The following are archived PoP Updates. PoP Updates are timely and relevant summaries of the health policy and reimbursement issues that impact patient access to pharmaceutical, biotechnology, and medical device innovations.
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April 14, 2005 -- On March 4, 2005, The Centers for Medicare and Medicaid Services (CMS) published a proposed rule to implement a competitive acquisition program (CAP) for outpatient drugs and biologicals covered under Medicare Part B. The MMA requires that CMS establish the CAP, effective January 1, 2006. Under the CAP, physicians will have a choice between obtaining drugs through a contracted vendor selected by CMS, or acquiring drugs under the average sales price (ASP) drug payment methodology.
Likely Implications for Pharmaceutical Manufacturers: • Drugs Excluded From the CAP in 2006 - CMS is proposing that the CAP only include Medicare Part B drugs that are furnished “incident to” a physician’s service. Part B covered vaccines, certain oral anti-emetics, and drugs administered through durable medical equipment are among the drugs that would be excluded under CAP. Manufacturers will need to consider the implications of having their drugs shift to Part D. In addition, vendors would be required to supply one manufacturer’s version for multiple source drugs. Manufacturers of multiple source drugs will need to be aggressive in negotiating with CAP vendors for formulary placement, while considering the impact on their drug’s ASP.
• Price Negotiations - In negotiating pricing with CAP vendors, there are several factors that manufacturers need to consider. For instance, any price concessions granted to CAP vendors would be reflected in the calculations of ASP. These discounts can substantially lower manufacturers’ net income. Also, CMS is proposing to create a national competitive service area in which the winning vendors will have considerable leverage when negotiating prices for pharmaceuticals and biologicals. In addition, CMS intends to establish a single price for each drug in a competitive acquisition area. This pricing methodology can be also used as a measurement for determining prices for new drugs by comparing them to prices of similar drugs in their category.
• Physician Participation and Proposed Phase-In for the CAP - A major impact on manufacturers for 2006 will be physicians’ participation in CAP and the proposed phase-in for the CAP. A low participation rate or small-scale pilot program will have little impact for 2006. On the other hand, an overwhelming participation in the CAP, or a large-scale program and/or an elimination of the proposed phase-in entirely, will have major implications on manufacturers’ marketing practices.
The potential implementation of CAP can have a considerable impact on drug manufacturers. Manufacturers will need to be informed and prepared for any consequences that implementing this program may bring. CMS is soliciting public comment on the proposed rule until April 26, 2005. To comment on CMS proposed rule on the CAP, click here to address an email directly to CMS at http://www.cms.hhs.gov/regulations/ecomments.
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Vermont Pharmaceutical Price Disclosure Law Goes Into Effect March 1; Law Does Not Likely Affect Patient Assistance Programs
March 2, 2005 -- On March 1, a Vermont state law went into effect that requires drug companies to disclose average wholesale price (AWP) information to physicians and other prescribers in the state.AWPs must be disclosed in writing for every pill-based product at each and all interactions with Vermont physicians and/or any other individuals licensed to prescribe drugs in the state. A manufacturer must provide the AWP for its own drug, as well as the AWP of other drugs within the same therapeutic class.
Vermont’s Pharmaceutical Marketer Price Disclosure Law (33 V.S.A. § 2005(a)) presents an additional administrative burden for drug company marketing staff, who are defined by the statute as individuals under contract to represent a pharmaceutical manufacturing company who engage in pharmaceutical detailing, promotional activities, or other marketing of prescription drugs within the state of Vermont.Unlike similar laws passed in other states, this law specifically limits its applicability to promotional activity occurring within the State of Vermont.
AWP information will be required to be disclosed at all interactions with prescribers, regardless of whether the interactions are in person, via telephone, or in writing.This can include sales discussions and face-to-face meetings in Vermont with physicians (or other persons authorized to prescribe drugs in Vermont), or to members of their staff.Examples of this can include sales calls, group sell settings, and speaker programs; product distributions to prescribers or to members of their staff; distribution of printed/promotional materials to prescribers or to members of their staff; documents received by mail; telephone calls; faxes; emails or other electronic communications.
Interactions that do not require AWP disclosure include: administrative contacts (by any method) when no product discussion has occurred; any interaction regarding injectable, liquid, aerosol, or other non-pill formulations; and interactions with payers (state or private) who are not Vermont prescribers.
In addition, it seems that seems that patient assistance programs (PAPs) and reimbursement programs (RPs) are not activities that are subject to the Vermont law for several reasons.One is that the activity must be promotional and involve samples.Because PAPs and reimbursement programs are not viewed as promotional and the FDA does not consider free drugs from PAPs as samples, PAP and RP activities are not subject to the law.Moreover, because it is the physician's office or patient that initiates contact – and not the drug company – in PAPs, the law does not apply.
The result of noncompliance with this law will be legal action brought against the drug company by the Attorney General of Vermont.The AG issued a Proposed Guide to the law on October 19, 2004, requested comments, and then issued a Final Guide on January 13, 2005.This has only given the industry less than two months to prepare for compliance with the law.
Drug firms should ensure that they have the proper long-form and short-form disclosure formats ready this month; examples of those forms were provided in the final guidelines issued by the State.However, as always, drug companies should consult with their own legal departments for interpretation of this law before making any final decisions.
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March 8, 2004 -- Ongoing state budget shortfalls, combined with the requirements of the recently passed Medicare Modernization Act (MMA), are likely to put pressure on manufacturer Patient Drug Assistance Programs (PAPs) over the next few years. At CBI’s 5th Annual PAP meeting held on March 8, 2004 in Washington, DC, PAREXEL health policy analysts emphasized the growing need for manufacturers to reexamine the objectives, management and operation of their PAPs. The state fiscal situation is problematic, and the MMA will likely increase financial pressure on state programs. For example, “states are likely to feel the financial impact of the new Medicare discount card,” suggested Cary Ruscus, a Senior Project Manager with PAREXEL’s Health Policy and Payer Relations group. The discount card, which goes into effect in 2004, will provide transitional assistance (TA) to low-income beneficiaries, but has co-insurance requirements, which states may decide cover. In addition, states may opt to pay cost sharing requirements and the enrollment fee for non-TA cardholders. Angela Mitchell, PAREXEL’s Director of Reimbursement HELPlines™ also commented, “because transitional assistance recipients may have difficulty covering their co-insurance, they may turn to senior drug assistance programs to cover those costs.” This pressure, combined with other factors, could prompt states to refer applicants from their senior drug assistance programs to PAP programs. Moreover, state senior drug assistance programs also face the added, potentially costly, responsibility of coordinating with the discount card sponsors, although funds have been earmarked for enrollee education and technical assistance. As federal policymakers begin to implement the new Part D benefit over the next few years, states will likely face additional financial and operational burdens such as so-called “clawback” payments, cumbersome administrative requirements, and increased demands to fill coverage gaps caused by MMA’s “doughnut” hole. Mitchell told the group that manufacturers will need to address many questions in the coming months, including: ¨ Will manufacturers direct all eligible callers to Medicare? ¨ Will states direct senior drug assistance applicants to Medicare? ¨ Will manufacturers require Medicare-eligible patients in their PAP to inform them when they change sponsors for the Medicare discount card? PAREXEL will continue to monitor the implementation of MMA and assess its impact on our biopharmaceutical clients. For more information see our full slide presentation. CONTACT:Angela Mitchell, MHA, Director, Reimbursement HELPlines™, email -- 703/310-2054)
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CHANGES TO PAYMENT FOR BRAND NAME VERSUS GENERIC DRUGS, BIOLOGICALS, AND RADIOPHARMACEUTICALS IN THE OUTPATIENT PROSPECTIVE PAYMENT SYSTEM
March 4, 2004 -- The Centers for Medicare and Medicaid Services (CMS) recently issued instructions to implement changes in coding and payment amounts for certain multiple source innovator (brand name drugs) and non-innovator drugs (generic drugs), biologicals, and radiopharmaceuticals that are payable under the hospital outpatient prospective payment system (OPPS).CMS issued these instructions in its Medicare Claims Processing Manual in accordance with requirements under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).The implementation date for these coding and payment changes is April 5, 2004.All changes addressed in this instruction are effective for services furnished on or after January 1, 2004.
Section 621(a) of the MMA creates three categories on which radiopharmaceuticals and drugs and biologicals that had pass-through status on or before December 31, 2002, will be paid:
¨Single source drugs, i.e., drugs for which there are no generic alternatives, are to be paid between 88 and 95 percent of the May 1, 2003, Average Wholesale Price (AWP);
¨Innovator multiple-source drugs, i.e., drugs that have U.S. Food and Drug Administration (FDA) New Drug Application approval and for which there exists generic alternatives, are to be paid at an amount not to exceed 68 percent of the May 1, 2003, AWP; and
¨Non-Innovator multiple-source drugs, i.e., drugs that do not have FDA New Drug Application approval and are, in effect, generic drugs, are to be paid at an amount not to exceed 46 percent of the May 1, 2003 AWP.
This instruction further implements new HCPCS C-codes and new ambulatory payment classifications (APCs) to describe and set payment amounts for the brand name form of specified covered drugs affected by the MMA requirements.The descriptors for the new alphanumeric C-codes include “brand name” to distinguish the new C-codes from existing HCPCS codes, which generally do not identify whether the drug is a brand name or generic.
CMS also instructs that following installation of the April 1, 2004 release, the payment amount for specified covered brand name and generic drugs, biologicals, and radiopharmaceuticals furnished on or after April 1, 2004 should be as follows:
¨Innovator multiple-source products, i.e., brand name products, are to be at paid an amount not to exceed 68 percent of the May 1, 2003 AWP.
¨Non-innovator multiple-source products, i.e., generic products, are to be at paid at an amount not to exceed 46 percent of the May 1, 2003 AWP.
Following installation of the April 1, 2004 release, payment for specified covered brand name and generic drugs, biologicals, and radiopharmaceuticals furnished on or after January 1, 2004 through March 31, 2004, will be as follows:
¨Innovator multiple-source products, i.e., brand name products, are to be paid at an amount not to exceed 68 percent of the May 1, 2003 AWP.
¨Non-innovator multiple-source products, i.e., generic products, are to be paid at an amount not to exceed 46 percent of the May 1, 2003 AWP.
CONTACT: Silver Ho, MPP, Project Manager, Health Policy and Payer Relations (email -- 703/310-2053)
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OIG RECOMMENDS APPLYING LCA POLICIES FOR LUPRONÒ; FINDS $40 MILLION IN POSSIBLE SAVINGS
February 12, 2004 -- The Centers for Medicare and Medicaid Services (CMS) should encourage all Medicare carriers to apply a least costly alternative policy (LCA) for LupronÒ (leuprolide acetate depot suspension), according to a recently issued Department of Health and Human Services (HHS) Office of Inspector General (OIG) report. LCA policies mean that Medicare carriers will not cover the additional cost of a more expensive product if a clinically comparable product costs less.
In 2002, Medicare and its beneficiaries paid $677 million for LupronÒ, accounting for eight percent of all Medicare drug spending that year.The objective of the OIG analysis was to determine the amount Medicare would have saved if all Medicare carriers established an LCA policy for LupronÒ.According to the local medical review policies (LMRPs) of many Medicare carriers, a single dose of ZoladexÒ has been found to be clinically comparable to a single dose of LupronÒ.Therefore, in jurisdictions where a carrier applies an LCA policy, providers that administer LupronÒ are generally reimbursed the ZoladexÒ amount.
After reviewing LMRPs from all Medicare carriers, the OIG found that carriers in 10 of 57 jurisdictions did not apply an LCA policy to LupronÒ.If these 10 carriers implemented an LCA policy, OIG reports that their reimbursement amount for LupronÒ would be cut by 27 percent, saving Medicare and its beneficiaries approximately $40 million per year.
CMS partially agrees with the OIG’s recommendation for Medicare carriers to apply an LCA policy to LupronÒ in all jurisdictions.Although CMS stated that the agency does provide oversight for the development of LMRPs, CMS does not generally influence the application of these guidelines in specific circumstances.CMS stated that it will continue to monitor the use of LCA policies for LupronÒ while pursuing other cost containment measures for drug spending.
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CLINICS AND HOSPITALS MAY PUSH MANUFACTURERS FOR MORE 340B DISCOUNTS
February 6, 2004 -- Due to an often-overlooked provision of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MPDIMA)--commonly referred to as the Medicare Modernization Act (MMA)--government-supported clinics and safety net hospitals may begin approaching biopharmaceutical manufacturers for additional discounts under the Department of Health and Human Services (HHS) 340B federal drug pricing program.
Under section 340B of the Public Health Service Act, pharmaceutical manufacturers participating in the Medicaid program are required to enter into a second agreement with HHS.Under this agreement, the manufacturer agrees to provide discounts on covered outpatient drugs purchased by specified government-supported clinics and safety net hospitals.The amount of these discounts is comparable to the best price discounts to which Medicaid is entitled under the Medicaid drug rebate program; however, eligible clinics and safety net hospitals are free to negotiate even deeper discounts than the best price amount.
MMA Changes
MMA specifies that the inpatient drug prices charged to eligible government-supported clinics and safety net hospitals, including disproportionate share hospitals, will not be included in the best price calculations for the purposes of the Medicaid drug rebate program.This provision appears to encourage manufacturers to offer discounted pricing to these facilities.However, MMA does not require a manufacturer to reduce the price of its product in an effort to match the outpatient drug price.
It is unclear whether some manufacturers will begin to compete for sales based on the new discounts that they can offer to eligible facilities for hospital inpatient purchases.In the past, some manufacturers have not offered these facilities substantial discounts for the inpatient segment because it would lead to a reduction of their Medicaid best price computations.
Importance for Manufacturers
Government-supported clinics and safety net hospitals may now begin to approach manufacturers asking for discounts on products used in the inpatient setting, citing the MMA provision that exempts the sales of such products from best price calculations.While the exemption from best price calculations means that 340B discounts will not negatively impact Medicaid pricing, extending further 340B discounts to eligible facilities clearly could have a financial impact on vendors, distributors, and manufacturers.Companies will need to weigh the loss of revenues due to offering further discounts against the possible loss of market share if hospitals change purchasing patterns in favor of manufacturers that do agree to offer additional discounts.
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MEDICARE REFORM TO COST DRAMATICALLY MORE THAN ORIGINALLY ESTIMATED
February 2, 2004 -- President George Bush released the administration’s $2.4 trillion budget proposal for fiscal year 2005 today, confirming that the recently enacted Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MPDIMA)--more commonly referred to as the Medicare Modernization Act (MMA)--will cost significantly more over the next ten years than he originally told Congress as it voted on the legislation. Based on estimates from the Centers for Medicare and Medicaid Services (CMS), the President now projects that the MMA will cost $534 billion from 2004 to 2013, about one-third more than the $395 billion cost projection originally released by the Congressional Budget Office (CBO) last November. However, the proposal noted that, because the new legislation makes “far-reaching changes to a complex entitlement program with many new private-sector elements, there is even larger uncertainty in these estimates than usual”, and attributed a large portion of the difference in the HHS and CBO estimates to assumptions regarding beneficiary participation, market behavior, and cost growth rates.
Today's White House announcement was not surprising for health policy insiders, who had noted over the past several months that the original $395 billion estimate was dramatically under-stated. However, the President's announcement does complicate the enactment of the MMA because CMS will now have even greater incentives to control costs throughout the Medicare program.
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MEDICAID CUTS ON THE HORIZON
January 29, 2004 -- Nationwide, there is growing concern among states about the prospect of a dramatic increase in Medicaid expenditures when the $20 billion one-time federal fiscal relief funding, which included $10 billion in additional federal Medicaid matching funds, expires.Few states are financially prepared to fill in the impending gaps and handle the highest expected growth of Medicaid cost seen in years. As states continue to struggle in their fourth consecutive year of fiscal crisis, their responses to budget woes have been reported in several surveys conducted for the Kaiser Commission on Medicaid and the Uninsured (KCMU).
The findings of the December 2003 survey, States Respond to Fiscal Pressure: A 50-State Update of State Medicaid Spending Growth and Cost Containment Actions, indicate the following for fiscal year (FY) 2004:
The District of Columbia and 49 states have implemented or plan to implement overall Medicaid cost containment measures.
States have also focused on reducing Medicaid prescription drug costs as well as reducing or freezing provider payments.
States have also reduced benefits, restricted eligibility, and increased copayments.
KCMU also released two additional reports on the condition of state budgets:
Is the State Fiscal Crisis Over? A 2004 State Budget Update finds that FY 2005 will prove to be another difficult year for most states.Although the nation’s economy has seen growth in some sectors, state revenue increases have not been significant enough to pull states out of their current economic slump.In addition, extremely high unemployment rates have had an adverse effect on the amount that states collect in income taxes, a major source of state revenue.
State Responses to Budget Crisis in 2004: An Overview of Ten States profiles responses in 10 states to budget pressures in FY 2004. Overall, the states (Alabama, California, Colorado, Florida, Massachusetts, Michigan, New Jersey, New York, Texas, and Washington) made more significant cuts to Medicaid and State Children's Health Insurance Programs than during previous years of financial hardships.In addition, states remained reluctant to increase income or sales taxes, relying instead on temporary or one-time quick budget fixes such as issuing new bonds, spending tobacco settlement funds, and drawing on reserve funds in an effort to fill gaps in FY 2003 and FY 2004.With these funding sources exhausted and federal relief funding soon to expire, states maybe forced to drastically cut spending or increase taxes unless there is a significant increase seen in state revenue.
All of the reports are available at the KCMU website.
Discussing the new reports, Diane Rowland, Executive Director at KCMU said, "The issue is not out-of-control Medicaid spending, but the economic downturn and sluggish state revenue growth that are pushing states to cut Medicaid. Federal fiscal relief has clearly helped to stave off deeper cuts this year, but the June end of fiscal relief is likely to bring more aggressive cost containment next year."
CONTACT:Yulondra Barlow, MSW, Research Analyst, Health Policy and Payer Relations (email -- 703/310-2048)
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CMS TO ISSUE NCD ON EXPANDED USES OF VERTEPORFIN FOR MACULAR DEGENERATION
January 28, 2004 -- The Centers for Medicare and Medicaid Services (CMS) has released a decision memo announcing that it intends to issue a national coverage decision (NCD)expanding coverage of ocular photodynamic therapy (OPT) with Visudyne™ (verteporfin) for age-related macular degeneration (AMD). The decision memo states that evidence supports reimbursement for patients treated with verteporfin for AMD with occult and minimally classic lesions that are four disc areas or less in size and have shown evidence of recent disease progression. Medicare already provides coverage for OPT with verteporfin for predominantly classic subfoveal choroidal neovascularization (CNV) lesions associated with AMD.
The memo also states that CMS will continue to address other uses of OPT with Verteporfin to treat AMD that are currently not covered, including:
Patients with juxtafoveal or extrafoveal CNV lesions (lesions outside the fovea);
Patients who are unable to obtain a fluorescein angiogram; and
Patients with atrophic or dry AMD.
OPT with verteporfin for other ocular indications (such as pathologic myopia or the presumed ocular histoplasmosis syndrome) will continue to be covered at the discretion of individual contractors.
CONTACT:David Saferstein, MSG, MPA, Research Analyst, Health Policy and Payer Relations (email -- 703/310-2118)
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MEDICARE IMPLEMENTS NEW BENEFIT: HOME COVERAGE OF IGIV
January 26, 2004--The Centers for Medicare and Medicaid Services (CMS) has officially announced a new Medicare-covered benefit for immune globulin, intravenous (IGIV) products infused to patients in the home setting.Congress mandated the new IGIV benefit as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) signed by the President on December 8, 2003.The initiation of coverage and reimbursement in this setting of care significantly extends access to IGIV for use as replacement therapy for patients with primary immune (PI) deficiencies.In addition, the new benefit brings Medicare coverage policy in line with Medicaid and most private payers, both of which have historically reimbursed IGIV when administered in the home setting.
Based on the guidelines issued in updates to Medicare Benefit Policy and Claims Processing manuals, CMS will begin covering IGIV for PI deficiencies. For a list of specific International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) codes for which coverage and reimbursement will be made, please click here.
The following Medicare-participating providers should bill for IGIV administered in the home setting as follows:
pharmacies and hospital outpatient departments dispensing IGIV should bill their local Medicare Durable Medical Equipment Regional Carriers (DMERCs);
physicians furnishing IGIV for the refilling of an external pump for home infusion should also bill their local DMERCs; and
home health agencies dispensing IGIV should bill their local Medicare Regional Home Health Intermediary (RHHIs).
Claims may be filed under Healthcare Common Procedure Coding System (HCPCS) codes J1563 (IGIV, per 1 gram) or J1564 (IGIV, per 10 mg).Reimbursement will be based on the rates currently paid under Medicare Part B in the physician office setting ($66.00 and $0.77, respectively).
Coverage of IGIV administered in the home setting is retroactive back to January 1, 2004, but Medicare claims processing systems will not be able to handle claims until April 5, 2004.
CONTACT: Tom Snyder, MA, Senior Project Manager, Health Policy and Payer Relations (email--703/310-2050)
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STUDY FINDS HEALTH INSURANCE HELPS PREVENT PREMATURE DEATH IN HIV PATIENTS
January 26, 2004 -- A recent study published in the Journal of Health Economics found that having health insurance helps to prevent premature death in HIV-infected persons, although individuals with private insurance were found to be more protected than those with public insurance coverage such as Medicaid.
The study estimated the impact of different types of insurance on premature death by using data from a nationally representative sample of HIV-infected persons receiving regular medical care. The researchers found that after taking into account the health status of HIV+ individuals, insurance coverage does help to prevent premature death, although private insurance was found to be more effective than public insurance in reducing mortality. The researchers concluded that this difference is attributable to the fact that patients with private insurance coverage have better access to care than patients with public coverage such as Medicaid, which may have limits on prescription drugs or very restrictive eligibility requirements for people living with HIV who are not disabled by the disease.
The findings of this study have some important implications for policymakers considering expansion of insurance coverage for people living with HIV, such as through the Early Treatment for HIV Act (ETHA).ETHA is a bill currently pending in Congress that would allow states to extend comprehensive Medicaid coverage to provide early access to care and treatment for low-income people living with HIV, and which also would help relieve the fiscal burden on other safety net programs like the AIDS Drug Assistance Program (ADAP).ETHA’s projected savings were demonstrated by a recent study that found that ETHA could cut in half the death rate of people with HIV on Medicaid and would save Medicaid $31.7 million if passed over a ten-year period.
CONTACT: David Saferstein, MSG, MPA, Research Analyst, Health Policy and Payer Relations (email -- 703/310-2118)
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NASTAD RELEASES NEW LIST OF ADAP PROGRAMS WITH WAITING LISTS AND ACCESS RESTRICTIONS
January 23, 2004--Fifteen states have waiting lists or access restrictions for their AIDS Drug Assistance Programs (ADAPs), with a total of 791 people on the waiting lists, according to the latest ADAP Watch released by the National Alliance of State and Territorial AIDS Directors (NASTAD).
The states include the following:
Alabama,
Alaska,
Arkansas,
Colorado,
Idaho,
Indiana,
Kentucky,
Montana,
North Carolina,
Oklahoma,
Oregon,
South Dakata,
Washington,
West Virginia, and
Wyoming.
Additionally, three more states (Alabama, Alaska, and New Hampshire) are anticipating new program restrictions during fiscal year (FY) 2003, which runs through the end of March, and another seven states (Alabama, Montana, New Hampshire, New Mexico, Oklahoma, South Carolina, and Texas) are anticipating new restrictions during FY 2004, which begins April 1, 2004.
AIDS treatment policy experts had estimated that a $214 million increase was needed for ADAPs in FY 2004 to alleviate waiting lists and restrictions, but the funding appropriation level passed in the recent Omnibus bill fell short of meeting ADAP program needs. Due to repeated underfunding, the HIV/AIDS community has determined that a $319 million increase will be needed in FY 2005 to meet the needs of those seeking ADAP services and to stop further program restrictions.
CONTACT: David Saferstein, MSG, MPA, Research Analyst, Health Policy and Payer Relations (email -- 703/310-2118)
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CMS ISSUES FINAL RULE ON NATIONAL PROVIDER IDENTIFIERS
January 23, 2004 -- The Centers for Medicare and Medicaid Services (CMS) today published the final rule on adopting the national provider identifier (NPI) standard.Healthcare providers deemed to be covered entities under the rule are required to obtain an NPI and use it in all standard transactions as of the rule’s compliance date.
NPIs will be 10-digit numeric identifiers. As of the compliance date, most providers will no longer have to keep track of different ID numbers for each health plan that they bill.However, health plans may require providers to use additional identifiers when conducting standard transactions, (such as, specialty codes, location codes, etc.).NPIs will not contain any coded information about the provider.
The effective date is May 23, 2005, with the compliance date of May 23, 2007, for all covered entities except small health plans.Small health plans have until May 23, 2008, to comply.No healthcare provider is required to have an NPI prior to 2007.
CONTACT: George Ward, Compliance Coordinator, PAREXEL (email -- 703/310-2280)
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NATIONAL POLICY FORUM ON FUTURE FUNDING FOR HIV CARE ADDRESSES KEY HIV/AIDS FINANCING ISSUES FOR 2004 AND BEYOND
January 20, 2004--Representatives from over 70 HIV/AIDS community-based organizations, advocacy groups, federal and state government agencies, and other groups gathered in Washington, DC from November 13-15, 2003, to explore the current state and future direction of funding for HIV-related care and services.PAREXEL conducted the meeting with the support of the Association of State and Territorial Health Officials, the HIV Medicine Association, the National Alliance of State and Territorial AIDS Directors, the National Association of People With AIDS, and the National Minority AIDS Council.Financial support for the meeting was provided by Roche and Trimeris.
Over the course of the meeting, participants examined the complex interaction among Medicare, Medicaid, and the Ryan White CARE Act as well as implications of efforts to reform and improve these systems.
Three major themes emerged at the National Policy Forum on Future Funding of HIV Care:
Medicare is the base for healthcare delivery to People Living with HIV and AIDS. Significant gaps currently exist within the Medicare program, and Medicare reform and the addition of a prescription drug benefit will impact both Medicaid and the Ryan White CARE Act.
Medicaid is the largest provider of healthcare for People Living with HIV and AIDS. Medicaid has had to fill the fundamental gaps in the Medicare program and serve as the safety-net for HIV+ individuals who do not qualify for Medicare. State and federal efforts to control Medicaid costs and reform the Medicaid system have an effect on Medicare and the Ryan White CARE Act. In some states, Medicaid benefits for HIV+ individuals may be at risk due to the financial and political situations existing in those states.
The Ryan White CARE Act, as the provider of last resort, has come to fill the gaps left by Medicare and Medicaid and for individuals who may not qualify for healthcare under either of those programs.Efforts to reform Medicare and Medicaid have a direct impact on the capacity of the Ryan WhiteCARE Act to meet the needs of People Living with HIV and AIDS.Every effort must be made to ensure the reauthorization of the federal Ryan White CARE Act in 2005.
The Executive Summary of the National Policy Forum on Future Funding of HIV Care, which PAREXEL released today, serves as an aid in charting the landscape of HIV funding and is designed to generate ideas for advocacy, action, and the development of activities to promote future availability of funding for caring for People Living with HIV and AIDS.
Portions of the National Policy Forum on Future Funding for HIV Care were webcast and transcribed by kaisernetwork.org, a free service of the Kaiser Family Foundation. Click here to view the webcast or transcripts.
CONTACT: Sara Sullivan, Poject Manager, Health Policy and Payer Relations (email -- 703/310-2042)
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CMS ACKNOWLEDGES ERRORS IN MEDICARE PART B DRUG AND BIOLOGICAL PAYMENT RATES; CORRECTION FORTHCOMING
January 19, 2004 -- There are errors in some payment rates for Medicare-covered drugs and biologicals paid under Part B, officials with the Centers for Medicare and Medicaid Services (CMS) acknowledged in recent communications with PAREXEL's Washington, DC office. CMS noted that a correction notice will be published shortly to address the payment calculation errors. Examples of some types of drugs and biologicals that were impacted include immune globulin, intravenous (IGIV) products and end-stage renal disease (ESRD) products.
In the rush to release regulations to implement the Medicare reform legislation enacted at the close of 2003, CMS made some computational and classification errors. PAREXEL notified affected clients of the errors and informed CMS of the need to make changes. Speaking about the importance of communicating with CMS openly and quickly about possible errors, Erica Bisguier, Associate Director, Payer Relations, at PAREXEL, said, "When CMS can be educated about inadvertent errors, the agency typically can respond swiftly. Often, instead of launching a major advocacy campaign, PAREXEL recommends directing our clients' concerns to key CMS decision-makers to correct matter-of-fact errors simply."
CMS did not specify a date for the correction notice; however, the agency expects that the notice will be published within a matter of weeks. The payment corrections should be retroactive to January 1, 2004.
CONTACT: Tom Snyder, MA, Senior Project Manager, Health Policy and Payer Relations (email--703/310-2050)
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AHA SURVEY FINDS HEALTHCARE IS TOP ELECTION ISSUE
January 14, 2004--A new national survey released by the American Hospital Association (AHA) found that healthcare will be an important issue in the 2004 elections, particularly to swing voters--those voters who will likely decide who is elected President and which party controls Congress.
The bipartisan poll of more than 2,000 Americans revealed that healthcare has emerged as the country's leading concern after the economy and jobs--on a par with terrorism and national security.While 60 percent of respondents felt that the current healthcare system meets their and their families' needs, almost 75 percent felt the current system did not meet the needs of most other Americans.The survey also found that the majority of respondents supported universal health coverage, health coverage for children, access to preventive care services, prescription drug coverage for seniors and choice of physician. Furthermore, the survey found that nearly seven in ten respondents would be willing to pay more in federal taxes to assure that every American has healthcare coverage.
In addition to the national survey, four key early primary caucus states (Arizona, Iowa, New Hampshire, and South Carolina) were over-sampled. While the results in these states mirrored the national results, New Hampshire voters were found to be more concerned about affordable healthcare and the uninsured compared to the other three over-sampled states and to voters nationally.
To keep the issue of healthcare in the forefront during the upcoming election, the AHA also unveiled Seven Steps to a Healthier America, a list of principles that the association calls the building blocks of a healthcare system that would provide “affordable, equitable coverage for everyone's basic healthcare needs.”The AHA will send be sending letters urging support of these principles to President Bush and other presidential candidates, as well as to candidates for the U.S. Senate and House of Representatives.
CONTACT: David Saferstein, MSG, MPA, Research Analyst, Health Policy and Payer Relations (email -- 703/310-2118)
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MAINE RX PLUS LAUNCHES; MAINE TO PURSUE ADDITIONAL MANUFACTURER REBATES
January 13, 2004--Today, Maine officials launched Maine Rx Plus, a state-sponsored prescription drug discount program.The announcement came less than two weeks after state officials had said the program would be delayed indefinitely over questions related to how the program would work with the new Medicare prescription drug benefit.
Through the Maine Rx Plus program, more than 275,000 Maine residents with incomes under 350 percent of the federal poverty level (FPL) without prescription drug coverage will have access to discounts of up to 10 to 25 percent for brand name drugs and 60 percent for generics.The program permits participants to purchase all of the drugs on the state's Medicaid preferred drug list at Medicaid prices.The legislature appropriated $800,000 for its first year of operation and $2 million per year thereafter.
Phase two of the program, which calls for the state to negotiate with pharmaceutical manufacturers for additional rebates by placing products on prior authorization lists if they do not provide discounts, is due to begin in October of this year.
The Maine Rx Plus program has encountered many obstacles.Enacted in June 2003, the program is modeled on Maine Rx, which was signed into law in 2000 but never became operational due to legal challenges.Maine Gov. John Baldacci (D) dropped plans to launch Maine Rx and opted to pursue Maine Rx Plus, which includes an income eligibility limit of 350 percent of the FPL whereas Maine Rx was open to all state residents without prescription drug coverage, regardless of income.
Maine Rx Plus was scheduled to launch on January 1, 2004, however, earlier this month officials announced that the program would be delayed as the state took into consideration the effect that the new Medicare reform legislation would have on the program.State officials were examining how the Maine Rx Plus discount card could be coordinated with the Medicare prescription drug card, scheduled to become available later this year.State residents with incomes under 135 percent of poverty will be eligible for an annual credit of $600 on their Medicare discount cards, and state officials wanted to ensure that eligible Maine residents were able to benefit from that federal subsidy before dipping into state funds.
Additional information about Maine Rx Plus is expected to be released shortly at the website for the Maine Department of Human Services.
CONTACT: Sara Sullivan, Project Manager, Health Policy and Payer Relations (email -- 703/310-2042)
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CMS LENGTHENS RECORDKEEPING TIMELINE FOR MEDICAID DRUG PRICING
January 9, 2004--The time required for drug manufacturers to retain drug rebate pricing records has been substantially extended by the Centers for Medicare and Medicaid Services (CMS).Under the original rule, published on August 29, 2003, in the Federal Register, manufacturers would be required to keep data used to derive the average wholesale price (AWP) and best price (BP) for only three years, except when the company knows it is the subject of an AWP/BP audit or government investigation. According to CMS, the three-year limit was designed to mirror the time frame that states were required to maintain Medicaid spending records, and would enable them to close their books within a reasonable time frame.
However, after strong backlash from state and congressional officials, the original three-year record-keeping requirement was replaced with a 10-year requirement, effective January 1, 2004.The revised rule would also require manufacturers to retain records beyond the 10-year time period, but only if they have knowledge of an audit or a government investigation involving company records.
Opponents of the three-year time requirement maintained that Medicaid fraud investigations would be considerably hampered, making it easier for drug manufacturers to defraud the Medicaid rebate program if the time requirement was not extended.However, advocates for the time extension emphasized that drug pricing cases and investigations could stretch back beyond the three-year limitation. In addition, there were also concerns that the limited three-year time requirement would have an adverse effect on the False Claims Act, and would make it difficult for whistleblowers to pursue cases.
CONTACT: Yulondra Barlow, MSW, Research Analyst, Health Policy and Payer Relations (email -- 703/310-2048)
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HEALTHCARE SPENDING SKYROCKETS IN 2002; DRUG SPENDING SLOWS
January 8, 2004--Healthcare spending surged in 2003, reaching an astounding total of $1.6 trillion. According to new data released today by the Centers for Medicare and Medicaid Services (CMS), 2002 marked the sixth consecutive year that spending on healthcare services grew at an accelerated rate.According to calculations, the growth rate was 9.3 percent in 2002, compared to 8.5 percent in 2001.
When compared to the growth of the overall economy as measured by the gross domestic product (GDP), which calculates the total value of goods and services produced in the U.S., healthcare spending outstripped total growth by 5.7 percentage points in 2002.
Prescription drug spending reached $162.4 billion in 2002. However, according to CMS, the 15.3 percent growth rate for prescription drug spending was slightly down from the 15.9 percent measured in 2001.Out-of-pocket spending for prescription drugs, however, increased to 14.4 percent in 2002.CMS mostly attributed the increase to the effect of tiered drug formularies shifting more of cost burden to consumers.
Other key healthcare statistics released today by CMS include the following:
Healthcare expenditures per person averaged $5,440, up $419 from $5,021 in 2001.
Healthcare’s share of the GDP increased to 14.9 percent after nearly a decade in the 13.1 to 13.4 percent range.
Hospital spending reached $486.5 billion, an increase of 9.5 percent.
Spending for physician services reached $340 billion, an increase of 7.2 percent.
Private payers accounted for over half of total healthcare expenditures in 2002, but spending by public payers also increased in 2003.The Medicare program spent $267 billion or 17 percent of total expenditures, while the nation’s Medicaid programs accounted for $249 billion or 16 percent of total spending.
CONTACT: Yulondra Barlow, MSW, Research Analyst, Health Policy and Payer Relations (email -- 703/310-2048)
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HOSPITAL DRUG PAYMENT REFORMS IMPLEMENTED
December 30, 2003--Following on the drug payment changes in the physician office setting released yesterday, the Centers for Medicare and Medicaid Services (CMS) issued an interim final rule today that implements several hospital outpatient drug payment reforms required under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MPDIMA).
The rule enacts changes to the way that the Medicare program reimburses hospitals for drug, biological, and radiopharmaceutical products in the hospital outpatient setting. The changes include the following:
establishing an two-tiered system of pass-through payments, with eligible products approved before April 1, 2003, being paid at 85 percent of average wholesale price (AWP) and those approved on or after April 1, 2003, being paid at 95 percent of AWP;
basing payment rates for products that are no longer eligible for pass-through payments on whether there is a single source or multiple sources of the product, and whether a multiple source product is classified as an innovator or non-innovator; and
paying for brachytherapy sources based on hospital charges adjusted to costs.
The interim final rule takes effective on January 1, 2004.CMS will accept comments through 5:00 PM Eastern Time on March 8, 2004.
CONTACT: Tom Snyder, MA, Senior Project Manager, Health Policy and Payer Relations (email--703/310-2050)
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CMS SLASHES PAYMENT RATES FOR SOME PRODUCTS; REQUESTS INDUSTRY DATA
December 29, 2003--In a special announcement released today, the Centers for Medicare and Medicaid Services (CMS) enacted new dramatically lower Medicare physician office reimbursement rates for twenty Healthcare Common Procedure Coding System (HCPCS) codes representing branded products and nine HCPCS codes for generic products.The selected HCPCS codes include some of the top Medicare expenditures for drugs and biologicals, including epoetin alfa, leuprolide acetate, goserelin acetate, and immune globulin, intravenous (IGIV) products.According to the CMS announcement, the recently-passed Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MPDIMA), allows CMS to cut the payment rates for certain drugs and biologicals.
For calendar year (CY) 2004, MPDIMA specifies that payment for the majority of Medicare-covered products will be based on 85 percent of the AWP that was determined and published April 1, 2003.Some products qualify for higher reimbursement.The products include the following:
antihemophilic clotting factors;
drugs and biologicals that were not available for Medicare payment as of April 1, 2003;
pneumococcal, influenza, and hepatitis B vaccines; and
drugs and biologicals furnished in connection with renal dialysis services and billed by end-stage renal dialysis (ESRD) facilities.
However, CMS also has the authority to lower reimbursement rates unilaterally.Manufacturers that wish to seek special consideration of the reimbursement cuts may choose to submit non-confidential drug pricing data to CMS before January 1, 2004.Under MPDIMA, CMS is authorized to consider external industry data—such as average selling price (ASP)—in determining the allowable amount used to reimburse providers for drugs and biologicals purchased and administered by physician offices.
All of the CY 2004 reimbursement rates for Medicare-covered products, listed by HCPCS code, are available by clicking here.
CONTACT: Tom Snyder, MA, Senior Project Manager, Health Policy and Payer Relations (email--703/310-2050)
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Budget Woes Lead to SCHIP CUT BACKS Nationwide
December 23, 2003 -- There is abundant information about the effects of the state budget crisis on Medicaid programs, but there has been little data until now about how state budget challenges are affecting the State Children’s Health Insurance Program (SCHIP).According to new data arising from a Gannett/USA Todayinvestigation into the status of SCHIP during the current period of economic crisis at the state level, many states facing historical budget shortfalls have already reduced or plan to reduce their SCHIP budgets.In fact, the study found that 270,000 children have been cut from programs in nine states, and 22 states have implemented eligibility and other cost-saving restrictions.Health policy experts note that more cuts are possible for 2004 as the anticipated economic upturn fails to materialize for states.
Created by the Balanced Budget Act of 1997, SCHIP gives each state permission to offer health insurance for children--up to age 19--who are not already insured.SCHIP is designed to provide coverage to children in low-income families who are not eligible for Medicaid but who also cannot afford privately sponsored health insurance.Similar to Medicaid, SCHIP is a jointly funded federal-state partnership program.Each state administers its own program and sets its own guidelines regarding eligibility and coverage of services.Due to this arrangement, there is wide variability in SCHIP programs nationwide.
Health policy analysts and children’s advocates are concerned about the geographic and ethnic disparities that this state-by-state variability in SCHIP may create.Specifically, observers are particularly concerned about how eligibility cuts might affect immigrant children.For example, according to the Urban Institute, Hispanics represent only 18 percent of all children in the U.S. but account for approximately 37 percent of all uninsured children.Many of these children live in just a few specific states and cities.If one of these states slashes its SCHIP program due to budget challenges, it will disproportionately impact Hispanic children.Citing this and other examples, advocates emphasize that the healthcare a child receives should not be determined by where they reside.
CONTACT: Sara Sullivan, Project Manager, Health Policy and Payer Relations (email -- 703/310-2042)
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HHS ASKED TO CLARIFY RULES TO ALLOW UNINSURED DISCOUNTS
December 22, 2003 -- Acknowledging that some hospital billing and collections practices may be unfair to uninsured patients, the American Hospital Association (AHA) sent a letter to Health and Human Services (HHS) Secretary Tommy Thompson claiming that current overly complex and confusing web of Medicare regulations "make it far too difficult and
