The Centers for Medicare & Medicaid Services (CMS) released its final Medicare physician fee schedule notice for 2006 yesterday.

We credit CMS for the positive steps it is continuing to take by focusing on quality care issues in its 2006 fee schedule. As we indicated in our alert on November 1, CMS is revising the oncology demonstration project in 2006 to gather more specific information about the extent to which evidence-based guidelines set forth by ASCO and the National Comprehensive Cancer Network (NCCN) are used as the standard of care. We believe CMS’ emphasis on cancer care quality guidelines in the demonstration project will help improve care for all cancer patients.

We are, however, disappointed that overall funding for cancer care services will decrease. CMS is estimating that there will be a 10% reduction in reimbursement to oncology practices as a result of changes to the demonstration and other fee schedule provisions. ASCO remains concerned about maintaining necessary resources for oncology care and is conducting a full-scale analysis to determine all of the financial implications of the final rule.

ASCO will continue to work with CMS and Congress to ensure that there are adequate resources in the system so oncologists can continue providing patients with the high-quality care they need.


Medicare Physician Fee Schedule Notice for 2006 – Preliminary Review

Below is a preliminary summary of the key provisions of the notice. We will provide you a more detailed summary of the rule soon.

Oncology Demonstration Project. CMS states that the 2006 demonstration project is intended to support care that has been shown to lead to better outcomes for patients with cancer, determine how and whether oncology practices follow well-established evidence-based practice guidelines, and associate reporting of quality by evaluating physician services rather than chemotherapy administration.

• Participation in the project will be available only to office-based hematologists/oncologists.
  
  
• An additional payment of $23 will be made if a physician bills a visit code for an established patient (levels 2 through 5) who is being treated for any one of 13 specified categories of cancer.
  
  
• To qualify for the payment, the physician must, in addition to the visit code, submit three G-codes that will provide information about (1) the primary reason for the visit, (2) the current disease state, and (3) whether current management adheres to relevant guidelines issued by ASCO and the National Comprehensive Cancer Network.
  
  
• CMS estimates that the demonstration project will result in an additional $150 million in allowed charges in 2006.
  
  
• Details on the diagnoses included in the demonstration and how the primary focus of visit and level of guideline adherence will be reported are included in a CMS Fact Sheet on the demonstration.

Conversion Factor.  Under the statutory sustainable growth rate ("SGR") methodology, the conversion factor will decrease by 4.4% in 2006 compared to 2005.  The 2006 conversion factor is $36.1770.

Competitive Acquisition Program.  CMS has issued final CAP provisions as part of this rule.  CMS has updated the list of drugs that will be included in the CAP and established an exception to allow vendors to bill for the unused portion of a single-use vial, noting that both vendors and physicians enrolled in CAP should make "good faith" efforts to minimize drug wastage.

Vendors will be invited to bid for participation in the CAP program upon publication of the fee schedule notice, and CMS anticipates that the physician election process will take place in early to mid-spring.

IVIG.  In response to concerns about the availability of intravenous immunoglobulin ("IVIG") at the Medicare payment level, CMS has established a new G-code valued at 1.90 RVUs, that can be billed once per day when IVIG is administered.  A similar payment will be made under the hospital outpatient PPS.

Practice Expense.  CMS has decided not to revise the method of calculating practice expense relative value units to use a "bottom-up" methodology for calculation of direct costs as it had proposed.

Multiple Diagnostic Imaging Procedures.  CMS has finalized its proposal to reduce the payment amount for the second and subsequent imaging procedures in the same "family" of procedures conducted on the same day.  In a revision to the proposal, there will be a two-year phase-in under which the payment for the multiple procedures will be reduced 25% in 2006 and 50% in 2007 and beyond.