This issue of ASH Washington Update addresses Medicare Physician Payments, the 2003 Medicare Physician Fee Schedule, Medicare Reimbursement of Drugs, Teaching Physician Regulations, FY 2004 NIH Appropriations, and the Ascension of Senator Frist to Majority Leader. Please contact us by phone at (202) 776-0544 or send e-mail to jcoughlin@hematology.org or mmayrides@hematology.org if you have questions or need more information on these issues.

Legislation Introduced to Halt Medicare Physician Payment Reduction
2003 Medicare Physician Fee Schedule Overview
Medicare Sets Stage for Drug Reimbursement Cuts
Teaching Physician Regulations Clarified by CMS
Administration to Propose Only Small NIH Funding Boost in FY 2004
Senator First's Ascension to Majority Leader Means More Emphasis on Health Issues

Legislation Introduced to Halt Medicare Physician Payment Reduction

As you well know, Congress did not act in 2002 to stem the 5.4% cut in Medicare payments to physicians last year. With publication on December 31, 2002 of the Physician Fee Schedule for 2003, the Centers for Medicare and Medicaid Services (CMS) plans an additional 4.4% decrease in payments to physicians beginning March 1, 2003. The first day of the first session of the 108th Congress on January 7, 2003 was a busy one on this issue.

Representative Bill Thomas (R-CA-22), Chairman of the House Ways and Means Committee, introduced legislation that would block the 2003 final physician fee schedule from going into effect and halt the 4.4% across-the-board cut in Medicare physician payments. The legislation is in the form of a joint resolution of disapproval that requires a simple majority for passage in the House and Senate, and cannot be filibustered in the Senate (the Congressional Review Act of 1996 allows lawmakers to halt implementation of rules that have an annual cost to the government of $100 million or more). If Congress passes the measure, physicians and other practitioners would be paid under 2002 rates and would not be able to use the 2003 CPT codes included in the 2003 physician fee schedule. Also halted would be any changes in work and practice expense relative value units, and pay raises for vaccine administration.

Meanwhile, Representative Ben Cardin (D-MD-3), another high-ranking member of the House Ways and Means Committee, sponsored legislation January 7 entitled "The Medicare Provider Payment Restoration Act" that would erase the 2003 pay cut and instead give physicians a 2% across-the-board pay boost. The bill would also increase payments to all other Medicare providers along the lines of the House-passed Medicare reform legislation in June 2002.

Though both bills reflect the effectiveness of physicians who have come to Washington this week to help encourage a halt to the scheduled payment reduction, convincing Congress to do something about 2003 Medicare physician payments this month will be difficult. Hope has never been higher that with Republican control of Congress and with Senator Bill Frist (R-TN) the new Senate Majority Leader, broad Medicare reform and prescription drug legislation will be attainable. Indeed, the President's budget proposal due at the end of January is likely to include a large-scale proposal to reform Medicare. Significant concern exists that fixing physician payments now might endanger the chances of broader reform. Furthermore, Senate Finance Committee Chair Senator Charles Grassley (R-IA) and Ranking Member Senator Max Baucus (D-MT) remain adamantly opposed to Medicare relief that does not include greater fairness in payments to rural physicians and hospitals.

Back to Top

2003 Medicare Physician Fee Schedule Overview

As mentioned, the 2003 Medicare Physician Fee Schedule was published on December 31, 2002 by CMS. If Chairman Bill Thomas' legislation (the joint resolution for disapproval) is passed by Congress, the fee schedule will not go into effect and everything written below about the fee schedule will be put on hold.

However, as printed, the fee schedule contains a conversion factor of $34.5920, down from $36.19 in 2002, which reflects the 4.4% cut in physician payments. According to CMS, total Medicare physician spending will increase 2% in 2003 with $44.9 billion going to over 750,000 physicians and health care providers. The fee schedule will not take effect until March 1, with claims made between January 1 and February 28, 2003 paid by Medicare at existing 2002 rates. For new codes, CMS carriers will not process claims until after March 1.

The overall impact of the final fee schedule on Medicare payments for the hematology/oncology subspecialty is -3%. Listed below are values for the 19 new hematology/oncology-related CPT codes in 2003. Many of these do not include a final recommendation by CMS since they are still being shepherded by ASH through the official approval process. The second table below includes relative values for some existing hematology/oncology codes of interest.

New hematology/oncology-related codes for 2003:

CPT Code	Description	AMA RUC Recommendation	CMS Decision	2003 Work RVUs
36511	Apheresis, wbc	None	None	1.74
36512	Apheresis, rbc	None	None	1.74
36513	Apheresis, platelets	None	None	1.74
36514	Apheresis, plasma	None	None	1.74
36515	Apheresis, adsorp/reinfuse	None	None	1.74
36516	Apheresis, selective	None	None	1.74
38204	Bl donor search management	2.00	Disagree	0.00
38205	Harvest allogenic stem cells	1.50	Agree	1.50
38206	Harvest auto stem cells	1.50	Agree	1.50
38207	Cryopreserve stem cells	None	None	0.00
38208	Thaw preserved stem cells	None	None	0.00
38209	Wash harvest stem cells	None	None	0.00
38210	T-cell depletion of harvest	None	None	0.00
38211	Tumor cell deplete of harvest	None	None	0.00
38212	Rbc depletion of harvest	None	None	0.00
38213	Platelet deplete of harvest	None	None	0.00
38214	Volume deplete of harvest	None	None	0.00
38215	Harvest stem cell concentrate	None	None	0.00
38242	Lymphocyte infuse transplant	1.71	Agree	1.71

A 2002 to 2003 comparison of other hematology/oncology-related codes:

CPT Code	Description	2002 RVUs	2003 RVUs
36522	Photopheresis	2.90 (hosp)	2.89 (hosp)
		7.77 (office)	8.51 (office)
38220	Bone Marrow Aspirate	1.55 (hosp)	1.54 (hosp)
		5.75 (office)	5.75 (office)
38221	Bone Marrow Biopsy	1.97 (hosp)	1.95 (hosp)
		6.15 (office)	6.20 (office)
38230	Bone Marrow Harvesting	7.24 (hosp)	7.21 (hosp)
38240	Bone Marrow Transplant	3.20 (hosp)	3.16 (hosp)
96420	Chemotherapy, push technique	1.25 (office)	1.31 (office)
96422	Chemotherapy infusion, up to one hour	1.24 (office)	1.29 (office)
96423	Chemotherapy infusion, each addtl hour	0.48 (office)	0.49 (office)

The 2003 Medicare physician fee schedule also reflects CMS' decisions concerning certain supplemental practice expense data submitted by specialties that believe they are underrepresented in existing AMA socio-economic (SMS) survey data. Notably, supplemental data collected by ASCO for oncology practice expenses was not accepted by CMS for 2003. In the rule, CMS says it has concerns about the extraordinarily high expenses associated with oncology clinical and clerical staff and a more than 300 percent increase in "other" practice expenses compared to the SMS value for oncology. CMS says it will take a closer look at ASCO's underlying data and work to address these concerns for future consideration.

Back to Top

Medicare Sets Stage for Drug Reimbursement Cuts

Here are some payment values for a handful of hematology/oncology-related drugs under the SDP system beginning 1/1/03:

Code	Drug	Dose	Payment
J1440	Neupogen (Filgrastim)	300 mcg	$185.90
Q0136	Procrit (non-esrd Epoetin)	1000 u	$12.69
J9201	Gemzar (Gemcitabine)	200 mg	$121.01
J9185	Fludarabine	50 mg	$326.69
J9310	Rituxan (Rituximab)	100 mg	$475.00
J2405	Zofran (Ondansetron)	1 mg	$6.09
J9000	Adriamycin (Doxorubicin)	10 mg	$50.96
J0880	Aranesp (Darbepoetin Alfa)	5 mcg	$23.69
NOC*	Neulasta(Pegfilgrastim G-CSF)	6 mg	$2802.50 (95% of AWP)

* Not Otherwise Classified, which means drug reported to Medicare in different ways and reimbursement is Carrier-dependent.

On the heels of the new SDP policy, CMS also published a final rule in the December 13, 2002 US Federal Register outlining how the agency intends to apply so-called "inherent reasonableness" standards to all Medicare Part B services (excluding physician services and any prospective payment system such as the hospital outpatient department system). Medicare law currently dictates reimbursement rates that are based on reasonable charges as defined by methodology. In the Federal Register notice, CMS maintains that Medicare thus has the authority to replace payment rates at will to make them more reasonable. Therefore, if Medicare deems payment for a Part B drug as "grossly excessive", CMS can propose through a formal public notice and comment period process to reduce the payment amount for that drug (based on survey data) by up to 15% per year. Again, many concede that by implementing the long-debated inherent reasonableness standards, CMS is setting the stage for future Medicare drug reimbursement cuts.

Both CMS actions at the end of last year followed the inability of lawmakers to take action on AWP reform in the 107th Congress. However, on January 7 this year, Representative Fortney (Pete) Stark (D-CA-13), the ranking minority member of the House Ways and Means Subcommittee on Health, reintroduced a bill (H.R. 194) to base payments for Medicare-covered drugs on their average acquisition price and end the AWP system. One provision of the bill is to adjust oncology practice expenses to better reflect the costs of providing cancer care services. Clearly, AWP reform will be high on the list of priorities once again in the 108th Congress.

Back to Top

Teaching Physician Regulations Clarified by CMS

In November 2002, CMS published a clarification memo for Medicare regulations regarding teaching physician documentation for billing of evaluation and management (E/M) services delivered by graduate medical education trainees. According to the clarification, it is not necessary for teaching physicians to rewrite documentation already provided by a resident for E/M services. Moreover, the regulations state Medicare auditors must consider the combined medical record entry of the teaching physician and resident to determine whether the documentation justifies the level of service billed. The full text of the regulations is available on the CMS website at www.cms.gov/manuals/pm_trans/R1780B3.pdf.

The CMS clarification includes different scenarios describing situations where 1) the teaching physician personally performs all of the required elements of an E/M service without a resident, 2) where E/M elements are performed and documented by the resident in the presence of or jointly with the teaching physician, and 3) the resident performs and documents the required E/M elements in the absence of the teaching physician and documents his/her service. The notice also includes examples of medical record notations that are generally deemed by CMS to be unacceptable as documentation of teaching physician involvement in E/M services, such as "agree with above" or "seen and agreed." These so-called "stamps" are unacceptable because they do not detail the presence of the teaching physician in the patient's evaluation or involvement in the plan of care.

Though some openly wonder if the relaxation of teaching physician rules might raise new audit and malpractice questions in terms of proving the involvement of the teaching physician in direct patient care, most physicians welcome the changes as a form of much needed regulatory relief.

Back to Top

Administration to Propose Only Small NIH Funding Boost in FY 2004

Confounding the prospect of a 1 percent increase for NIH in FY 2004 is the FY 2003 federal budget situation. Although the Senate approved the NIH doubling last year, new budget parameters and revised appropriations allocations mandated by the Bush Administration after the November elections now make this more challenging for appropriators who need to, in effect, re-write the legislation. In December, the Administration requested that the Senate and House Appropriations Committees revise their FY 2003 proposals-according to some reports by $2.6 billion-to more closely adhere to the Administration's original FY 2003 budget. Although this request still holds significant support on Capitol Hill for doubling the NIH Budget, other administration and congressional priorities-such as education and social programs-could squeeze funding from NIH.

Such a small percentage increase for NIH in FY 2004 would be a considerable change from the agency's recent funding history. Since 1998-with the first installment of the doubling effort-NIH's annual funding boosts have averaged 15 percent. If the 1 percent NIH increase holds for FY 2004, it would effectively be a funding cut since it would not keep pace with inflation. NIH advocates believe that funding for the agency needs to increase about 8 percent annually in order to maintain the momentum of the doubling effort and not squander past federal investments in biomedical research at NIH.

Along with many other organizations interested in NIH funding, ASH is preparing an advocacy campaign to educate members of Congress and the Administration about the importance of maintaining a funding commitment to NIH and the overall benefits of the biomedical research enterprise.

ASH Washington Update will keep you informed about the first step in the FY 2004 budget process with the unveiling of President Bush's Budget February 3.

Back to Top

Senator First's Ascension to Majority Leader Means More Emphasis on Health Issues

The elevation of Senator Bill Frist (R-TN) to Senate Majority Leader has many onlookers speculating that the 108th Congress will refocus its domestic policy agenda to place an even greater emphasis on health care issues. New Majority Leader Frist has helped President George W. Bush navigate through some difficult and controversial health policy issues during his first two years in office and become a close ally. Now, with his new leadership post, the Senate's only physician is expected to maintain his close ties to the White House and initiate Senate deliberations on important issues such as Medicare reform and cloning.

In past years, Majority Leader Frist has been a strong advocate of Medicare reform proposals that foster competition between the fee-for-service Medicare program and private health plans and also includes a Medicare prescription drug benefit. According to sources, the President is working on a long-term Medicare reform proposal-to be released at the end of January-that revolves around the principles supported by Majority Leader Frist. Policymakers expect that Majority Leader Frist's personal experience with the Medicare Program will help efforts to "sell" the President's proposals to Congress as well as the public.

Moreover, policymakers foresee that Majority Leader Frist's knowledge and opposition to any form of cloning research will prod the Senate to finally take up the issue. When Congress convenes, many observers expect that the recent claim by the Raelians that they cloned a human will prompt Majority Leader Frist to proceed with debate on Senator Sam Brownback's (R-KS) legislation to ban all forms of cloning. Although it is unlikely that the cloning issue is first on the majority leader's agenda, efforts to ban all cloning research could commence in the spring.

Back to Top