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    Medicare Part B drug billing revisited

    How proposed demonstration project and a possible change in ‘brown bag’ rules may affect your practice

    Ray Painter, MDRay Painter, MD Mark PainterMark Painter


    It’s time to revisit billing for Medicare Part B drugs. A proposed demonstration project that every urologist should be aware of, a change in the “brown bag” rules since our last publication, and a continued loss of income by many offices are making the purchase and delivery of drugs less palatable for urology offices.

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    We should also add to that list the increased number of high-priced drugs available to treat urologic problems. It is a conundrum created under a difficult pressure to increase the care provided to more people of Medicare age under a shrinking budget.

    Average sales price changes

    In a perfect world, we would assume that each of you have read the AUA Policy and Advocacy Brief article, “CMS New Payment Model Would Cut ASP for Part B Drugs” (March 15, 2016) and we could make a few comments and move on.

    Since that may not be the case, we will summarize the key parts of the Centers for Medicare & Medicaid Services’ plan to change the way you’re paid for Part B drugs. The reason for the proposed project is the increased costs to the Medicare program for Part B drugs from $11 billion in 2007 to $22 billion in 2015. The purpose is to test whether the alternative drug payment designs discussed in this proposed rule will lead to a reduction in Medicare expenditures while preserving or enhancing the quality of care provided to Medicare beneficiaries.

    Here are the proposed rules in summary:

    Phase 1. This would begin in fall 2016 or soon thereafter. The program would run for 5 years. The proposed add-on payment would be average sales price (ASP)+2.5% and a flat fee drug payment of $16.80 plus a yearly cost-of-living increase. It would be implemented in selected different geographic areas; all physicians in those geographic areas would be required to participate. It is proposed to be budget neutral.

    Phase 2. This would begin no earlier than January 2017. This phase would add value-based purchasing tools to phase 1 participants and a select group of ASP+6% users. These tools are currently employed by commercial health plans, pharmacy benefit managers, etc. The plan is to have both phase 1 and phase 2 implemented for the last 3 years of the 5-year project.

    As you can imagine, there are additional variations, potential add-ons, requests for feedback, etc. (The proposed rule is 119 pages of federal jargon.)

    Next: What does this mean for your practice?

    Ray Painter, MD
    Urologist Ray Painter, MD, is president of Physician Reimbursement Systems, Inc., in Denver, and is also publisher of Urology Coding and ...
    Mark Painter
    Mark Painter is CEO of PRS Urology SC in Denver.


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