PRACTICE RESOURCES > Regulation/AUA Positions, Letters, and Talking Points > AUA Comments to CMS on 2004 Drug Payment and Fee Schedule Changes

AUA Comments to CMS on 2004 Drug Payment and Fee Schedule Changes

March 8, 2004

Dennis Smith
Acting Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-1372-FC
P.O. Box 8013
Baltimore, MD 21244-8013

RE: CMS-1372-FC: Medicare Program; Changes to Medicare Payment for Drugs and Physician Fee Schedule Payments for Calendar Year 2004

Dear Mr. Smith:

On behalf of its 10,000 U.S. members, the American Urological Association (AUA) is pleased to submit comments on the January 7, 2004 interim final rule implementing the provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). We realize that CMS was operating under an extremely tight time frame for implementing 2004 physician fee schedule and drug payment changes due to delayed passage of the Medicare bill in Congress. We appreciate CMS's hard work and diligent efforts to publish this rule as soon as possible after the law was passed, and also the extension of the participation enrollment period.

However, we have grave concerns about the impacts the drug payment changes implemented in this rule will have on urologists and their patients-particularly cancer patients. And, the changes will disproportionately affect urologists in solo practice and urologists and patients that live in rural areas, potentially reaching crisis level for these groups. Also, such a short transition time for these massive payment reductions has the potential to greatly disrupt or hinder treatment for urology patients who currently receive drug therapy in the office for prostate cancer, bladder cancer, interstitial cystitis and other urological diseases. More detail on these concerns is included in our comments below.

  1. Application of Market-Based Systems of Medicare Payment for Part B Drugs

    As of January 2004, payments for the majority of Medicare-covered drugs were set at 85 percent of average wholesale price (AWP). Also, payments for three urology drugs were set even lower because they had been previously studied by the government. These are prostate cancer drugs Lupron (J9217) and Zoladex (J9202), set respectively at 81 percent and 80 percent of AWP, and a bladder cancer drug doxorubicin (J9000), set at 80 percent of AWP. However, it is unclear from Table 11 in the rule, which shows the Combined Payment Impact of Drug and Physician Fee Schedule Payment Changes, whether these decreases were accounted for in the figure showing that urology would see a 14 percent decrease in Medicare drug revenues in 2004. Therefore, the impacts to urology may be greater than shown in the final rule.

    Also, according to Table 11, urologists receive 43 percent of their total Medicare revenues from drugs. Based on this, it is clear that drug payment changes will disproportionately impact the 48 percent of urologists who are in solo practice. But, the changes will also impact the 48 percent of urologists who are in single-specialty or multi-specialty group partnerships. As the owners of small businesses, urologists are finding it difficult to adapt so quickly to such large payment cuts, and are already informing the AUA of drastic changes they will have to make to their practices when payments are based on average sales price (ASP) in 2005. These changes include closing satellite offices, sending patients to hospital emergency rooms for drug administration, admitting patients to the hospital for outpatient drug administration and laying off employees.

    We are also hearing from many urologists who say they will absolutely not be able to provide drugs to patients in their office for this payment. We are concerned that this will be especially true for Medicare patients who do not have Medigap policies. With a six percent markup, physicians can not afford to order, stock and cover the bad debt associated with it for patients that do not have supplemental Medicare coverage. Physicians have one year (2004) to reevaluate and restructure their business plans in light of these drastic payment changes, and will not see any estimates of ASP until mid-year or later when the proposed rule for 2005 is published by CMS. Because of this, we urge CMS to seek ways to extend the transition to the ASP system beyond one year and to support any such efforts in Congress.

    A. Exceptions Process and Monitoring Impacts

    The MMA established an exceptions process for drug manufacturers to submit data and information requesting a different Medicare payment. However, only one adjustment is possible in 2004 (on April 1, 2004) and according to the final rule, the exceptions process is open only to manufacturers. However, it is vital that physicians also have input into this process, and we urge CMS to establish a process for physician input as well as evaluation of the effects of drug payment changes in 2004 and beyond.

    Although there are various reports and studies by the Medicare Payment Advisory Commission, the HHS Secretary and the HHS Office of the Inspector General mandated in the MMA, they will all be conducted well after the payment changes have been implemented, and also tend to focus on oncologists over other specialties that are affected by the payment changes. Thus, it is unclear how helpful these reports will be in identifying problems for urology and how soon solutions could be implemented based on the reports.

    We are also concerned that the next few years will be a roller-coaster ride for physicians who want to continue to administer drugs in their offices, with changes being implemented at the last minute and continual uncertainty about the government's ability to identify and correct problems. Because of this, many physicians might choose to stop offering these services, and it is especially unclear what the ramifications of this will be during the time before the competitive bidding option is put into place. For example, in 2005, if physicians stop buying drugs to administer in their offices, will they will be able to write a prescription for the drugs that their patients can then have filled under the new Medicare Part D benefit and bring to the office themselves, or will these patients have to be referred to other physicians or hospital outpatient departments?

    B. Problems with Payment for Bladder Cancer Drugs

    We are hearing some alarming accounts from urologists that the payments for bladder cancer treatment drugs have been reduced below the purchase price of the drugs. In some cases, the gap between the cost of the drug and the payment now received from Medicare is substantial. In some instances the payment rate is slightly higher than cost but there is a significant amount of maintenance required to keep these drugs viable for usage. For example, thiotepa and bacillus Calmette-Guérin (BCG) have to be refrigerated, and BCG is a live attenuated mycobacteria that requires a closed system (hood and ventilator) when a liquid is added to the BCG inside of vials to reconstitute. Also, below we will discuss the administration payments for these drugs.

    We are unsure whether the manufacturers of these drugs have requested an April 1, 2004 change in payment for this drug, and have been unable to obtain from CMS a list of manufacturers that have requested an exception. We urge CMS to investigate this problem with payments for bladder cancer drugs and adjust the payments accordingly.

    HCPCS Code

    Drug Name

    Purchase Price

    January 2004 Payment


    Thiotepa, 15mg(Bedford)




    Mitomycin 5 MG inj (Bristol Meyers)




    Mitomycin 20 MG inj




    Mitomycin 40 MG inj




    BCG (Organon)



    Overall, bladder cancer is the sixth most common cancer in the United States (the fourth most common for men). About 53,200 Americans are diagnosed with bladder cancer each year and 12,200 die annually of the disease. In recent decades there has been a steady increase in the incidence of bladder cancer, which is linked to smoking and environmental factors. Urologists have been making progress in treatment and survival rates are improving. However, payment reductions may change that abruptly. Several urologists have indicated that they will refer any new bladder cancer cases to academic or outpatient settings, which will increase cost to the Medicare system and create frustration for cancer patients.

    Additionally, one physician relayed that the oncology clinic in his area is now demanding that the few bladder cancer patients they are treating get the drugs needed to treat their cancer from a urologist and bring it with them. In other words, the oncology clinic wants to provide the care and receive the payments for the visits it performs but they want urologists to pay the cost of the drugs. Urologists are telling the AUA that shifting patients and/or delayed treatments is going to lead to a increase in the number of bladder cancers that are not treated in a timely or appropriate fashion, which in turn means that care and treatment will wait until the cancer and its symptoms are much more aggressive and costly to treat.

  2. Physician Fee Schedule Provisions Related to the Administration of Drugs and Mandated Evaluation of CPT® Codes

    A. Bladder Cancer Drug Payment Problems and Drug Administration Services That Fall Outside of the 90000 Series

    For urology, the payment changes to CPT® codes for drug administration services offset cuts in drug payments to a very small degree, still leaving the specialty with an overall change in Medicare revenue of -4 percent in 2004. Also, there are certain drug administration procedures for urology that have been inadvertently excluded from the process because they do not fall into the group of codes listed in the MMA. The table below lists urology codes that are used to administer drugs but that received no offsetting practice expense or transitional payments.

    For certain bladder cancer administration codes, not only is the purchase price of the drugs currently higher than the Medicare payment, but there were also no increases given on the procedure code side to offset drug payment decreases. We urge CMS to consider applying the transitional adjustment payment to these drugs for the remainder of 2004 and for 2005. We also urge CMS to include these codes in the MMA-mandated evaluation of existing drug administration codes for physicians' services to ensure accurate reporting and billing for such services. Furthermore, it should be considered whether the budget-neutrality waiver would apply to these codes if their practice expense RVUs were to increase as a result of applying urology supplemental survey data.

    CPT® Code


    Drug(s) Used With


    Subcutaneous hormone pellet implantation (implantation of estradiol and/or testosterone pellets beneath the skin)

    J1080, Testosterone cypionat 200 MG


    Insertion, non-biodegradable drug delivery implant

    J9219, leuprolide acetate implant, 65 mg (for prostate cancer)


    Removal, non-biodegradable drug delivery implant

    J9219, leuprolide acetate implant, 65 mg (for prostate cancer)


    Removal with reinsertion, non-biodegradable drug delivery implant

    J9219, leuprolide acetate implant, 65 mg (for prostate cancer)


    Bladder irrigation, simple, lavage and/or instillation

    J1212 - Dimethyl sulfoxide 50% 50 ML
    J9357, valrubicin, intravesical, 200 mg
    (for interstitial cystitis)


    Bladder instillation of anticarcinogenic agent (including retention time)

    J9340, Thiotepa, 15mg
    J9280, Mitomycin 5 MG inj
    J9280, Mitomycin 20 MG inj
    J9291, Mitomycin 40 MG inj
    J9031, BCG
    (for bladder cancer)


    Injection procedure for Peyronie disease;

    J2650 - Prednisolone acetate inj


    Dynamic cavernosometry, including intracavernosal injection of vasoactive drugs (eg, papaverine, phentolamine)

    J2440, Papaverin HCL injection


    Injection of corpora cavernosa with pharmacologic agent(s) (eg, papaverine, phentolamine)

    J2440, Papaverin HCL injection and tri-mix injection

    B. Blending of SMS and Supplemental Practice Expense Data

    This final rule incorporates changes made due to the acceptance of the American Society of Clinical Oncology's (ASCO) supplemental practice expense survey data. In the rule, CMS states that they have generally blended supplemental survey data with prior survey data from the American Medical Association's Socioeconomic Monitoring System (SMS), but that they did not blend ASCO's data with prior SMS data for oncologists because the MMA directed them to use survey data that meets the specific criteria specified in the statute. However, CMS has not made a final decision on whether to apply this policy to all new surveys that are submitted going forward, and is seeking comments on the appropriate conditions in which to use unblended supplemental survey data.

    CMS goes on to say that a specialty society is not likely to undertake a survey unless it believes that higher practice expense payments for that specialty could be achieved by submitting additional data. However, there are in fact other circumstances under which a specialty, including urology, would undertake a practice expense survey, and CMS must consider that such circumstances contribute to a high uncertainty about future practice expense payments. For example, surveys may be conducted if CMS points out potential problems related to practice expense RVU refinement and the practice expense methodology, including scaling factors that are much higher or lower than 1.0.

    Therefore, one important criteria for determining when to employ specialty submitted supplemental surveys without blending will be the reason for conducting a supplemental survey. If a specialty conducts a survey because they believe that existing SMS data is not sufficiently representative of their practice expenses, it may be more prudent to blend such data. However, surveys that are conducted as part of practice expense RVU refinement or at the suggestion of CMS, will require special consideration on a case-by-case basis because it is unclear whether their outcome will positively impact a specialty and to what degree. It is thus impossible to state ahead of time whether blending or not blending with SMS would be the most desirable outcome.

    Also, as discussed in the criteria for submitting supplemental practice expense survey data under the physician fee schedule, CMS deflates supplemental survey data to be consistent with the timeframe of the data from other specialties from the SMS. It seems that this would also play in to the decision of whether to blend data and that it might offset any increases to some degree. However, the AUA seeks clarification on how this affects survey data.

  3. Fee Schedule Conversion Factor

    We are encouraged that the MMA mandated an increase of at least 1.5 percent in the conversion factor in 2004 and 2005. However, the law does not allow the conversion factor increase to be treated as a change in law for purposes of calculating the sustainable growth rate (SGR). This means that in 2006 and beyond, the conversion factor will almost certainly receive the maximum decrease allowed by law unless there is legislative or administrative intervention. Although we realize that any major substantive changes must come from Congress, CMS should also consider solutions that can be applied administratively-such as removing the cost of drugs from the sustainable growth rate-to mitigate future extreme negative updates to physician payments under the current system.

    This is important, as continued reductions in physician payments will jeopardize access to care for Medicare beneficiaries. For urologists, the situation is also exacerbated by the changes to Medicare's drug payment system and skyrocketing liability insurance premiums. In light of drug payment reductions, CMS should once again reconsider including physician-administered drugs in SGR calculations.

Thank you for considering our comments. If you need more information, please contact Robin Hudson, Manager of Regulatory Affairs, at 410-689-3762 or


Martin I. Resnick, MD
American Urological Association

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