2005 Physician Fee Schedule Released; Includes Reimbursement Changes to Provide Doctors with Extra Payments

The Centers for Medicare and Medicaid Services (CMS) has announced various payment provisions to compensate hematologists and other specialists for reduced revenue, stemming from changes to the Medicare reimbursement system for physician-administered drugs.

The new provisions are part of the 2005 final physician fee schedule rule, expected to be published in the November 15 Federal Register, which will become effective on January 1, 2005.

The Medicare Modernization Act (MMA) changed the payment methodology for Part B-covered drugs and biologics from one based on the Average Wholesale Price (AWP) to one based on the Average Sales Price (ASP) plus 6 percent, beginning in 2005.

The ASP reimbursement rates in the rule are based on second quarter data provided by drug manufacturers. The third quarter data will be available soon, although CMS believes that it will not differ significantly from the second quarter.

The final rule includes a $300 million cancer demonstration project announced earlier this week that would pay providers $130 a day per patient for participation. In addition, the final rule adopts 18 new codes to be used for billing for administering drugs, developed by a special AMA Drug Infusion Workgroup in which ASH was a leader. Because new permanent codes will not be included in the CPT until 2006, CMS developed temporary codes to allow physicians to be paid for these services in 2005. CMS also accepted the relative values for these codes that were recommended by the Workgroup. The rule also clarifies that physicians may bill Medicare separately for managing significant adverse drug reactions related to chemotherapy administration.

Physicians will receive a 1.5 percent increase in reimbursement rates, a provision added to the MMA to stop a 3.3 percent decrease that would have occurred.

A list of the average sales price of drugs plus 6 percent, based on the second quarter data, can be found at http://www.cms.hhs.gov/providers/drugs/default.asp. The rule is available at http://www.cms.hhs.gov/regulations/pfs/2005/1429fc.asp.