Physician Fee Schedule Final Rule Summary

CMS issued its final physician fee schedule rule for 2006 on November 2, 2005. Absent legislation, there will be a 4.4 percent reduction in the conversion factor due to the Sustainable Growth Rate.

For hematologists and oncologists, the following represents the more significant policy changes in the final rule:

• Technical changes in ASP and other revisions in drug payment policy
• Changes in payment for IVIG
• Changes to the Competitive Acquisition Program (CAP)
• Establishment of a revised cancer demonstration program
• Change in payment for photopheresis
• Deferral of the sweeping changes proposed in the system for calculating practice expense values.

ASP and other Changes in Drug Payment
Wholesaler charge-backs: CMS will not require manufacturers to calculate ASP for direct sales independently from the ASP for indirect sales and submit to the agency the weighted average of direct sales ASP and indirect ASP.

Limitations on ASP: CMS will continue the 5% threshold in 2006 as the level which the Secretary may disregard the ASP for a drug or biological that exceeds the WAMP or AMP.

Clotting factor furnishing fee: The furnishing fee for 2006 will be $0.146 per unit clotting factor a 4.2% increase from for the 12 months ending in June 2005.

IVIG: CMS will provide an additional payment to physicians and to hospital outpatient departments that administer IVIG via a temporary G code for CY 2006 only. The G code (G0332) will allow separate payment for the substantial additional resources that are associated with locating and acquiring IVIG product and preparing for an office infusion of IVIG in the current environment. Code G0332 will have 1.90 PE RVUs and may be billed in conjunction with administration of immunoglobulin. It can also be billed in addition to any significant and separately identifiable E/M services (level 2-5) in association with the infusion encounter (append the -25 modifier to the E/M services).

Competitive Acquisition Program (CAP)
CMS again is reinstating the bidding process for CAP. The plan is to have physicians enroll in the CAP next spring, presumably for implementation July 1, 2006. The CAP will still be implemented for essentially all categories of drugs; i.e., no differentiation by specialty or therapeutic category of drug.

Chemotherapy Demonstration Project
CMS has replaced the current chemotherapy demonstration project with a revised one-year demonstration. Reporting will no longer be specific to chemotherapy administration services and all of the related G codes will be deleted. Instead, payment will be associated with physician E/M visits for established patients with cancer. The demonstration is available to office-based hematologists/oncologists who provide an E/M service of level 2, 3, 4, or 5 to an established patient.

The 2006 oncology demonstration payment amount is $23.00 as compared to the current payment of $130 per encounter. More information is forthcoming through a fact sheet and information at the CMS Web site.

36522 (Extracorporeal Photophoresis) Clinical Labor
CMS is setting 167 minutes of total clinical labor time for code 36522 instead of the 122 minutes recommended by the AMA Relative-value Update Committee (RUC). CMS believes that this time more closely approximates the time assigned to the other procedures in this family of codes, including codes 36514, 36515, and 36516. However, the PE RVUs for 2006 will not reflect the adjustment due to the decision concerning the PE methodology to maintain all PE RVUs at the 2005 level as discussed previously (see below).

PE Proposals for CY 2006
CMS decided not to change the methodology for calculating practice expense (PE) over concern that the changes would have led to substantial redistribution of payments between specialties. CMS will hold meetings early next year to solicit input from all interested parties. CMS also plans to develop a strategy for funding and fielding a multi-specialty indirect PE survey and plans to work with the AMA and the medical community. Implications, if any, on the PE values assigned to the drug administration codes as a result of the ASCO study is unclear at this time.