CMS Rolls Out Proposal for Drug Cuts, Face-to-Face Physician Exam

Washington

In a Notice of Proposed Rule Making published in the Aug. 5 Federal Register, CMS included respiratory drug reimbursement cuts for 2005 even more drastic than originally expected. The agency also issued its long-anticipated proposed regulation requiring Medicare beneficiaries to have a face-to-face examination from a physician before receiving a power wheelchair. But in an unexpected turn, the proposal calls for face-to-face patient exams for all items of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS).

Detailed following, both proposals are part of CMS’ “Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule for Calendar Year 2005,” which deals with physician services.

Comments on the proposal are due by Sept. 24. The final rule is scheduled to be published Nov. 1 and will become effective Jan. 1, 2005.

Respiratory Drug Reimbursements Cut by 89 Percent

As mandated by the Medicare Modernization Act (MMA), beginning next year, Medicare reimbursement for Part B respiratory medications will be based on Average Sales Price (ASP) plus 6 percent. Analysts had predicted that the new pricing would translate to an 80 percent cut from current rates.

But as part of CMS’ annual physician fee schedule proposal, cuts for albuterol sulfate and ipratropium bromide — two staple drugs of the home respiratory industry — are listed at an 89 percent drop from 2004 allowances. The proposal cuts albuterol sulfate payments from 39 cents to 4 cents per milligram, and ipratropium bromide payments from $2.82 to 30 cents per milligram. The two drugs are currently paid at 80 percent of the Average Wholesale Price (AWP).

Since CMS announced the proposed cuts, a number of the country’s major home respiratory providers — including Apria Healthcare, Lincare, American HomePatient and Pediatric Services of America — have said they will be forced to exit the respiratory drug business if CMS fails to develop reasonable fees to account for drug delivery and related costs.

Sen. John Ensign, R-Nev., also threw his support to the industry in a letter to CMS Administrator Dr. Mark McClellan stating that the drugs’ “dispensing fee must be meaningful (i.e., it reflects the costs incurred by home care pharmacies), so that important services to Medicare beneficiaries are not dramatically reduced.”

While the proposal does not set a specific service fee, CMS is asking for comments on an appropriate amount for such a payment. “We intend to make sure that beneficiaries who need to use nebulizers have access to these drugs,” McClellan said in a statement when the proposal was issued.

The rule proposal does discuss offering a “transition payment” to encourage providers to stay in the business through next year and into 2006, when CMS rolls out its “Part D” prescription drug benefit. As part of that benefit, Medicare will begin paying for metered dose inhalers (MDIs), which could be a lower-cost alternative for some patients now using nebulizers, the agency said.

The regulations also propose changes in how the drugs would be delivered, shifting from a 30-day supply to a 90-day supply for each prescription and lengthening the lead-time for when new prescriptions can be sent so that providers can ship by regular mail rather than overnight delivery.

Face-to-Face Examination Proposed

Under MMA, power chair reimbursements require a face-to-face exam with a physician. In its recent NPRM, CMS proposes the requirement for all DMEPOS. (See the sidebar on the preceding page for proposal specifics regarding the physician exam.)

According to Jim Walsh, president of VGM Management Ltd., and general counsel to The VGM Group, Waterloo, Iowa, although unexpected, the rule should not produce any “devastating problems unless the DMERCs and the HHS [Office of Inspector General] say it’s the responsibility of the HME supplier to prove that the physician has seen [the Medicare beneficiary]. The key is for the burden of medical necessity [to] stay with the physicians and not the suppliers.”

The proposed rule presents an “interesting dichotomy,” said Eric Sokol, director of the Washington-based Power Mobility Coalition, whose membership is comprised of both power mobility manufacturers and suppliers. On one hand, it supports the role of the physician as a “gatekeeper” for DME. “My question is, why, then, does CMS give no weight to the [certificate of medical necessity] in this process? The rules require [a physician] examination, re-establishing the physician’s role as gatekeeper, but when [the DMERC] reviews the claim, [it] devalues the physician and the physician-signed CMN.”

CMS Is Seeking Comments

Comments on CMS’ proposal are due by Sept. 24 and may be submitted electronically at www.cms.hhs.gov/regulations/ecomments. For information on sending written comments, visit www.cms.gov/physicians.

For breaking news, go to www.homecaremonday.com, the electronic news service of the home medical equipment industry.

• Require a face-to-face examination by a physician, physician assistant, clinical nurse specialist or nurse practitioner to determine the medical necessity of DMEPOS.
• Require that the prescribing physician or practitioner be independent from the DMEPOS supplier and may not be a contractor or an employee of the supplier.
• Require that the face-to-face examination be for the purpose of evaluating and treating the patient’s medical condition, and not for the sole purpose of obtaining the order for the DMEPOS from the prescribing physician or practitioner.
• Require an order prior to delivery for all items of DME, prostheticsor orthotics.
• Require that the order be dated and signed within 30 days after the face-to-face examination and include verification of the examination. CMS is soliciting comments on “the appropriate verification process.”
• Require the prescribing physician or practitioner to maintain appropriate and timely documentation in the medical records that support the need for all DMEPOS ordered.
• Provide that CMS would promulgate through contractor instructions other criteria required for payment, such as for prescription renewal requirements, repair, minor revisions and replacement. CMS is also interested in comments on whether the agency should establish national renewal requirements or permit contractor discretion.
• Provide that CMS would present additional clinical conditions for items of DMEPOS through the national coverage determination process or through the local coverage determination process.