CMS Proposes 2010 Medicare Physician Fee Schedule

Last week, Centers for Medicare and Medicaid Services (CMS) proposed changes to policies and payment rates for services to be furnished during calendar year (CY) 2010 by over 1 million physicians and nonphysician practitioners who are paid under the Medicare Physician Fee Schedule. CMS is required by law to adjust the MPFS payment rates annually based on an update formula which includes application of the Sustainable Growth Rate (SGR) that was adopted in the Balanced Budget Act of 1997. This formula has yielded negative updates every year beginning in CY 2002, although CMS was able to take administrative steps to avert a reduction in CY 2003, and Congress has taken a series of legislative actions to prevent reductions in CYs 2004-2009. Based on current data, CMS is projecting a rate reduction of -21.5 percent for CY 2010. Congress is expected to act to avert the 21.5% cut prior to January 1, 2010.

A press release from CMS about the rule is online here: www.cms.hhs.gov/apps/media/press_releases.asp

The 1128-page rule is posted online at: www.federalregister.gov/OFRUpload/OFRData/2009-15835_PI.pdf

US Oncology will comment on the various aspects of the proposed rule prior to the August 31, 2009 deadline, including each of the provisions summarized below. Additionally, over the coming days and weeks, in collaboration with specialty societies and other advocates for community cancer care, US Oncology will be developing Congressional support for efforts to convince CMS to revise some of the particularly harmful provisions outlined below.

You will have an important role in that process, both in contacting your Members of Congress in support of these efforts and in commenting to CMS individually prior to August 31. US Oncology will provide further information about these initiatives, including talking points for your use in discussions with Congressional offices and to guide your individual CMS comments prior to August 31.

After reviewing public and legislative comment, CMS is expected to publish the Final Rule on or around November 1, 2009.

Summary of Relevant Provisions

CMS projects that the changes in the proposed rule would result in a 6% decrease in overall payments to the specialty of hematology/oncology and a 19% decrease in overall payments to the specialty of radiation oncology, not including the 21.5% SGR cut.

CMS estimates the effect of the proposals on primary care specialties such as General Practice, Family Practice, Internal Medicine, and Geriatrics are positive with increases ranging from +6 percent to +8 percent, not including the 21.5% SGR cut. CMS estimates cuts to IDTFs of 24%, nuclear medicine 13%, cardiology 11%, interventional radiology 11%, radiology 11% and urology 7%, not including the 21.5% SGR cut.

These estimates for increases/decreases are primarily results of 1) the practice expense update using the new AMA PPIS survey and 2) the change to the utilization rate assumption for major medical equipment.

Practice Expense Update

The AMA has conducted a new survey, the PPIS, which was expanded to include nonphysician practitioners (NPPs) paid under the PFS. The PPIS, administered in CY 2007 and CY 2008, was designed to update the specialty-specific PE/HR data used to develop PE RVUs.

The results of the AMA PPIS survey suggest that radiation oncology practice expense per hour increased from $114 to $126.66 and medical oncology practice expense per hour have decreased 8% from $141.84 to $129.94 while overall physician practice expenses increased 42% from $69.74 to $99.32.

CMS estimates that the practice expense update using the PPIS account for 5% of the 6% cut to medical oncology and 12% of the 19% cut to radiation oncology.

US Oncology is working in collaboration with the broader medical oncology, radiation oncology and specialty medicine community on this issue to ensure that practices providing needed services to Medicare beneficiaries fighting cancer are paid fairly for their services. More information about this initiative and your important role in supporting it will be forthcoming in the days ahead.

Utilization Rate Assumption for Services Using Expensive Equipment (including imaging & radiation therapy)

In response to MedPAC's recent survey of CT and MRI equipment usage and subsequent recommendation that the equipment utilization rate assumption used to estimate the cost to the physician of the major medical equipment needed to perform those services. Under current law, the equipment utilization assumption is 50%, or 25 hours per 50 hour work week. MedPAC recommends that CMS increase this assumption to 90% for CT, MR and other diagnostic imaging equipment that costs over $1 million. In adopting MedPAC's recommendation, CMS ignored MedPAC's exclusion of radiation therapy services from the recommendation. CMS estimates that the change to the equipment utilization rate assumption accounts for at least 5% of the 19% cut to radiation oncology.

US Oncology is working with ASTRO, ACRO, Varian, 21st Century Oncology, Vantage Oncology, OnCure and Alliance Oncology to ask CMS to exclude radiation therapy services from the cut, per MedPAC's recommendation. This effort will also include the development of Congressional support for the radiation therapy exclusion. The effort is expected to find broad support on the Hill as Congressional plans to adopt the MedPAC recommendation have been limited to diagnostic imaging services and have all excluded radiation therapy services. More information about this initiative and your important role in supporting it will be forthcoming in the days ahead.

Removal of Part B Drugs from SGR Calculation

CMS is proposing to remove physician-administered drugs from the definition of "physician services" for purposes of computing the physician update formula in anticipation of enactment of legislation to provide fundamental reforms to Medicare physician payments. While the proposal will not change the projected update for services during CY 2010, CMS projects that it would reduce the number of years in which physicians are projected to experience a negative update.

CMS' proposal is expected to significantly reduce the Congressional Budget Office (CBO) score -- or projected government cost -- of eliminating or otherwise changing the flawed SGR policy. In practice over the past decade, increases in Part B drug spend have directly resulted in decreases in physician services spending (and more specifically, physician fee schedule payments pursuant to the conversion factor) in each year. CMS' proposal would avoid such a result going forward.

Elimination of Consultation Codes

CMS is proposing to stop making payment for consultation codes, which are typically billed by specialists and are paid at a higher rate than equivalent evaluation and management (E/M) services. Practitioners will use existing E/M service codes when providing these services instead. Resulting savings would be redistributed to increase payments for the existing E/M services.

Implementation of Accreditation Requirement for Suppliers of Technical Component of Advanced Imaging Services

CMS is proposing to implement a requirement in the MIPPA that suppliers of the technical component of advanced imaging services be accredited beginning January 1, 2012 by designating accrediting organizations (AOs) for these suppliers and utilizing the imaging quality standards that have been developed by the AOs. The accreditation requirement applies to mobile units, physicians' offices, and independent diagnostic testing facilities that create the images, but does not apply to the physician who interprets them.

Competitive Acquisition Program (CAP) for Part B Drugs and Biologicals

CMS is proposing to restart the CAP program with a number of substantive changes to the structure including:

• Quarterly payment amount updates, capped on the aggregate at ASP+6%;
• Narrowing the CAP drug list by removing low-cost, high-volume drugs;
• Allowing vendors to request additions to the CAP drug list where they have sufficient demand;
• Allowing vendors to request permanent deletions from the CAP drug list where the drug is no longer available;
• Designating the geographic area of the CAP to the 48 contiguous states (removing Hawaii, Alaska and the territories from the service area previously required);
• Allowing vendors to utilize electronic transactions to furnish CAP drugs from nominal quantities of approved CAP vendor-owned stock located at the physician's office in response to specific prescription orders and to capture charges related to such transactions;
• Permanently excluding CAP drugs from the Average Sales Price (ASP) methodology;
• Eliminate the use of proxy data for bidders who are no longer in the system in setting payment updates;
• That all practitioners legally authorized to prescribe CAP drugs may participate in the program (including NPs, CNSs and MAs) but only incident to physician services;
• Easing restrictions on the transport of CAP drugs from one physician practice location to another; and
• Creation of a dispute resolution process to adjudicate disagreements between vendors and physicians.

Physician Ownership/Self-Referral Provisions

CMS did not propose any substantive revisions to the Stark regulations. CMS did propose some clarifications around the concept of the physician stand in the shoes framework within the Stark law.

Compendia Used for Coverage of Off-Label Drugs and Biologics Used in an Anti-Cancer Regimen

CMS is proposing new transparency requirements on the conflicts of interest of those who develop compendia used to support medical appropriateness as it relates to Medicare coverage of off-label uses of drugs and biologics in an anti-cancer regimen.

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