CY2006 Physician Fee Schedule Rule Released by CMS

• CY2006 Physician Fee Schedule Rule Released by CMS
• New HCPCS Codes released by CMS for Plasma-Derived and Recombinant Therapies
• CMS Releases their Final Rule for the CY2006 Hospital Outpatient Prospective Payment System
• Prescription Benefit Coverage under Medicare Part D

On November 21, 2005, the Centers for Medicare and Medicaid Services (CMS) published their final rule for the calendar year 2006 Physician Fee Schedule. Below we will breakdown key components of the rule and the impact on plasma-derived and recombinant therapies. CMS has also released their First Quarter 2006 Payment Rates. The Q1 2006 payment rates are listed below.

Physician Fee Schedule

On November 21, 2005, CMS published in the Federal Register the final rule with comment for revisions to the payment policies under the physician fee schedule for calendar year 2006 (CY2006). The effective date of the rule released will be January 1, 2006. Most significantly, the final rule would institute a 4.4 percent across-the-board reduction in Medicare reimbursement for physicians’ services in CY2006. Although Congress is currently considering legislation that would mitigate the cuts in CY2006, Medicare reimbursement for physician services are slated to be cut for future years as well. The cuts affect payment rates for administering plasma-derived and recombinant therapies, but not the payment for the therapies themselves.

Of most importance, CMS has modified the payment policy for intravenous immune globulin (IVIG) therapies. There has been a unified effort by manufacturers, trade associations, specialty pharmacies, and consumer groups to address the cuts in reimbursement for IVIG both in the physician’s office and in the hospital outpatient setting under Medicare. These efforts are a result of the change in reimbursement for IVIG, which went into effect in some settings on January 1, 2005. Under the Medicare Part B program, IVIG is now reimbursed based upon an Average Sales Price (ASP) plus 6 percent. This significant shift in methodology has created severe cuts in the overall reimbursement to physician and infusion clinics when administering IVIG for their Medicare patients. This reduction in reimbursement reportedly forced physicians to either treat their patients at a loss, or send patients to a hospital outpatient department for the infusion.

In the final rule, CMS does point out some significant issues pertaining to the IVIG market:

• There is a current period of market instability and a time of some volatility in IVIG product availability due in part to a significant number of products available in CY 2005 exiting the market and new products coming onto the market. However, CMS does point out that they see no overall product shortage at this time.
• Concerns about availability and the adequacy of the ASP plus 6 percent rate have been particularly strong and persistent for IVIG in comparison with other drugs paid under the same methodology.
• ASPs have been developed in accordance with applicable guidance; the resulting price reflects the current IVIG market in aggregate.
• Recognition of the increasing demand for IVIG, with “off-label” use significantly exceeding “on-label” uses.
• Physician office staff have to spend extra resources on locating and obtaining appropriate IVIG products and scheduling patient infusions.
• Recent patterns of utilization of IVIG also are unusual in comparison with most other drugs and biologicals
  

Q1 2006 Medicare Part B Payment Rates

CMS Offers Specific Action Steps to their findings

As a result of the above issues raised by CMS in their final rule, action steps to address the IVIG situation have been developed. Among those action steps of most importance are:

• Beginning January 1, 2006, CMS will implement a temporary "add-on" payment to cover the additional pre-administration-related services required to locate and acquire IVIG product and prepare for an infusion of IVIG. CMS created a new Healthcare Common Procedure Coding System (HCPCS) code, G0322, for billing for this add-on. This code will allow for a flat payment rate of $69.00 per day in the physician’s office. This is to be billed in conjunction with the normal administration of IVIG and for the procurement of IVIG products. Again, this is only a temporary “add-on” payment for CY 2006, as CMS will revisit the add-on for CY2007.
• CMS states it will continue to work with the IVIG patient community, product manufacturers, distributors, physicians and hospitals to develop a common understanding of the evolving IVIG marketplace, as well as the continuation of accurate ASP data collection and the focus of the medical necessity of IVIG utilization.
• The Office of the Inspector General will be studying the availability and pricing of IVIG, which may contribute to CMS’ later decisions on payment for IVIG.
  

Blood Clotting Factor "Furnishing Fee"

Beginning January 1, 2005, blood-clotting factors, along with most all other drugs and biological therapies covered under the Medicare Part B Program were subject to the new reimbursement methodology of ASP plus 6 percent. Blood clotting factors were given a special provision for the services associated with the dispensing and administration of such therapies. This additional provision was a "furnishing fee" of $0.14 per unit in CY2005. The furnishing fee is in addition to the ASP plus 6 percent for each blood-clotting factor HCPCS code. CMS updates the furnishing fee amount based on the consumer price index (CPI) for medical care. In the final rule, CMS has calculated the CY2006 blood clotting factor “furnishing fee” to be approximately $0.15 per unit. This will be in effect for all of CY2006.

Conclusion and Next Steps

It is important to note that although CMS has acknowledged in the final rule the on-going need to better understand the IVIG marketplace and the impact reimbursement has on providers and Medicare beneficiaries, strong advocacy work needs to continue from the patient community, product manufacturers, and by healthcare providers involved with the distribution and administration of IVIG. Beginning January 1, 2006, the reimbursement for IVIG will remain at ASP plus 6 percent, with the additional "add-on" payment of $69.00 per day. Advocacy work will continue throughout the remainder of CY2005 and into CY2006 to address a permanent solution to the IVIG reimbursement problems. All interested parties should continue to focus their efforts with their local and federally elected officials, as the strong and consistent voices have improved the reimbursement environment for IVIG, although there is more work to be done.

The CMS final rule can be reviewed by accessing the website address via http://www.cms.hhs.gov. CMS also will allow comments from any individual or organization related to their finale ruling. Comments must be received no later that 5:00PM EST on January 3, 2006. For further information related to the available options for commenting on the final rule, refer to the website listed above.

As always, ZLB Behring will continue to monitor and report on any changes to Medicare reimbursement and the access to care issues for our IVIG providers and patients. For more information on this topic, ZLB Behring’s Toll-Free Reimbursement Answerline can be reached by calling 1-800-676-4266.

REFERENCES:

ZLB Behring assumes no responsibility for the individual interpretation of any material, facts, or references provided within the context of its publication of Reimbursement alert.

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Reimbursement Alert December 2005

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ZLB Behring assumes no responsibility for the individual interpretation of any material, facts, or references provided within the context of its publication of Reimbursement alert.