▪ Medicare Releases Average Sales Price Data Used to Reimburse Hospitals
The Centers for Medicare and Medicaid Services has issued final changes to its payment for Part B drugs and biologics.
The bad news is that the new payment method could significantly reduce payment rates for the majority of drugs administered in physicians' offices, which will be paid at average sales price (ASP) plus 6%. Based on this method, 14 drugs will be reimbursed at 50% less than previously. Five drugs will drop more than 70%.
However, things are somewhat better for cancer drugs. The new Medicare law stabilized payment rates for 2005, resulting in minimal but expected payment rate reductions for many commonly used cancer drugs given in hospital outpatient departments.
The most significant reductions will affect the most innovative therapies since they too will be paid at a rate equivalent to that which would be paid if they were administered in a physician's office—ASP plus 6%.
Ultimately, the effects of reductions in drug reimbursement rates in physicians' offices could affect hospital outpatient departments. If physicians are reimbursed less than the cost of a drug in 2005, they will have to decide whether to send some patients to the hospital for chemotherapy.
In addition, a new payment method will be introduced in 2006: Most drugs will be reimbursed at acquisition cost or ASP plus 6% in hospitals as well as physicians' offices. If physicians find it difficult to provide care at ASP plus 6%, hospitals could find it virtually impossible.
▪ GAO Issues Report on Medicare Payments to Oncologists
At the request of Congress, the Government Accountability Office (GAO) recently issued a report on Medicare payments to oncologists. The highlights are as follows:
▪ Medicare payments for drugs billed by oncologists in 2004 and 2005 will be less than in 2003, but costs for acquiring the drugs and administering them to patients will increase substantially.
▪ Medicare payment rates for 16 particular drugs will exceed by 22% oncologists' estimated costs for acquiring them in 2004 and 6% in 2005. Assuming the same relationship between payments and costs for all drugs billed by oncologists, GAO estimates that total Medicare drug payments will exceed costs by $790 million in 2004 and $202 million in 2005.
▪ GAO estimates that fees for chemotherapy administration services will increase in 2004 and 2005 over 2003. In some cases, the increase will be more than 300%.
▪ CMS estimates that these changes will further increase Medicare payments to oncologists for chemotherapy administration in 2005. For example, the agency says that 5% of the increase will be due to revised and added billing codes and 15% to a nationwide demonstration project related to care and assessment of cancer patients. CMS estimates that in 2004, Medicare practice expense payments will have covered 24% to 70% more of oncologists' practice expense costs than total Medicare payments for all services to all specialties. They will be lower in 2005 but will still exceed the sum of payments to all specialties.
▪ Best Pharmaceuticals Act Enhances Research & Development for Children's Drugs
The Best Pharmaceuticals for Children Act (Public Law 107–109) directs the Secretary of Health and Human Services to create an annual list of approved drugs for which additional pediatric safety and efficacy studies are needed, and to award contracts to entities for pediatric clinical trials of such drugs.
Subsequently the FDA Commissioner is to authorize labeling changes based on those trials.
To encourage pharmaceutical companies to conduct pediatric clinical trials, the Act eliminates the user-fee waiver for pediatric supplements to a drug application, provides priority status for pediatric supplements (including neonates), provides for dissemination of such information, and establishes an additional six-month exclusivity period for new or already-marketed pediatric drugs.
Other provisions of the law that should speed up development of pediatric cancer drugs include:
▪ Establishment of an FDA Office of Pediatric Therapeutics and an advisory committee on pediatric pharmacology, as well as amplification of the Pediatric Subcommittee of the Oncologic Drugs Advisory Committee, to which FDA had not given its full support recently.
▪ A contractual agreement with the Institute of Medicine to review issues such as compensation, informed consent, and risk assessment for research involving children.
▪ Collection and dissemination of funds by NIH for pediatric pharmacologic research.
▪ Expansion and intensification of NIH's efforts in research and development of preclinical models to evaluate which therapies are likely to be effective for treating pediatric cancer.
▪ Establishment of a toll-free adverse-reaction number, which must appear on drug labels. The Office of Pediatric Therapeutics will review all such reactions from drugs with pediatric market exclusivity.
▪ NIH Announces New Regulations on Outside Activities & Financial Holdings
Employees of the National Institutes of Health are subject to new regulations about outside activities, financial holdings, and awards. They are now prohibited from consulting and advisory or other board service, compensated teaching, speaking, writing, or editing.
The new rules affect work with biotechnology, pharmaceutical, or medical device companies; hospitals, clinics, HMOs, or other health care providers; health insurers; health science- or research-related trade organizations; professional associations; consumer or advocacy groups; and certain educational institutions or nonprofit independent research institutes.
Some activities, however, are allowed, such as teaching a course that requires multiple presentations and is part of the established curriculum of a university or college.
▪ New Medicare E-Prescribing Process Will Improve Quality, Accuracy for Beneficiaries
Health and Human Services Secretary Michael Leavitt announced new proposed regulations for electronic prescriptions that will take effect with the Medicare prescription drug benefit on January 1.
“The proposed e-prescription rules would set standards to help Medicare, physicians, and pharmacies take advantage of new technology that can improve the health care of Medicare beneficiaries,” he said.
E-prescribing allows a physician to transmit a prescription electronically to a pharmacy. It also enables physicians and pharmacies to obtain information from drug plans about patients' eligibility and medication history.
Having access to this information at the point of care makes writing, filling, and receiving prescriptions quicker and easier, and makes it possible for physicians and pharmacies to make informed decisions about appropriate and cost-effective alternative medications.
E-prescribing can theoretically improve safety and reduce costs by decreasing prescription errors and by automating the process of checking for drug interactions and allergies.
The proposed regulations will create standards for transactions between prescribers and dispensers for: new prescriptions, refills, changes, and related messages and administrative transactions; eligibility and benefits inquiries between prescribers and drug plans and between dispensers and Part D sponsors; and formulary and benefit coverage information.
The proposed regulation is an important part of the Medicare Modernization Act because it will require drug plans participating in the new prescription drug benefit to support electronic prescribing, but it will be voluntary for physicians and pharmacies.
▪ Bill Directed toward Easing Pain & Suffering of Children with Life-Threatening Illnesses
Senators Mike DeWine (R-OH) and Chris Dodd (D-CT) have introduced the Compassionate Care for Children Act of 2005, which would improve the pediatric palliative care system for children with life-threatening illnesses and their families.
The bill would provide grants for physicians and nurses to receive training and education in how to provide end-of-life care for children, and for NIH to conduct research in pain and symptom management in children.
It would also change the way palliative care is delivered. The health care system does not now account for the special needs of children, and parents must choose between curative and palliative care.
This legislation would allow for simultaneous curative and palliative care and would create Medicare and private demonstration programs for integration of curative and palliative care, thus easing the burden of choice for parents and physicians.
“Terminally ill children and their families deserve dignity and care,” said Senator DeWine, a member of the Health, Education, Labor and Pensions (HELP) Committee. “They face illness with bravery, and this bill would give a form of comfort by correcting deficiencies in the current law so that young lives do not end in preventable pain or fear.”
Senator Dodd, ranking member of the HELP Subcommittee on Children and Families, said that for the first time, the bill will empower families with the information and resources they need to help their sick children manage pain and live with dignity and peace of mind.
▪ Medicare to Provide Expanded Coverage for PET Scans for Cancer
The Centers for Medicare and Medicaid Services (CMS) has announced a new coverage decision that will significantly expand Medicare coverage for positron emission tomography (PET) scans for all cancers. PET evaluates glucose metabolism in normal tissue as well as in conditions such as cancer, heart disease, and neurological disorders.
CMS will cover PET for brain, cervical, ovarian, pancreatic, small cell lung, testicular, and other cancers when a provider participates in either a PET clinical trial that meets certain FDA requirements, or when data are submitted to a registry designed to provide additional information on its use for diagnosis, staging, and monitoring therapeutic response.
“This is a major step forward in improving the quality of cancer care for Medicare beneficiaries,” said Ed Coleman, President of the Academy of Molecular Imaging (AMI).
“The decision builds on years of experience with PET and will provide valuable data on its accuracy and impact on patient management. AMI looks forward to working with CMS to quickly implement a data registry for patients, which is required for coverage.”
CMS is currently working with AMI, ASCO, and other professional societies to finalize the details of the registry.
▪ CMS Proposal Could Change Medicare Reimbursement Process for Cancer Drugs
The Center for Medicare and Medicaid Service's draft proposal to change the national coverage determination may change the process by which certain colorectal cancer treatments are reimbursed. The determination would require beneficiaries to participate in a clinical trial in order for Medicare to provide coverage for medically necessary non-compendium, off-label uses for colorectal cancer treatments.
CMS is seeking public comment on its proposed determination that use of oxaliplatin (Eloxatin), irinotecan (Camptosar), cetuximab (Erbitux), and bevacizumab (Avastin) be covered in NCI-sponsored clinical trials of one or more off-label uses of these drugs in colorectal and other cancers.
The Association of Community Cancer Centers released a statement of concern about CMS's goals, intentions, and lack of information about the proposed trials, saying that the proposal:
▪ Threatens Medicare carriers' current coverage policies, which now provide timely access to cancer treatment.
▪ Raises many unanswered questions about beneficiary access to care inside and outside these trials.
▪ Represents an inappropriate use of the coverage determination process and creates a profoundly different approach to Medicare coverage of advanced drugs and biologicals.
© 2005 Lippincott Williams & Wilkins, Inc.