Other issues of concern for 2012 are the expiration of the 1.0 work floor and the proposed expansion of the 50% multiple procedure payment reduction (MPPR) reduction to the professional component (PC) of advanced imaging services.

However, there is some good news too, as the proposals for the Physician Quality Reporting System (PQRS), the Electronic Prescription (eRx), and the Electronic Health Record (EHR) incentive programs are overwhelmingly positive.

In this issue, we will look at the calculation of the 2012 PFS and the 2012 proposals of most interest to oncology.

2012 PROPOSED RULE - AREAS OF INTEREST TO ONCOLOGY

PPIS Transition Continues
2012 is the third year of the four-year transition to the new practice expense RVUs calculated using Physician Practice Information Survey (PPIS) data. In 2012, practice expense will be calculated using 75% of the new PPIS data and 25% of the old Socioeconomic Monitoring Surveys (SMS) data.

However, the transition from the SMS to PPIS data is not applied to the practice expense per physician hour (PE/HR) of the oncology drug administration services. Section 303 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) requires CMS to continue using the medical oncology/hematology supplemental survey data submitted in 2003 for oncology drug administration services. Therefore, the supplemental survey data continues to be used to calculate the PE/HR for medical oncology, hematology and hematology/oncology.

RVUs of Potentially Misvalued Services
The AMA RUC (American Medical Association’s Specialty Society Relative Value Update Committee) provides recommendations to CMS on physician work relative value units (RVUs) for new and revised codes, direct practice expense (PE) inputs for services, and recommendations on the value of codes that have been identified as potentially misvalued.

CMS is statutorily required to review the RVUs of services paid under the PFS at least once every five years. The Affordable Care Act (ACA), enacted on March 23, 2010, adds the requirement that the Secretary specifically examine potentially misvalued services in seven specific categories including codes and families of codes for which there has been the fastest growth and codes or families of codes that have experienced substantial changes in practice expenses.

In the proposed rule, CMS reports that, in conjunction with the AMA RUC, they have made significant progress in identifying and reviewing potentially misvalued codes. They also propose to consolidate the 5-year review of Work and PE RVUs with the annual review of potentially misvalued codes.

CMS identifies two lists of potentially misvalued CPT codes that they are asking the AMA RUC to review. First, CMS is asking the AMA RUC to review all E/M codes and to provide CMS with recommendations for at least half the E/M codes by July 2012, for inclusion in the CY 2013 PFS final rule, and the other half to be completed by July 2013, for inclusion in the CY 2014 PFS final rule. Second, CMS is asking the AMA to review a select list of CPT codes identified as representing the highest non-E/M expenditure codes for each specialty.

The high expenditure codes identified for review have not been reviewed for at least six years and each code had 2010 allowed charges of greater than $10 million at the specialty level. There are three drug administration codes on the select list of procedural codes referred to the RUC for review:

• 96413 Chemotherapy administration, IV infusion, up to 1 hr, single or initial drug
• 96367 Additional sequential infusion, up to 1 hr, therapeutic/diagnostic
• 96365 IV infusion, initial, up to 1 hr, therapeutic/diagnostic

Geographical Cost Indexes
The Geographical Cost Indexes (GPCIs) were developed to adjust the price physicians receive for providing services based on the cost of running a practice and providing the services in that locality. The GPCIs adjust the three RVUs by increasing the adjusted RVU values for high cost areas and decreasing the adjusted RVU values for low-cost areas.

For the past several years, legislation has extended a 1.0 floor for Work GPCIs in order to preserve access for Medicare beneficiaries in rural areas. However, the 1.0 Work floor is set to expire on December 31, 2011.

The expiration of the 1.0 Work floor will not affect Alaska and the frontier states as previous legislation set a permanent 1.5 Work GPCI floor for services in Alaska and a permanent 1.0 PE GPCI floor for services in the frontier states of Montana, Nevada, North Dakota, South Dakota and Wyoming.

Table 66 on page 164 of the proposed rule illustrates the impact of the changes of the GPCI values through the previously passed Affordable Care Act (ACA) and the Medicare and Medicaid Extenders Act (MMEA) and the combined impact with the changes under consideration in the 2012 proposed rule. Proposed changes include reweighting the work, practice expense and professional liability components with a larger share assigned to practice expense and less to work.

Expanded Imaging Payment Reductions
Under Medicare’s multiple procedure payment reduction (MPPR) policy, payment is reduced, for certain services, when more than one unit or procedure is provided to the same patient on the same day. CMS states that the application of the MPPR policy is based on the expected efficiencies of providing the services together due to duplication of clinical labor activities, supplies and equipment time.

The MPPR currently applies to the technical component (TC) of advanced imaging services (CT, MRI and ultrasound) resulting in a 50% payment reduction on the second and any subsequent CT, MRI and ultrasound service furnished in the same session.

For 2012, CMS is proposing to expand the MPPR policy to include the professional component (PC) of the advanced imaging services. Under this proposal, full payment would be made for the PC and TC of the highest paid procedure, and payment would be reduced by 50% for the PC and TC for each additional procedure furnished to the same patient in the same session.

CMS says the proposed expansion of the MPPR is consistent with the ACA requirement to identify, review and adjust the relative values of potentially misvalued services and is responsive to continued concerns about the significant growth in imaging spending. CMS estimates that the expansion of the MPPR to include the PC of advanced imaging services would result in payment reductions of approximately $100 million yearly, which would be redistributed through a small increase in the conversion factor and a small adjustment to all PE RVUs.

In their analysis of the proposed 2012 rule, the AMA states that while the Medicare Payment Advisory Commission (MedPAC) has also recommended the expansion of the MPPR to the PC of advanced imaging services, the AMA RUC’s review of codes indicates that the amount of duplication varies across codes and rarely amounts to 50 percent.

CMS is also soliciting comments on further expansions of the MPPR under consideration, including:

• Applying the MPPR to the TC of all imaging services,
• Applying the MPPR to the PC of all imaging services, and
• Applying the MPPR to the TC of all diagnostic tests.

Part B Drugs and Biologicals
By statute, the Office of Inspector General (OIG) is required to conduct studies to determine the widely available market prices (WAMP) of Part B drugs and biologicals and to compare the average sales price (ASP) with the WAMP and the average manufacturer price (AMP) for these drugs. If the OIG finds that the ASP for a drug or biological exceeds the WAMP or AMP by a certain percentage CMS may disregard the ASP and substitute the lesser of the WAMP or 103% of AMP.

Citing a lack of data regarding WAMP to ASP comparisons, CMS excluded WAMP from the price substitution proposal. However, as they did in the 2011 proposed rule, CMS is once again proposing the method under which they would substitute the Average Manufacturer Price (AMP) for the Average Sales Price (ASP). In particular, CMS is proposing to substitute 103% of AMP for 106% of ASP only when ASP exceeds AMP by 5% or more for two consecutive quarters or three of the last four quarters. The change would be effective for one quarter, and would only apply in cases where the substituted price was lower than the 106% of the ASP calculated price for the target quarter.

Electronic Prescribing
Medicare’s electronic prescribing (eRx) program was developed to encourage providers to adopt electronic prescribing systems with the goals of improving patient safety and quality of care. The eRx program encourages the adoption of electronic prescribing through a combination of financial incentives and penalties.

As established under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), Medicare’s eRx incentive program provides incentive payments to eligible professionals (EPs) who are successful eRx prescribers and payment adjustments to those EPs who are not successful eRx prescribers.

Those EPs who earn a Medicare EHR incentive payment do not qualify to earn the eRx incentive payment as EPs cannot earn both an eRx and Medicare EHR incentive in the same year. Nevertheless, qualified EPs must still successfully e-prescribe and report the eRx measure G8553 10 times between June 1 - June 30, 2011, or qualify for and report one of the eRx exemptions by June 30, 2011, in order to avoid the payment adjustment penalty in 2012. However, CMS has proposed changes to the 2011 eRx program which would expand eRx hardship exemptions and extend the deadline for submitting a hardship exemption. The eRx Incentive Program ends in 2014.

The 2012 proposal would continue the incentive requirements in place for the 2010 and 2011 eRx program. That is, the requirement for EPs to e-prescribe and report the eRx measure G8553 for denominator-eligible visits at least 25 times during the reporting period of January 1 - December 31, 2012. Eligibility requirements for the 2012 incentive payment also remain the same, including the requirement that at least 10 percent of an EPs total Medicare Part B Fee for Service charges must be comprised of the eligible denominator codes listed below:

90801, 90802, 90804, 90805, 90806, 90807, 90808, 90809, 90862, 92002, 92004, 92012, 92014, 96150, 96151, 96152, 99201, 99202, 99203, 99204, 99205, 99211, 99212, 99213, 99214, 99215, 99304, 99305, 99306, 99307, 99308, 99309, 99310, 99315, 99316, 99324, 99325, 99326, 99327, 99328, 99334, 99335, 99336, 99337, 99341, 99342, 99343, 99344, 99345, 99347, 99348, 99349, 99350, G0101, G0108, and G0109.

Furthermore, CMS proposes to continue a calendar year reporting period for both the 2012 and 2013 incentive payment.

Nevertheless, the 2012 proposed rule contains some significant and positive proposed changes to the eRx program including an additional 6-month reporting period for purposes of the 2013 payment adjustment and the ability to report the eRx measure with any service, rather than the limited denominator codes, during the additional 6-month period.

Under the proposed rule EPs and groups could avoid the 2013 payment adjustment one of two ways:

• Qualifying for the eRx incentive in 2011 by successfully reporting during the 12-month period of January 1, 2011 through December 31, 2011; or
• Reporting the eRx measure (G8553) for 10 eRx events for any service provided (not limited to the billing codes in the measure’s denominator) during the 6-month period of January 1, 2012 through June 30, 2012.

In addition, individual EPs can avoid the 2014 payment adjustment by:

• Qualifying for the eRx incentive in 2012; or
• Reporting the eRx measure (G8553) for 10 eRx events for any service provided (not limited to the billing codes in the measure’s denominator) during the 6-month period of January 1, 2013 through June 30, 2013.

Other significant proposed changes include:

• A modification of the eRx measure to allow EPs to use either a qualified e-prescribing system or certified EHR technology.
• A modification of the way the eRx measure is reported for purposes of the 2013 and 2014 payment adjustment by eliminating the requirement that the eRx measure may only be reported when it is associated with an eligible visit, as defined by the denominator codes.
• An expansion of the reporting mechanisms, for purposes of the payment adjustment, to allow registry and EHR reporting in addition to claims-based reporting.

The proposed rule would also expand the significant hardship exemptions for the 2013 and 2014 payment adjustments to include exemptions for EPs who:

• Practice in a rural area with limited high speed internet access;
• Practice in an area with limited available pharmacies for e-prescribing;
• Are unable to e-prescribe due to local, state, or federal law or regulation; or
• Prescribe fewer than 100 prescriptions during a six-month, payment adjustment reporting period.

www.cms.gov/ERxIncentive

Physician Quality Reporting System
The Physician Quality Reporting System (PQRS) began in 2007 as the Physician Quality Reporting Initiative (PQRI). CMS announced the name change for the 2011 program explaining that the new name reflects the transition to a permanent program.

While this program is still a voluntary pay-for-reporting program, we are rapidly approaching the date at which eligible providers (EPs) who are not successful PQRS reporters will be monetarily penalized. In addition, the incentive payments for successful reporters will decrease to 0.5% of their total estimated Medicare Physician Fee Schedule (PFS) allowed charges in 2012.

Still, there are some very positive proposed changes to the 2012 PQRS program including the following:

• The consolidation of the group practice reporting option (GPRO) into a single option that defines a group practice as a group of 25 or more individual EPs;
• The inclusion of a reporting option for electronic health record (EHR)-based reporting that is identical to reporting requirements for reporting clinical quality measures (CQMs) under the EHR Incentive Program;
• The option of EHR reporting of PQRS measures through either direct submission or data submission through a vendor;
• Providing interim feedback reports to EPs reporting through claims based reporting; and
• Providing more flexibility to Maintenance of Certification (MOC) entities to define what an EP is required to do “more frequently” to qualify for an additional 0.5% incentive payment and applying the “more frequently” requirement to at least one component of the MOC program rather than all four.

Furthermore, CMS is proposing to retain all of the 2011 PQRS measures and to adopt 10 new measures groups as well as 26 new measures for claims and registry reporting in 2012. According to CMS, the expansion of PQRS measures is intended to increase participation in the program by providing additional reporting opportunities.

CMS proposes to retain the claims-based, registry-based and EHR-based reporting mechanisms for 2012 and future years. As in previous years, EPs can report through multiple mechanisms, but must satisfy the reporting criteria for a single reporting mechanism to be eligible for the bonus payment.

In accordance with statutory requirements, CMS has offered alternative reporting periods for the PQRS since its inception in 2007. For 2012 and subsequent years, CMS proposes to comply with this requirement by retaining the 6-month reporting period option for reporting PQRS measures groups via registry and eliminating the 6-month reporting period for claims and registry reporting of individual measures.

If finalized, reporting options for reporting individual measures via claims, registry and EHR, and reporting measures groups via claims and EHR for individuals and the Group Practice Reporting Option (GPRO) will require a 12-month reporting period.

PQRS Penalties are Just Around the Corner
As mentioned earlier, the PQRS is still a voluntary program. However, beginning in 2015 EPs who are not successful PQRS reporters will be assessed a penalty. The penalty is 1.5% in 2015 and increases to 2.0% in years 2016 and beyond.

However, providers looking to avoid the PQRS penalty must be successful reporters in 2013 as the 2015 penalty will be based on performance in the 2013 PQRS program year.

The most recent CMS reports show that providers who report the PQRS measures through a registry have the highest reporting success rate. In fact, 94.82% of the 311 oncology/hematology EPs reporting individual measures by registry in 2009 were successful reporters and earned the PQRS incentive payment.

Medicare’s Value Based Payment Modifier
Under the ACA, CMS is required to implement a value-based payment modifier that would adjust physician payments based on the quality of care provided compared to the cost, not later than January 2015. The value-based modifier program is part of Medicare’s effort to move from a passive payer to an active purchaser of higher quality, more efficient health care through the value-based purchasing (VBP) initiative.

CMS is proposing to measure performance on the core set of the 2012 PQRS measures, all measures in the GPRO of the 2012 PQRS, and the core measures, alternate core measures and 38 additional measures in the 2012 EHR incentive program.

To measure the cost of care, CMS proposes to use total per capita cost measures and per capital cost measures for Medicare beneficiaries with the following chronic conditions:

• Chronic obstructive pulmonary disease
• Heart failure
• Coronary artery disease
• Diabetes

CMS reports that they may begin applying the value modifier to certain physicians in 2015 before expanding the program to all physicians in 2017. CMS also proposes that the initial performance period be calendar year 2013.

The comment period for the 2012 Proposed Rule ends August 30, 2011. It is expected that the 2012 Medicare Physician Fee Schedule Final Rule will be published in November 2011. Oplinc will provide a detailed review of the final rule once it is published.