The Centers for Medicare & Medicaid Services expects the combination of a new oncology "quality of care" demonstration project and the adoption of new billing codes to help smooth the transition to ASP-based reimbursement in 2005.

Under a one-year program announced Nov. 1, CMS will create three new sets of payment codes tied to an assessment of patients undergoing chemotherapy. The codes will record patients' assessments of their pain, nausea and vomiting, and fatigue associated with chemotherapy.

Any physician prescribing under Part B will be eligible for the program by performing an assessment at the time of chemotherapy administration. The payment rate - $130 per patient per assessment - should encourage widespread participation.

The goal of the program is "to evaluate measures of patient well-being in office-based oncology practice, as a basis for addressing quality of life concerns for Medicare beneficiaries with cancer," CMS said.

$300 Mil. For Demo Project

The more immediate impact, however, may be to take some of the bite out of reimbursement cuts under Part B slated to take effect Jan. 1.

CMS has earmarked $300 mil. for the demo program. In effect, the agency will be restoring more than a third of the projected $800 mil. cut in oncology payments expected as a result of the transition to average sales price-based reimbursement in 2005.

CMS expects to reduce federal spending by $530 mil. and beneficiaries' spending by another $270 mil. as a result of the move from average wholesale price-based reimbursement to ASP plus 6% (¹ Also see "Inhalation Rx Market In Transition; CMS May Increase 2005 Payments" - Pink Sheet, 2 August, 2004., p. 34).

Oncologists argue that the reimbursement changes, coupled with other cuts in administrative fees, will drive many physicians out of the market. The $300 mil. demonstration project could help ensure stability for at least another year.

In its final 2005 Physician Fee Schedule, CMS estimates that the adoption of the ASP reimbursement formula will reduce physicians' Medicare drug revenues by 13%. CMS released the rule, which outlines the transition to ASP-based reimbursement, Nov. 3 (see ² Also see "CMS Updates 2005 Part B Payment Rates; Gemzar ASP Increases By 7.3%" - Pink Sheet, 8 November, 2004.).

CMS notes in the rule that it expects that the demo project will increase Medicare Part B payments to oncologists by 15%.

Increased Use Of Palliative Drugs?

The demo program should also encourage increased use of palliative therapies for pain, nausea and anemia.

"Practitioners participating in the project must provide and document specified services related to pain control management, and minimization of nausea and vomiting, and the reduction of fatigue," CMS said.

Those changes could bring expanded use of drugs like the 5-HT3-antagonist anti-emetics and the EPO brands Procrit and Aranesp .

The agency expects changes to the billing codes for drug administration to add another $150 mil. to physicians' Medicare revenues.

The final rule implements new codes for oncology drug administration based on the recommendations of the American Medical Association (³ Also see "Medicare Cancer Drug Administration Code Changes Follow AMA Proposal" - Pink Sheet, 18 October, 2004., p. 18).

The new codes allow for "higher permanent increases in payment for the administration of IV push, infusion and the ability to be paid at a higher rate for the initial hour of infusion of a subsequent drug administered," the rule states.

Remicade Helped By New Billing Codes

The higher fees for injection services apply to all Part B markets, not just oncology.

The cancer care services provider U.S. Oncology estimates that $50 mil. to $100 mil. of the new payments will go to the chemotherapy market, making the combined impact of the Part B changes somewhere between $300 mil. and $400 mil. in new money for oncology providers.

The revised codes are expected to increase Part B payments to rheumatologists by 4%, CMS said.

"This impact is due to the change in the definition of chemotherapy that will allow rheumatologists to bill substances such as monoclonal antibody agents or other biologic response modifiers using the chemotherapy administration codes," the rule states.

Centocor noted that the changes "will facilitate increased patient access" to its TNF inhibitor Remicade .

Under the new billing codes, physicians will be able to bill for injections provided on the same day as other physician fee schedule services.

CMS estimates that policy will increase payments to oncologists and other specialists by 3% and 1%, respectively.

The new injection services fees take some of the bite out of a steep cut in transitional payments to physicians: under the Medicare Modernization Act, Part B physicians receive a 32% transitional payment this year, which will be cut to 3% next year.

Co-Pays Still An Issue For Oncologists

During a stakeholder call on Nov. 3 to discuss the final rule, oncologists acknowledged that the demo project and the changes to the billing codes would help them recoup a portion of the lost revenues due to cuts in reimbursement.

Oncologists expressed reservations about some aspects of the demo project, including the need to collect a co-pay from Medicare beneficiaries for asking quality of life questions - services that many argued they already perform.

Furthermore, oncologists anticipate that the coding changes will complicate the billing process as private insurers are not expected to recognize the new codes.

Assuming no changes in utilization of chemotherapy, CMS notes that the changes to physician payments combined with the adoption of ASP-based reimbursement are expected to decrease Medicare revenues to oncologists by 6%.

However, if chemotherapy utilization continues to increase at historical rates, CMS projects oncologists' revenues would increase by 4% in 2005 excluding the demo project, and by 8% for physicians participating in the demo project.

CMS is projecting that spending on chemotherapy under Medicare Part B will continue to increase despite the reimbursement cuts scheduled for 2005.

"Because we have taken all these steps to help assure a smooth transition, to make sure we're addressing all the major concerns about administration and cancer management services that have been raised by the oncology groups, we are...continuing to project some increases in utilization and use of ambulatory oncology services," CMS Administrator Mark McClellan said Nov. 3.

Chemo Market Will Continue To Grow

"The trends have been dramatic increases in the use of chemotherapy in cancer patients over the last five years. So we're seeing 20%-25% growth per year," McClellan said.

The Administrator noted that the final rule includes "no surprises" in terms of savings to the Medicare system compared to what was projected when the MMA was enacted.

"If you look back at the expected savings at the time of the enactment of the law, when there was very hard work to get agreement between all of the relevant stakeholders to implement these changes in payments...the savings that we're ending up with in this regulation are right in line - in fact a little bit more favorable in 2005 - to the savings that were projected back then," McClellan said.

McClellan noted that CMS is taking additional steps that could affect oncologists' Medicare revenues that are not quantified in the final rule.

More Changes To Come

The agency plans to issue guidance soon clarifying that "oncologists can bill for complications that occur in the course of delivering chemotherapy services," he said.

Additionally, CMS is "also going to work to support access to useful information, practical information on finding better prices for drugs," McClellan said.

In the long run, McClellan said, the answer to ensuring equitable reimbursement for oncology drugs rests with the creation of a competitive bidding program, which begins in 2006 (⁴ Also see "Medicare Competitive Bidding Savings For Single-Source Drugs Questioned" - Pink Sheet, 26 April, 2004., p. 31).

Medicare Part B Demo, Coding Changes Will Stabilize Oncology Rx Market

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