The Medicare Prescription Drug Improvement and Modernization Act of 2003 dramatically changed the way urologists will be paid for injectable drugs in the office in the future. In the past, we have been paid a percent of the average wholesale price (AWP)-95% of AWP in 2003, and between 80% and 85% in 2004.
In 2005, physicians will be paid 106% of the average sales price (ASP), or they will have the option of buying their drugs from a contracting agent who will deliver the drugs when needed. Making this choice will alleviate all charges for drugs to Medicare and the patient, and will eliminate the profit. In addition, payments for the injections have increased, and the rules on how we charge for E&M services (office visit) on the same day have changed.
In this article, I will attempt to interpret exactly what this all means in a way that will allow you to plan for next year. Based on the information we now have, here is my interpretation of how the new payment system will work:
First, the difference between ASP and AWP must be explained. AWP was somewhat of a fictitious number that was provided by the pharmaceutical company for each drug. In contrast, the ASP will be calculated quarterly by each pharmaceutical company, using actual sales information based on very detailed and standardized rules. All drug sales, with the exception of drugs sold to Medicaid, the government, and a few other specific categories, will be included. All sales, including all volume, cash, or other discounts to physicians, purchasing groups, pharmacists, and wholesalers will be used in the calculations.
The ASP for each quarter will be established, and the payment will be 106% of the ASP. That will be the amount the urologist will be paid for that drug that quarter, regardless of the amount paid for the drug. Obviously, if company A sells the drug at a lower price and you buy from company A, you will realize a higher spread. However, the ASP will probably drop for the next quarter. If company B lowers its price to compete with company A, the ASP will be lower the following quarter.
Continue to get the best pric-
What will happen to the “least costly alternative”? This pertains to payment for drugs that are considered to be “medically equivalent” such as leuprolide acetate for depot suspension (Lupron), leuprolide acetate for injectable suspension (Eligard, Lupron), and goserelin acetate (Zoladex). Will the sales from drug A, drug B, and drug C be normalized by medically equivalent units and an ASP per dose be calculated? Or will the entire concept be dropped, since I am told that the ASP is very similar for these drugs?
The bottom line is, continue to get the best price you can for the drug that you think is most appropriate for your patients. Be aware that the lower prices paid for a drug in one quarter will decrease the ASP next quarter, and therefore, the payment for the next quarter. Be prepared to adjust your purchasing contract accordingly.
Several related issues also warrant attention. First, the payments for injections have increased significantly. For example, code 96400, chemotherapy administration, subcutaneous or intramuscular, currently pays ±$64. Be sure your office is not discounting your normal fee for the injections to below the payment level.
Second, CMS has made it clear that you should continue to treat patients with the appropriate drug for their condition and will be watching closely for major shifts, such as a shift from injections every 4 months to monthly injections. Particularly, CMS has warned against shifting a significant number of your patients from injections to implants prior to the end of this year.
The law also changed the rules for charging an E&M service on the same day as a chemotherapeutic administration code (such as 96400). You can no longer charge a 99211-first-level established patient code (commonly called “the nursing code”). There are no exceptions.
However, if the urologist sees the patient and provides a service that qualifies for the use of a 25 modifier, then a higher-level service (99212-5) can be charged by attaching the 25 modifier to the appropriate level code.
There are three parts to every law: Congress passes the law, the details are added in the form of regulations by the bureaucracy, and then the law and the regulations are clarified in various ways (eg, through additional publications and legal opinions). The regulations and interpretations for the new payment system are not available yet.
However, the general direction as outlined by the law will not change. What’s missing are the “details,” such as the details related to calculating ASP, including expenditures or related costs that might be deducted from the sales price in the calculations.
Urologist Ray Painter, MD, is president of Physician Reimbursement Systems, Inc., in Denver and is also publisher of Urology Coding and Reimbursement Sourcebook
Disclaimer:
The information in this column is designed to be authoritative, and every effort has been made to ensure its accuracy at the time it was written. However, readers are encouraged to check with their individual carrier or private payers for updates and to confirm that this information conforms to their specific rules.
