Physician Fee Schedule for 2005 Implications for ASH

On November 15, 2004, CMS will publish the final physician fee schedule rule for 2005. The major provisions affecting hematologists are as follows:

Changes in Fee Schedule

There is a 1.5 percent increase in the conversion factor for 2005. Most services will be increased by approximately this amount although some services will be increased by slightly more or less than this level. Attachment 1 provides a comparison of the 2004 and 2005 national payment rates for services commonly performed by hematologists. In addition, there were also changes in the geographic practice expense indices which are used to calculate the actual payment rate in each geographic area which will impact on your actual payment in 2005.

For the first time practice expense values were established for the performance of certain apheresis services in a physician office. The most significant area of change is in the payment for drug administration services. Essentially, an entire set of new codes for chemotherapy and non-chemotherapy infusion and injection services has been established. For 2005, CMS has established a series of 18 “G” codes for the drug administration services which will be incorporated into CPT for 2006.

A comparison of the current drug administration codes and the new G codes, including the 2005 payment, is provided at Attachment 2. One change which should prove beneficial is the establishment of a code to be used when infusing more than one drug. The new code is defined as “each additional sequential infusion up to one hour” which pays more generously than the “each additional hour” code. In addition, the definition of chemotherapy is being expanded to include the infusion of monoclonal antibody agents and other biologic response modifiers. Attachment 3 compares the payment trends for drug administration services from 2002 to 2005.

As you know, for 2004, drug administration services were assigned a 32 percent transitional add-on in payment. This transitional allowance was established to “ease the pain” from the reductions in payment for drugs. For 2005, consistent with the Medicare law, this transitional adjustment is being reduced to 3 percent.

Demonstration Project for Office-Based Oncology Care

CMS has established a one year demonstration program in 2005 to gather data on the quality of office based oncology services. The demonstration program focuses on three areas: pain control management, minimization of nausea and vomiting, and reduction of fatigue. A series of G codes (Attachment 4) have been established whereby physicians would report the patient’s assessment of the degree of their pain, nausea, and fatigue at the time of chemotherapy treatment. When these three codes are billed, the physician will receive a fee of $132 in addition to the reimbursement for drug administration and the chemotherapy agents. Physicians do not need to enroll in this demonstration program; rather, a physician “self-enrolls” by billing the G codes and providing the documentation for each day of chemotherapy. The payment will be subject to the normal Medicare reimbursement formula of 80% paid by the Medicare Carrier, and 20% reimbursed by the patient or their secondary insurance.

New Payment System for Drugs

In 2004, drugs provided in physicians’ offices have been reimbursed at 85 percent of Average Wholesale Price (AWP). For 2005, payment will be based on 106 percent of Average Sales Price (ASP) based on data submitted by manufacturers. For the first quarter of 2005, payment will be derived from ASP data for the third quarter of 2004. The rates will be updated quarterly based on the quarterly ASP submittals. Unfortunately, CMS has not yet provided the data on the proposed payment rates for January 1, 2005. However, CMS estimates that Medicare drug revenues will drop about 13 percent as a result of the adoption of the ASP pricing methodology.

Managing Adverse Drug Reactions

CMS recently clarified that oncologists may bill Medicare separately for managing significant adverse drug reactions relating to chemotherapy administration using existing codes for office visits, including higher level, prolonged service and critical care codes where appropriate. Medicare will be issuing a coding guidance to assure appropriate billing for these services.

Bone Marrow Aspiration and Biopsy through Same Incision

Currently a CCI edit prevents payment for a bone marrow aspiration following a bone marrow biopsy. CMS is establishing G0364, an add-on code, to report the aspiration following the biopsy. The biopsy would continue to be reported under Code 38221. CMS has established a payment allowance for G0364 at $12.88 in the office and $9.85 in the hospital. The payment grossly underestimates the incremental time and effort associated with performing the aspiration and ASH will try to get this increased in the future.

5 Year Review of Physician Work Values

CMS is inviting specialty societies and other interested parties to identify codes that may be misvalued under the Medicare program. Comments are being accepted through the end of the year. CMS will pass on to the Relative Value Update Committee (RUC) those codes where some evidentiary basis has been provided to support a possible change in the work values. Any changes in payment flowing from this process would be effective January 2007. ASH continues to study this issue to determine if there are any unique hematology services that might be identified for review by the RUC. In addition, ASH is part of a coalition of medical specialties to try to get the values for E/M services increased.

Other Changes

The following are some of the other changes in the rule for 2005:

• Medicare will reimburse for a Welcome to Medicare Physical examination for new beneficiaries. Until now, routine physical examinations and related diagnostic tests such as EKG’s without a presenting problem were not covered by the program.
• A payment will be established for supplying immunotherapy drugs to transplant patients. A $50 dispensing fee will be paid for a new transplant patient and a $24 fee for patients who are undergoing post transplant therapy.
• Medicare will offer a 5 percent quarterly incentive payment to doctors practicing in “physician scarcity areas”. A listing of these areas can be found at www.cms.hhs.gov/providers/bonuspayment.
• A payment of $0.14 per unit for the costs of supplying blood clotting factor is established for hemophilia treatment centers, homecare companies and other suppliers. This compares with $0.05 per unit in the proposed rule