The official copy of the 2008 Medicare Physician Fee Schedule Final Rule was published in the Federal Register on November 27, 2007. Provisions in the Final Rule are effective January 1, 2008, except for the amendments to § 409.17 and § 409.23 which are effective July 1, 2008, and the amendments to § 423.160 which is effective January 1, 2009.
The comment period for the Final Rule ends at 5 p.m. EST on December 31, 2007. Instructions for commenting are included in this newsletter.
Sustainable Growth Rate and the Conversion Factor
The MPFS bases payment for each service on the resource costs necessary to provide the service as reflected by the assigned relative values (RVUs). Prior to the establishment of the MPFS, Medicare paid these services using customary, prevailing, and reasonable charges based on past payments for the service.
Further changes in the methodology for determining physician payments were included in the Balanced Budget Act of 1997 (BBA) when the Medicare Volume Performance Standard (MVPS) Conversion Factor (CF) update formula was replaced with the Sustainable Growth Rate (SGR) provision. The SGR formula was intended to control the growth in aggregate Medicare expenditures for physicians' services. For a detailed report on the SGR and physician payments read the Centers for Medicare and Medicaid (CMS) Fact Sheet on the Sustainable Growth Rate and Conversion Factor 2008.
As discussed in Oplinc’s Best Practices Review Newsletter, Volume 3 Issue 4 the SGR sets the target expenditure for physician payments each year annually adjusting payments up or down, depending upon whether actual spending is below or above the target. If the SGR target is exceeded by actual expenditures the fee schedule update will subsequently be reduced resulting in a lower rate of payment. If expenditures are less than the target, the update is increased resulting in a higher rate of payment.
The many problems inherent in the SGR formula have resulted in a scheduled decrease in physician payments every year since 2002. Prompted by concerns that the decreased payments would result in access problems for Medicare patients Congress has intervened and stopped the decreases each year since 2003.
The table below chronicles the projected Medicare update, Congressional action taken, actual update realized and the resulting CF for each year from 2002-2007. There is a scheduled negative 10.1% uptake for 2008 that will result in a CF of 34.0682. There is cautious optimism that Congress will again step in and prevent the scheduled cut to physician payments in 2008 although to date there is no formal legislation addressing Medicare payments.
The following chart illustrates the changes in the Medicare CF for physician services from 2001-2008. While the Congressional action outlined in Table 1 helped to avert major cuts in physician payments for the past 5 years the chart below shows that the CF remains lower than it was in 2001.
Section 101 (d) of the Tax Relief and Health Care Act of 2006 (TRHCA) required the Secretary of the Department of Health and Human Services to establish a Physician Assistance and Quality Improvement Fund (PAQI) of $1.35 billion to be available for physician payment and quality improvement initiatives for services furnished during Calendar Year (CY) 2008. CMS has the option to use these funds to buy-down the negative update of the Physician Fee Schedule conversion factor (CF).
CMS addressed the SGR and the resultant decrease to the CF in the 2008 Medicare Physician Final Rule and their decision not to use the PAQI Fund to offset the negative 10.1% update to the CF. CMS reported that comments to their proposal in the Proposed 2008 Medicare Physician Rule to use the PAQI Fund for CY 2008 PQRI bonus payments were generally opposed to this use of the PAQI Fund, saying, “Almost all comments on this issue requested that we use the entire $1.35 billion to help offset the estimated negative 9.9 percent physician update for CY 2008.”
CMS responded to these comments and explained that the PAQI Fund is a fixed dollar amount of $1.35 billion. Once the Fund is spent there is no authority to pay any more than that. CMS estimates that the $1.35 billion would only reduce the negative update by approximately 2% and they cited their concern about potential oversight or other legal consequences in the event that the PAQI Fund is significantly exceeded or under-applied.
Relative Value Units
Payments for anesthesia services receive a boost in 2008 as CMS increases the work component of anesthesia services by 32%. However, this increase triggers the budget neutrality (BN) requirement. Under the BN requirement CMS must offset any total payment increase in the Fee Schedule that exceeds 20 million dollars in order to make the increase budget neutral.
In 2007 the BN requirement was prompted by the increase in the work RVUs for Evaluation and Management codes resulting in a BN adjuster of 0.8994 and a decrease of the Work RVUs for all services paid under the Medicare Physician Fee Schedule by 10.1%. With the 32% increase in anesthesia services the BN adjuster decreases in 2008 to 0.8806 for a reduction of 11.94% to all Work RVUs. The increased reduction in payment prompted by the new BN adjuster will be most noticeable in those services that have higher physician work RVUs.
Physician Quality Reporting Initiative
In the 2008 Final Rule CMS states that they will make the results of the 2007 PQRI, at the national level, available to the public but the disclosed information would not identify individual physicians or practices’ specific reporting or performance results.
As mentioned earlier, CMS will use the $1.35 billion PAQI Fund to pay for the 2008 PQRI bonus payments. CMS is estimating the 2008 bonus to be approximately 1.5% of total Physician Fee Schedule payments. The MPFS Final Rule includes provisions for this program and a 2008 PQRI Summary Sheet is available on the CMS Web site.
CMS has concluded that quality measures submitted through a registry or other means is not feasible in 2008, therefore the quality measures will be reported through claims-based submission as in 2007. However, CMS stated that they plan to test submissions based on registries and electronic health registries in 2008.
There are 119 measures in the 2008 PQRI, the measures and the Measure Specifications are available on the CMS Web site. 2008 Measures that may be of interest to cancer centers include:
2008 PQRI Measures
In the 2008 PQRI Measure Specifications Release Notes, Version 1.0 CMS details the changes made from the 2007 PQRI Specifications. If you plan to participate in the PQRI monitor the PQRI Web page regularly as CMS states that additional changes to the Measure Specification may occur until the start of the reporting period in 2008.
Changes to the Measures of particular interest to hematology and oncology include:
Measure Specification Revisions
The following 2007 PQRI Measure Specifications of particular interest to hematology and oncology will be retired effective January 1, 2008:
CMS will continue to make the additional payment for G0332 Preadministration-Related Services for Intravenous Infusion of Immunoglobulin in 2008. In the Final Rule CMS says the 2008 payment for G0332 will be based on the 2007 PE RVUs. The national payment rate for this code was $74.66 in 2007, however if the Conversion Factor decreases to the scheduled 34.06820 this will drop to $67.11.
Average Sales Price Issues
“An arrangement, regardless of physical packaging under which the rebate, discount, or other price concession is conditioned upon the purchase of the same drug or biological or other drugs or biologicals or some other performance requirement (for example, the achievement of market share, inclusion or tier placement on a formulary, purchasing patterns, prior purchases), or where the resulting discounts or other price concessions are greater than those that would have been available had the drugs or biologicals sold under the bundled arrangement been purchased separately or outside of the bundled arrangement.”
CMS proposed regulatory language changes in the Physician Fee Schedule (PFS) Proposed Rule that would have established a specific methodology that manufacturers would have been required to use when calculating the Average Sales Price (ASP) of drugs sold under a bundled arrangement. However, in the Final Rule CMS declined to finalize the proposed regulatory language changes.
CMS reiterated their concern regarding the treatment of bundled price concessions in the ASP calculation and the integrity of the ASP payment methodology stating they will continue to monitor the issue and may provide more specific guidance in the future through rulemaking or through program instruction or other guidance.
CMS is encouraging public comments and the submission of additional information on bundled price concessions.
Through the Medicare Modernization Act (MMA) the Office of Inspector General (OIG) is mandated to conduct studies and to compare the ASP for drugs and biologicals with the widely available market price (WAMP) and the average manufacturer price (AMP).
Under Section 1847A (d) (3) (A) of the Act CMS may disregard the ASP for a drug or biological that exceeds the WAMP or the AMP by a specified threshold percentage and substitute a payment method based on either WAMP or AMP. The threshold percentage will be 5% in 2008 as it has been since the start of the ASP payment methodology in 2005.
CMS acknowledged receiving numerous comments on the ASP payment methodology and other issues related to Part B drugs including:
CMS responded that the comments were outside the scope of this rulemaking (the MPFS Proposed Rule) and therefore will not be addressed in the Final Rule.
Drug Compendia - Off-Label Uses of Drugs and Biologicals in an Anti-Cancer Chemotherapeutic Regimen
Section 1861(t) (2) of the Act gives CMS the authority to revise the list of compendia for determining medically-accepted indications for drugs. CMS notes changes in the pharmaceutical reference industry has resulted in a decrease in the number of statutorily named compendia as the AMA-DE is no longer published and the USP-DI has been purchased by Thomson Micromedex and will be published under a new name.
In the Final Rule CMS did not revise the list of compendia used to determine the covered off-label use of drugs choosing instead to define a process for considering requests for changes to the list beginning January 2008.
Process for Listing Compendia for Determining Medically-Accepted Uses of Drugs and Biologicals In Anti-Cancer Treatment:
Exception: In addition to the annual process outlined above CMS may internally generate a request for changes to the list of compendia at any time.
CMS addressed commenters’ concerns that the deletion of a publication from the list of compendia could cause a beneficiary to lose coverage of an off-label treatment regimen already begun with the reminder that local contractors have additional authority to make medically-accepted off-label determinations. CMS cited Section 1861(t)(2)(B)(ii)(II) of the Act which provides that local contractors use “supportive clinical evidence in peer-reviewed medical literature” to aid in making determinations of “medically-accepted” off label treatment regimens when appropriate.
Reporting Anemia Quality Indicators
CMS states that they are not directing physicians as to how often or when to draw the hgb or hct. CMS also clarified that the requirement is not limited to use of erythropoiesis stimulating agents (ESAs), but applies to any drug administered to treat chemotherapy-related anemia. CMS states that the reporting of anemia quality indicators for Part B anti-anemia drugs will facilitate assessment of the quality of care for chemotherapy-related anemia. CMS said they will use the Change Request process to issue implementation instructions to the Medicare contractors including requirements for provider education.
In the Final Rule CMS states their intention to broaden the hgb or hct reporting requirement to include all ESA claims saying, “in light of the potential adverse events from ESA use and in accordance with our reading of Congressional intent, we believe it is appropriate to require reporting of the hemoglobin or hematocrit with respect to all ESA claims, and therefore, we have revised the regulations text to reflect this policy in this final rule with comment period.”
Competitive Acquisition Program
The CAP was launched in mid 2006 and has not proven to be popular with oncologists. CMS continues to revise the CAP in an effort to improve the program and increase provider enrollment. Changes to the CAP in the 2008 Final Rule include:
The 2008 CAP Physician Election Period began on October 1, 2007 and ended on November 15, 2007. The 2008 CAP runs from January 1, 2008 through December 31, 2008.
Physicians who are new to Medicare may submit a CAP application during the first 90 days of their Medicare participation or they may enroll during the regular fall election period.
Physicians who have elected to participate in the CAP may choose another CAP vendor or opt out of the CAP mid-year based on “exigent circumstances.” In the Final Rule CMS declined to specify a list of “exigent circumstances” instead stating, “We intend to take a broad view of what would constitute a burden to the practice resulting in an “exigent circumstance.”
CMS outlined a two-tier process under which a physician can terminate their participation in the CAP:
CMS did not finalize a policy allowing CAP drugs to be transported from the site at which they are received to another site for administration. CMS stated that they expect to make a specific proposal allowing transport of CAP drugs by next year. CMS said the proposal would be structured to comply with all applicable state and federal laws and regulations and product liability requirements.
In response to commenters concerned that participation in the CAP would conflict with the Clinical Trials National Coverage Decision (NCD) CMS stated that standard-of-care drugs used in the control group of a clinical trial may be ordered from the CAP vendor when available. If the drug is not available through the CAP program, the physician may buy and bill for it under the ASP system.
To be considered comments must be received by CMS at one of the addresses provided below, no later than 5 p.m. EST on December 31, 2007. In your comments refer to file code CMS-1385-FC
Comment in one of three ways:
Attachments must be in Microsoft Word, WordPerfect, or Excel; Microsoft Word is preferred.
Centers for Medicare & Medicaid Services,
Mailed comments must be received by 5 p.m. EST on December 31, 2007.
By express or overnight mail:
Centers for Medicare & Medicaid Services,
CMS did not finalize the proposed self-referral rules with the exception of the proposed anti-markup provision for diagnostic tests. CMS said they have enough information to finalize the self-referral regulations and will be publishing a final rule.
The anti-markup provisions finalized in the 2008 MPFS Final Rule apply when a physician or other supplier bills for the professional component (PC) or technical component (TC) of a diagnostic test, and the test was ordered by the physician, supplier, or a party related to the billing physician or supplier by common ownership or control and if:
Under the anti-markup provision, Medicare payment to the physician for a purchased diagnostic test, or the PC or TC of a diagnostic test performed at a site other than the physician’s or supplier’s office cannot exceed the net charge the physician paid for it.
CMS states that the anti-markup provisions are designed to reduce overutilization of diagnostic tests. CMS says the anti-markup provisions will ensure that tests are ordered because they are medically necessary and are not ordered because a profit can be made on each test.
ABOUT THE EDITOR
CPT® is a Trademark of the American Medical Association Current Procedural Terminology (CPT) is copyright 2007 American Medical Association. All Rights Reserved. No fee schedules, basic units, relative values, or related listings are included in CPT. The AMA assumes no liability for the data contained herein.