CMS Proposes Change to the Reimbursement Methodology for Inpatient "Add-on" Payments for Blood Clotting Factors

• CMS Proposes Change to the Reimbursement Methodology for Inpatient "Add-on" Payments for Blood Clotting Factors
• Proposed Change

The Centers for Medicare and Medicaid Services (CMS) has issued a proposed ruling to revise the Medicare hospital inpatient prospective payment system (IPPS). Most significant to the plasma industry is the proposed policy change regarding the method in which Medicare will calculate and reimburse hospitals for Blood Clotting Factors. The other policy changes being proposed relate to: the classification of cases to the diagnostic-related groups (DRGs); the long-term care (LTC) – DRGs and relative weights; the wage date, including the occupational mix data, used to compute the wage index; rebasing and revision of the hospital market basket; applications for new technologies and medical services add-on payments; policies governing post acute care transfers; payments to hospitals for the direct and indirect costs of graduate medical education; submission of hospital quality data; payment adjustment for low-volume hospitals; changes in the requirements for provider-based facilities; and changes in the requirements for critical access hospitals (CAHs).

BACKGROUND

This article will focus on the proposed changes to the "add-on" payment for blood clotting factors. Historically under the Medicare Part A Program, hospitals administering blood clotting factor products to individuals with hemophilia during an inpatient stay were provided an additional "add-on" payment for each unit of factor administered to the patient. Medicare Fiscal Intermediaries (FIs), who process hospital claims for such inpatient stays, based the per unit payment rate for clotting factor using the average wholesale price (AWP) methodology. Medicare set their payment rate of reimbursement using the LEAST expensive blood clotting factor product within a given therapeutic class (i.e. rFVIII, FIX purified, von Willebrand factor complex). Using the least expensive AWP within the therapeutic class, reimbursement to hospitals was determined by calculating 95% of the AWP. Medicare used the rates published in their quarterly Single Drug Pricer (SDP) release under Medicare Part B to establish the price per unit for blood clotting factor payment to hospitals. Updates to the "add-on" payment for blood clotting factors are concurrent with Medicare’s (IPPS) fiscal year, which is for inpatient stays on or after October 1 (current year) through September 30 (following year).

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Reimbursement Alert May 2005

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