it is paid between 85%–90% of AWP by its private payers.

Payers tend to be willing to give to the administration side of the equation, which offsets your customers drug-side payments. For larger practices, you can generally get 150% of Medicare’s conversion factor.

Ideal ASP?

An ideal reimbursement percentage seems to hover around ASP +15% to +18%, although some practices MRAW spoke with said they would be okay with ASP +9%, provided clean claim payments were made within 30 days. “The [payers] have to allow us to electronically send records for audit instead of having us have to pull charts for them,” says Barbara Palermo, CPHQ, CWCP, an administrator at Georgia Cancer Specialists, a large multisite provider in Atlanta. Practices are exploring multiple avenues to manage their bad debt and financial challenges, including redirecting patients who are on high-dollar drugs with low margin, joint ventures with hospitals and cancer centers, cutting out add-on services such as psychologists, and closing community sites.