The official copy of the 2009 Medicare Physician Fee Schedule Final Rule titled, Medicare Program; Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2009; E-Prescribing Exemption for Computer-Generated Facsimile Transmissions; and Payment for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) was published in the Federal Register on November 19, 2008. Provisions in the final rule are effective January 01, 2009 except for amendments to §410.62 and §411.351 which are effective July 01, 2009.

The final rule is 1459 pages in length so this newsletter will focus on those issues of most concern to oncologists.

Sustainable Growth Rate and the Conversion Factor
The Sustainable Growth Rate formula (SGR) sets the target expenditure for physician payments each year annually adjusting payments up or down, depending upon whether actual spending is below or above the target.  If the SGR target is exceeded by actual expenditures the fee schedule update will subsequently be reduced resulting in a lower rate of payment. If expenditures are less than the target, the update is increased resulting in a higher rate of payment.

The well documented problems with the SGR formula have resulted in a scheduled decrease in physician payments every year since 2002. In order to avoid access problems for Medicare patients Congress has intervened and stopped the decreases each year since 2003.

For the past two years Congress passed legislation after January 1 necessitating a retroactive adjustment for claims paid at the lower rate prior to passage of the legislation. This summer on July 15, 2008 Congress passed the Medicare, Improvements for Patients and Providers Act  of 2008 (MIPAA) extending the +0.5% update enacted in the Medicare, Medicaid and SCHIP Extension Act of 2007 through December 31, 2008 and rescinding a 10.6% cut in payments that became effective July 01, 2008.

MIPAA also mandates a +1.1% update effective January 01, 2009 through December 31, 2009. However, like all of the congressional actions before it MIPAA is just a temporary fix and it is estimated that the Medicare update will be a negative 21% in 2010 if Congress doesn’t act to change the Medicare payment formula or take action to stop the payment cuts.

Figure 1 chronicles the projected Medicare update, Congressional action taken, actual update realized and the resulting Conversion Factor (CF) for each year from 2002-2009.

Figure 1

Figure 2

So, why is the 2009 CF less than the 2008 CF if MIPPA provides for a 1.1% increase? Because MIPPA also contains a provision changing how the Budget Neutrality Adjuster (BNA) is applied in 2009.  

Before we look at how the BNA is applied in 2009 a quick review on Medicare’s budget neutrality requirement:

The Omnibus Budget Reconciliation Act of 1989 requires that increases or decreases in relative value units (RVUs) for a year that result in a change of more than $20 million from what the Medicare expenditures would have been without the changes must be adjusted to ensure budget neutrality.

The 5-year review of physician work relative values implemented in 2007 & 2008 resulted in an increase in the work RVUs for E/M codes that would increase Medicare expenditures by approximately $4 billion, thus triggering the budget neutrality adjustment. In 2008 the BNA was applied to the physician work relative value units (RVUs) reducing these RVUs for all codes by 11.94%.

MIPPA changes how the BNA is implemented requiring that the BNA be applied to the CF in 2009. The result is a 6.41% reduction in the CF for 2009. Additionally, CMS estimated that CY 2009 RVU changes would result in a decrease in Medicare physician expenditures so to maintain budget neutrality they increased the CF by 1.0008 to offset this estimated decrease in Medicare physician expenditures.  Figure 3 illustrates how the 2009 Conversion Factor (CF) is calculated.

Calculating the 2009 Medicare Conversion Factor

Figure 3

The 2009 Medicare Physician Payment Amount

There are several factors impacting the Medicare allowable for physician services in 2009:

• The 1.1% increase in the CF,
• The 2009 CF BNA & the application of the 5-year review BNA to the CF and
• The continued transition to the new methodology for calculating Practice Expense RVUs

We discussed the calculation of the CF and how the application of the BNA impacts the CF now let’s look more closely at how it impacts payments for specific physician services.

In 2007 and 2008 the BNA only reduced Work RVUs while under the MIPPA requirement the BNA is applied to the total payment in 2009. Therefore, services that have a higher than average proportion of its total payment accounted for by Physician Work RVUs will see a payment increase while services that have higher Practice Expense RVUs will see a reduction in payment.

CMS published Table 50 (Figure 4) illustrating the impact of placing the BNA on the Conversion Factor.

TABLE 50: CY 2009 Impact of Placing Budget Neutrality Adjustment on the Conversion Factor (section 133(b) of the MIPPA)

Figure 4
Source: 2009 Medicare Physician Fee Schedule Final Rule

Finally, physician payment is also impacted by the continued transition to the new methodology for calculating Practice Expense (PE) RVUs.  In 2009 we will be in the third-year of the four-year transition with PE calculations based on 75% of the new methodology and 25% of the old methodology. Most drug administration services will decrease slightly in 2009 due to this transition.

PE Transition Timeline

2007
75% old methodology	25% new methodology
2008
50% old methodology	50% new methodology
2009
25% old methodology	75% new methodology
2010
100% new methodology

Figure 5

GPCI Floor Extended
The Medicare Modernization Act of 2003 (MMA) included a revision establishing a floor of 1.0 for the work geographic practice cost index (GPCI) for 2004, 2005 and 2006. The payment floor ensured that every area was paid, at a minimum, the national average for the work component regardless of its relative cost. The work GPCI floor addressed concerns about access in rural areas.

The 1.0 floor originally set to expire December 31, 2006 has been extended once more. Section 134(a) of MIPPA extends the 1.0 floor from July 01, 2008 through December 31, 2009. Additionally, section 134(b) of the MIPPA sets a permanent 1.500 work GPCI floor in Alaska, beginning January 01, 2009.

History of the 1.0 Work GPCI Floor

• Established for three years (2004 through 2006) by passage of the Medicare Modernization Act of 2003 (MMA)
• Extended through  December 31, 2007 by passage of the Tax Relief and Health Care Act of 2006 (TRHCA) 
• Extended for six months through June 30, 2008 by passage of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA)
• Extended for eighteen months through December 31, 2009 by passage of the Medicare  Improvements for Patients and Providers Act of 2008 (MIPPA)

Temporary IVIG Preadministration Payment is Halted
In the 2009 proposed rule CMS stated their intention to eliminate the additional payment for IVIG preadministration services billed with temporary code G0332. CMS explained that the temporary additional payment was established in 2006 to assist in ensuring appropriate access to IVIG during a period of market instability. 

CMS referenced the April 2007 Office of the Inspector General’s (OIG) report entitled, Intravenous Immune Globulin: Medicare Payment and Availability (OEI-03-05-00404) in which the OIG said their study on the availability and pricing of IVIG found that for the third quarter of CY 2006, just over half of IVIG sales to hospitals and physicians were at prices below Medicare payment amounts.

In the final rule CMS finalized their decision to discontinue the temporary additional payment stating that the OIG report and national Medicare claims data indicate that the reported transient market conditions that led them to adopt the separate payment for IVIG preadministration-related services have improved.

CAP Not Providing Expected Savings
CMS has been struggling to increase participation in the Competitive Acquisition Program (CAP) for Part B drugs. The implementation of the CAP was expected to generate significant savings for the Medicare program. However, low physician participation and vendor interest has plagued the program from the start.

In the 2009 proposed rules CMS sought to make the program more attractive to both physicians and potential vendors. However, CMS did not finalize any of the proposed changes citing the 2009 CAP program postponement which CMS says is due to, “contractual issues with the successful bidders.” 

Earlier this year BioScrip, the sole CAP vendor since the inception of the program in 2006, announced they would not seek to renew their contract which expires December 31, 2008.

Few oncologists have participated in the CAP as current program restrictions and administrative burdens outnumber the benefits of participation.
CMS continues to solicit public feedback about the CAP and in particular on the following issues:

• The categories of drugs provided under the CAP
• The distribution of areas that are served by the CAP
• Procedural changes that may increase the program's flexibility and appeal to potential vendors and physicians.

CMS will host a teleconference on December 3, 2008, to obtain feedback about the program. Comments may also be sent to the CAP e-mailbox at MMA303DDrugBid@cms.hhs.gov.

Drug Pricing Issues
There are no significant changes in the average sales price (ASP) calculation however CMS states they are updating their regulations to reflect the April 01, 2008 changes affecting calculation of the weighted average ASP for multiple source drugs.

Additionally, CMS has the authority to disregard the average sales price (ASP) for a drug or biological that exceeds the widely available market price (WAMP) or the average market price (AMP) for such drug or biological by a threshold percentage that they may set. In the final rule CMS finalizes their proposal to maintain the threshold percentage at 5% in 2009.

Diagnostic Services
In the 2007 and 2008 Physician Fee Schedule final rules, CMS established performance standards for suppliers enrolled in the Medicare program as an independent diagnostic testing facility (IDTF). The standards were established to improve the quality of care for diagnostic testing furnished to Medicare beneficiaries.  These IDTF standards did not apply to physician offices.

In the 2009 proposed rule CMS proposed applying most of the IDTF standards to physician practices due to their concern that some entities may enroll as physician practices and furnish diagnostic testing services without the benefit of qualified nonphysician personnel. 

In the 2009 final rule CMS stated their decision to defer implementation of this proposal citing the enactment of section 135 of the MIPPA which requires CMS to establish an accreditation process for those entities furnishing advanced diagnostic testing procedures which include diagnostic magnetic resonance imaging, computed tomography, and nuclear medicine (including positron emission tomography), and certain other diagnostic testing procedures by January 01, 2012.

Anti-Markup Provisions
In the 2008 final rule CMS finalized a rule prohibiting physicians from charging Medicare more than the cost of diagnostic services that are either purchased from an outside supplier or furnished by an employee or contractor at a site other than the office of the billing physician.

CMS revises the anti-markup provision in the 2009 final rule in such a way that the anti-markup rule applies unless both the ordering and performing physicians share a practice. CMS outlines two alternatives that would meet the “share a practice” requirement:

• A performing physician (a physician who supervises the TC or performs the PC, or both) will be considered to share a practice with a physician, physician organization, or other supplier if the physician furnishes “substantially all” (at least 75 percent) of his or her professional services through that physician, physician organization, or other supplier.

Or on a case-by-case basis

• A performing physician (a physician who supervises the TC or performs the PC, or both) will be considered to share a practice with a physician, physician organization, or other supplier if the physician is an owner, employee, or independent contractor of the billing physician and provides or supervises the service in a building in which the ordering physician provides substantially the full range of services that the ordering physician provides generally.

If the “share a practice” requirement is not met the anti-markup rule applies and the payment to the billing physician or supplier for the TC or PC of the diagnostic test may not exceed the lowest of:

• The performing supplier’s net charge to the billing physician or other supplier;
• The billing physician or other supplier’s actual charge; or
• The fee schedule amount for the test that would be allowed if the performing supplier billed directly.

This anti-markup provision goes into effect January 01, 2009. 

Enrollment Issues
Currently, physicians and NPPs are allowed to bill Medicare prior to their enrollment date. Under the current rules physicians and NPPs can bill Medicare and receive payments for services furnished up to 27 months prior to enrolling in the Medicare program.

In the 2009 proposed rule CMS stated their concern that some physician and NPP organizations and individual practitioners may bill Medicare for services when they have not met all program requirements.

Under the final rule, effective January 01, 2009, the effective date for billing privileges for physicians, nonphysician practitioners, and physician and nonphysician practitioner organizations is the later of:

• The date of filing of a Medicare enrollment application that was subsequently approved by a Medicare contractor; or
• The date an enrolled physician or NPP first started furnishing services at a new practice location.

The final rule lists two exceptions allowing physicians and NPPs that have met all program requirements, including State licensure to bill for services provided at the enrolled practice location for up to:

• 30 days prior to their effective date if circumstances precluded enrollment in advance of providing services to Medicare beneficiaries, or
• 90 days prior to their effective date if a Presidentially-declared disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §§5121-5206 (Stafford Act) precluded enrollment in advance of providing services to Medicare beneficiaries.

Drug Administration Payment Rates

Once again we will see a decrease in the Medicare payment rate for most drug administration services. These decreases are a result of several factors including the continued PE transition and the application of the BNA to the CF. Those drug administration codes with high PE RVUs will see a greater reduction in payment due to the BNA application.

There will again be a slight increase in payment for CPT 96372 (90772 in 2008) therapeutic SQ/IM injection and CPT 96401 SQ/IM non-hormonal antineoplastic injection.

The most significant increase however is an increase of $251.39 for CPT 96440 Chemotherapy administration into pleural cavity, requiring and including thoracentesis. However, this code is infrequently used in the practice.

Comparison of Medicare Payment Rates 2008-2009

Figure 6            
Source: 2009 Medicare Physician Fee Schedule Final Rule

New 2009 CPT Codes

The American Medical Association (AMA) develops and maintains the Current Procedural Terminology (CPT®) code set. In 2002 the CPT code set was designated as the national coding standard for physician and other health care professional services and procedures under the Health Insurance Portability and Accountability Act (HIPAA). The CPT code set is published annually and the update is effective January 1st.

Effective January 01, 2009 there are new codes for the administration of hydration and therapeutic, prophylactic, and diagnostic substances and drugs (see Figure 7 CPT® 2008/2009 Drug Administration Crosswalk). These services have been renumbered and moved to the 96XXX series directly before the chemotherapy administration codes in the Medicine Section.

In order to avoid claim delays or denials ensure that all relevant forms and systems are updated with the new codes by the effective date. Be aware that some payers may not have loaded the updated codes in their systems, and be prepared to respond quickly to any improper denials or requests for information on these new codes.

CPT 2008/2009 Drug Administration Crosswalk

Figure 7
CPT is a registered trademark of the American Medical Association

HCPCS Level II codes are developed and maintained by the Centers for Medicare and Medicaid Services (CMS) for reporting services and supplies not captured by the CPT coding system. The HCPCS code set is updated annually by CMS although new codes may be introduced and existing codes may be revised or deleted throughout the year.
Figure 7 is a partial list of the January 01, 2009 HCPCS update and Figure 8 includes a new HCPCS modifier effective January 01, 2009. Watch your Medicare contractor’s newsletters, email alerts and bulletins for more information on the use of the new modifier RE.

Click Here to download the entire 2009 Alpha-numeric HCPCS file from the CMS Web site.

HCPC Update Effective 01/01/2009

Figure 7 

New Modifier Effective 01/01/2009

Figure 8