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Medicare Payment Resource Center
The AUA Medicare Payment Resource Center is designed to help you navigate numerous issues relating to the Medicare system, including the physician fee schedule, drug payments and ASC payments. Check back often, as we will update this website with more information as it becomes available. If you have any questions, please do not hesitate to contact govaffairs@AUAnet.org.
Physician Quality Reporting Initiative (PQRI)
- AUA PQRI Toolkit
Medicare Drug Payments
- Letter from Center for Medicare Management to House Leadership (01/06)
- Sorting Out Options for Outpatient Medicare Drugs in 2006
Pay-for-Performance
- Medical Quality Improvement Framework for Surgical Care
- Medicine’s Pay-for-Performance Phase-In Framework for Congress
Medically Unbelievable Edit (MUE) Initiative
- Response to Proposed Surgical Pathology Edits
- Response to Overall MUE Initiative
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Sorting Out Options for Outpatient Medicare Drugs in 2006
With all of the changes in Medicare outpatient drug payments over the past few years, and more changes coming in 2006 with the initial phase-in of the competitive acquisition program (CAP), urologists are faced with some tough business decisions. While you may be losing money on certain drugs under the new average sales price (ASP) payment system, the unknowns about the CAP, including the potential hidden administrative costs, make it difficult to objectively compare your options. We hope that the following information will help guide you as you make your business decisions regarding office-administered Medicare drugs.
The CAP has been postponed from its original January 1, 2006 implementation date. However, if you are interested in participating in the CAP in 2006, you may want to bookmark CMS's CAP information page at http://www.cms.hhs.gov/providers/drugs/compbid/default.asp. This CMS page will provide you with necessary resources, including the ability to sign up for a listserv to get more information.
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Details About the Interim Final Rule
On June 27, the Centers for Medicare & Medicaid Services (CMS) released an interim final rule with a comment period for the CAP. The rules are currently considered "interim final" because many of the provisions were not open for comment in the proposed rule and also because the CAP will be phased in. CMS intends to publish a final rule within three years, and will use public comments and lessons learned from the CAP phase-in to finalize the CAP rules.
The interim final rule released in June outlined how the CAP will be gradually phased in (starting in 2006) beginning with one drug category that includes about 180 drugs across the whole nation (the defined "competitive acquisition area"). CMS hopes that this will allow them to test their CAP design and identify problem areas while still keeping the program large enough to provide a financial incentive for drug vendors to bid to become CAP vendors. In future years, CMS plans to have multiple drug categories as well as multiple competitive acquisition areas. Potential CAP vendors are currently in the process of submitting bids to CMS for the drugs that will be included in the CAP next year, so we are not yet sure how many national CAP vendors there will be in 2006. However, the law allows no fewer than two and no more than five contracts to be awarded for each competitive acquisition area.
To read the interim final rule in the Federal Register, click here. Click here to read the text version. To read the AUA's comments on the interim final rule, click here.
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Financial Burden and Other Concerns not Addressed by CMS
According to CMS, the purpose of the CAP is to reduce the financial burden for physicians who do not wish to be in the business of drug acquisition. However, many urologists and practice managers have said the CAP is not an attractive option to them because of the administrative expenses associated with the program and the changes they would have to make to accommodate a different drug payment system. In our proposed-rule comments, the AUA told CMS that this additional administrative burden would hinder participation in the CAP. Nevertheless, CMS did not include any additional compensation in the final rule, but pointed out that the CAP is voluntary and that physicians are under no obligation to participate in the program if they find it burdensome.
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Claims Processing
CMS's claims-processing method will use a prescription order number generated by the CAP vendor to match the physician drug administration and vendor drug claims and authorize payment to the approved CAP vendor. There will be three entities that interact for CAP claims processing:
- Local Medicare Carrier: The physician's carrier will handle physician drug administration claims.
- CMS: The agency will task one carrier with the job of "designated carrier" and that carrier will process all CAP vendor drug claims
- CMS central claims processing system: This will match the vendor's drug payment claim with the physician's drug administration claim. Drug payments to vendors will not be made and vendors will not be able to bill beneficiaries for their co-payment unless the physician's drug administration claim has been approved for payment by the local carrier.
CAP vendors will file claims for drugs with the designated carrier no sooner than the expected date of administration indicated by the physician on the prescription order. The claim form would contain the prescription number for each drug administered to the beneficiary on one calendar day, the Unique Physician Identification Number (UPIN) or National Provider Identifier (NPI) for the physician to whom the drug was supplied and the expected date of service. The designated carrier will submit the claim to CMS's central claims processing system after the claim has passed all edits. The central claims processing system would then match the physician claim with the vendor claim using the prescription number.
If you elect to participate in the CAP during 2006, you will fill out the participation agreement and send it to your local Medicare carrier, who will then forward information from the CAP election agreement to the CAP designated carrier (there will be one carrier that handles all vendor claims). The DesignatedCarrier will compile a master list of all participating CAP physicians and will notify each approved CAP vendor of the participating CAP physicians who have selected it.
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CAP Prices Will be Included in ASP Calculations
In proposed rule comments, the AUA urged CMS to exclude the prices that CAP vendors pay for drugs from ASP calculations. However, CMS does not believe that it has the statutory authority to exclude CAP prices from the ASP calculations because the statute contains a specific list of sales that are exempt from the calculation, and sales to vendors operating under CAP are not included on that list. Therefore, CMS will include prices offered under the CAP in ASP calculations. This means the prices that CAP vendors pay for drugs will be included in the quarterly ASP submissions that drug manufacturers' must submit to CMS for calculation of the Medicare payment to physicians of 106 percent of ASP. Assuming that CAP vendors receive substantial discounts for buying in bulk, this will drive down the Medicare payment to physicians that is recalculated each quarter and could cause physicians who do not choose the CAP to have even more problems acquiring drugs at or below 106 percent of ASP. The AUA will continue to lobby against including CAP vendor prices in the ASP calculations.
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How CAP Will Work for Physicians Electing to Participate
The devil is in the details. Physicians who elect to participate in the CAP will obtain drugs through CAP vendors, which will bill Medicare for the administered drug and will also bill the beneficiary for any applicable co-payment or deductible. Physicians who participate in the CAP will bill Medicare only for drug administration for the drugs that they acquire from their CAP vendor. Beginning in 2006, you will be free to choose annually whether to participate in the CAP. The 2006 election period has been postponed and a special election period will be announced by CMS.
A participating physician must complete and sign a CAP participating election agreement for one calendar year. Physicians who do not participate with Medicare Part B can still participate in CAP but must accept assignment on CAP drug administration claims.
CMS designates the J codes of the drugs that must be included in the CAP program. Vendors will be identified on CMS and carrier web sites. If a HCPCS J-code includes more than one drug (as identified by National Drug Codes or NDCs), vendors are only required to supply one of the drugs included in the HCPCS code. However, vendors must provide a list of which National Drug Codes (NDCs) they will provide under the CAP vendor agreement for the doctors to review in making CAP participation decisions. This means that you could participate in CAP while still buying and billing these three drugs under ASP+6 percent to your patients who prefer them.
NOTE FOR UROLOGISTS: On the list provided with the Interim Final Rule, Lupron and Eligard were carved out from the CAP program drugs. In addition, Vantas was not included because it does not yet have its own J code.
Physicians select an approved CAP vendor to provide the CAP covered drugs in accordance with the program guidance. If the selected approved CAP vendor ceases to participate or if the physician leaves a group or if he/she relocates to another CAP region, he/she may opt out of the CAP program for the remainder of that year.
Participating CAP physicians must submit prescription order forms with complete patient information for each new patient to the program or when the patient's information changes. The order form must contain the following:
- Date of order
- Beneficiary name, address and phone number
- Ordering physician's name, practice address, shipping address, group name, PIN and UPIN (or NPI when available)
- Name of drug ordered
- Strength
- Quantity—may order for a single treatment or a course of treatments
- Dosage
- Frequency/instructions
- Anticipated date of administration - within a seven day window of actual administration
- Beneficiary Medicare information and number
- Beneficiary's supplemental insurance information
- Medicaid information - if applicable
- Patient's date of birth
- Patient's height & weight
- Patient's allergies - if any
- Patient's gender
- ICD-9 code to support drug administration
Participating physicians must maintain a separate paper or electronic inventory for the CAP drugs obtained.
Participating physicians must file Medicare claims for administration within 14 calendar days of service—this confirms the delivery of the CAP drug and drives the payment to the vendor for the CAP drug ordered. The CAP vendor may not bill the patient for the co-pay amount until Medicare and the supplemental insurance have paid the administration claim and the CAP carrier has received confirmation data from the local carrier.
Because the administration claim affects the CAP vendor payment, participating physicians must appeal any denial if their administration claim is denied.
The CAP vendors must offer options including payment plans and/or charitable assistance to beneficiaries who indicate financial difficulty. Beyond that, they may refuse to supply drugs for a patient who failed to pay the co-payment for a prior treatment. However, if the CAP vendor refuses to supply drugs for a particular patient on these grounds, the physician will be allowed to opt out of the CAP.
Participating physicians must not transport CAP drugs from one practice location to another. Therefore, if you give drugs in satellite office, you must order the drugs to be delivered there and the patient must go there to be administered those particular drugs.
Participating physician groups must supply a CMS-developed CAP fact sheet to beneficiaries.
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