APC Panel

The Biotechnology Industry Organization (BIO) appreciates this opportunity to testify before the Advisory Panel on Ambulatory Payment Classifications (the APC Panel). BIO is the largest trade organization to serve and represent the biotechnology industry in the United States and around the globe. BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers, and related organizations in the United States.

Representing an industry that is devoted to discovering new therapies and ensuring patient access to them, BIO has been pleased by the Centers for Medicare and Medicaid Services' (CMS') efforts to address stakeholders' concerns about access to quality care under the OPPS. We hope that our comments on the hospital outpatient prospective payment system (OPPS) proposed rule for 2007 will help CMS continue to refine the OPPS. We recommend the following measures to ensure that hospitals are reimbursed appropriately for providing advanced drugs and biologicals to Medicare beneficiaries: 1) hospitals should receive adequate payments for all aspects of providing drugs and biological therapies; 2) CMS should eliminate the bundling threshold and pay separately for all drugs and biologicals paid separately under the OPPS in the past; and 3) hospitals should be paid appropriately for the second and subsequent hours of infusion services and for hydration and non-chemotherapy infusions provided during the same visit. We ask the APC Panel to make recommendations to CMS on each of these three points.

  1. Ensuring Adequate Payment for All Aspects of Providing Drugs and Biological Therapies

First, BIO asks the APC Panel to recommend that CMS ensure that OPPS payments are adequate for all services associated with providing pharmaceutical and biological therapies in hospital outpatient departments, including the drug or biological product itself, the service to administer it, and related pharmacy services and handling costs. Currently, CMS reimburses separately paid drugs and biological products administered in hospital outpatient departments at their average sales price (ASP) plus six percent. For 2007, CMS proposes to reduce reimbursement for drugs and biological products without pass-through status to ASP plus five percent. CMS proposes to continue to reimburse pass-through drugs and biological products at ASP plus six percent, except that drugs that also are included in the Competitive Acquisition Program (CAP) will be reimbursed at the CAP rate. BIO remains concerned that reimbursement at ASP plus six percent may not be adequate to ensure beneficiary access to appropriate therapies, and we are very concerned that reimbursement at ASP plus five percent will not be sufficient to support continued access to care.

As the Medicare Payment Advisory Commission (MedPAC) recently testified to the House Ways and Means Subcommittee on Health, in some parts of the country, hospital outpatient departments are taking on larger patient loads as physicians are unable to provide chemotherapy in their offices at Medicare's current reimbursement rates. In particular, patients who do not have supplemental insurance coverage are being sent to hospital outpatient departments for cancer care. If hospitals are not appropriately reimbursed for providing care, these patients will have nowhere to turn for treatment.

Medicare payment for all aspects of providing drug and biological therapies, including preparing drugs, performing quality control, and administering drugs, must be adequate to protect hospitals' ability to satisfy these patients' needs and continue to provide quality care. Pharmacy service and handling costs can be complex and are labor and resource intensive. They range from basic mixings and reconstitutions to more advanced compounding requiring a clean room, trained and certified personnel, and ancillary supplies. Last year, CMS failed to finalize its proposal to pay an additional two percent of ASP to reimburse hospitals for the significant costs they incur for the pharmacy service and handling costs of separately paid drugs. In March of this year, the APC Panel recommended that CMS continue to examine these issues and work with stakeholders to study how to measure these costs.

We believe the technical issues involved in capturing pharmacy service and handling costs are not given sufficient consideration in CMS' proposed rule. In particular, we are concerned CMS' methodology may underestimate the overhead costs attributable to the pharmacy cost center. We hope the APC Panel will renew this recommendation and emphasize the importance of seeking further input in order to establish an accurate overhead cost methodology and that CMS will revisit this issue for 2007 to ensure these critical services are being captured and reimbursed appropriately.

  1. Packaging Threshold for Separately-Paid Drugs and Biologicals

BIO's longstanding position is that CMS should pay separately for all drugs and biologicals with a healthcare common procedure coding system (HCPCS) code that were separately paid in the past, including all therapies that ever had pass-through status. We ask the APC Panel to make that recommendation. BIO believes this is the best way to ensure patients have access to the drug and biological therapies they need. Packaging payment for certain drugs into the payment for their administration services discourages hospitals from providing appropriate therapies.

Hospitals are strongly encouraged to code for these drugs currently, so there should be no increased administrative burden if these therapies are separately paid. We currently are reviewing claims data to further analyze this issue, and our preliminary results show that hospitals are indeed coding for many of these therapies. In fact, paying separately for these therapies should only further encourage hospitals to code correctly, improving the data upon which future rates will be set. Moreover, such treatment is consistent with payment in the physician office setting and would be more equitable for hospitals. In the past, CMS has expressed concern that differences in reimbursement methodologies should not drive patient care from one setting to another. Yet this is precisely what will occur if all drugs and biological products with HCPCS codes are reimbursed at ASP plus six percent in the physician office but only certain drugs are paid separately in the hospital outpatient department, and the reimbursement rate for those drugs is one percent of ASP less.

Paying separately for drugs and biological products paid separately in the past also would solve the problem that the current drug administration codes do not allow additional payment for a second or subsequent IV push of the same drug. If the drug is packaged, hospitals currently receive no payment whatsoever for the second therapy administered or the service to administer it. Indeed, concerns have been raised that the drug administration payment rates do not adequately reflect the costs of packaged drugs. During the March meeting, the APC Panel recommended that CMS provide additional data on this issue. We ask that this information be presented to the public.

  1. Payment and Packaging Status of Drug Administration Services

Third, BIO is pleased that CMS proposes to create six new APCs for drug administration services and to make separate payment for additional hours of drug administration services. BIO has long urged CMS to adopt such policies. We are hopeful that these changes, combined with the new rates CMS has proposed based on more precise coding, will help to improve the adequacy of Medicare's payments for administration of advanced drugs and biologicals. We ask the APC Panel to recommend that CMS implement these proposals in the final rule.

In addition, we recommend that CMS make separate payment for administration of hydration and therapeutic infusions using codes similar to those currently used in physician offices. For payment under the OPPS, CMS currently has a single code assigned to the first hour of a therapeutic or diagnostic infusion. Under guidance issued in 2006, CMS allows hospitals to report a first hour for each different type of infusion provided when the infusions can be reported using different codes, and they meet the requirements for billing an hour of each type of infusion. Under the proposed rule, if a hospital provides an hour of therapeutic, non-chemotherapy infusion and an hour of hydration infusions, the first hour would be paid using code C8950, assigned to APC 440, and the second hour would be paid using code C8951, assigned to APC 437. When the same service is provided in a physician's office, however, Medicare would pay for two "first hour" codes, 90760 (Hydration infusion, initial) and 90765 (Therapeutic/prophylactic/diagnostic infusion, initial). To ensure that hospitals are appropriately reimbursed for these services, we ask the APC Panel to recommend that CMS allow hospitals to be paid using first hour codes when both a hydration infusion and a non-chemotherapy infusion are provided in the same visit.

  1. Conclusion

BIO appreciates the opportunity to present these comments to the APC Panel. We ask the APC Panel to make the following recommendations:

 

 

 

 

 

 

  1. CMS should ensure that OPPS payments are adequate for all services associated with providing pharmaceutical and biological therapies in hospital outpatient departments, including the drug or biological product itself, the service to administer it, and related pharmacy services and handling costs.
  2. CMS should continue to pay separately for all drugs and biologicals paid separately in the past, including all therapies that ever had pass-through status.
  3. CMS should implement its proposal to provide separate payment for the second and subsequent hours of infusion services and should allow hospitals to be paid for using initial infusion codes when administering both a hydration infusion and a non-chemotherapy infusion in the same visit.

Thank you for this opportunity to testify. I would be happy to answer any questions you might have.