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Drug Reimbursement and the Bottom Line: Update 2009 Anne Jarrett, MS, RPh ATJ Consulting, LLC

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Presentation on theme: "Drug Reimbursement and the Bottom Line: Update 2009 Anne Jarrett, MS, RPh ATJ Consulting, LLC"— Presentation transcript:

1 Drug Reimbursement and the Bottom Line: Update 2009 Anne Jarrett, MS, RPh ATJ Consulting, LLC

2 Disclaimer I have no relationships with any commercial interests related to my presentation.

3 A Real Fairy Tale A long, long time ago, no one had to worry about the bottom line. Money was plentiful across the land. Drugs were cheaper. We got paid based on AWP.Everyone lived happily ever after.

4 Inpatient? Outpatient? OPD? M.D. owned? OPPS? IPPS? NOC? SCOD? Rev Code? HCPCS II ? Pass –thru? SI? ASP? CDM? Dialysis? FI? CF? ICD-9? DRG? APC? UOM? PAL? Med A? Med B? Med C? Med D? Add B Packaged? Self adm? Medicaid? MS? SS? IMS? UB-92? CMS-1500? 2 nd payer? Carrier? Outlier?

5 Objectives 2009 IPPS and OPPS The bottom line Why you should care Specific knowledge and use Key relationships and data

6 True or False? No drug administered to a Medicare inpatient is separately reimbursed. Medical coders look at the drugs patients receive while in the hospital. No MS-DRGs mention drugs. There are no HCPCS codes that are useful in quality measurement.

7 True or False? Day hospital patients are inpatients and covered by Medicare A. Physician owned clinics/offices use HCPCS codes and fiscal intermediaries. In-house dialysis centers and hospitals share a Medicare number.

8 Objectives 2009 IPPS and OPPS The bottom line Why you should care Specific knowledge and use Key relationships and data

9 2009 Final Rules Inpatient Prospective Payment System (IPPS)

10 IPPS 2009 3.6% in national standardized rates High-cost outlier threshold to $20,185 Final 2 year transition to MS-DRGs Will not reimburse hospital to which a pt. has been transferred for tPA if given at transferring hospital

11 IPPS 2009 (con.) Additional quality measures Never events, present on admission(POA), readmission rates Will continue to reimburse separately for blood clotting factor products when given for approved indications

12 Value Based Purchasing Align payment with quality of care across settings Never events Present on admission (POA) Readmissions Repeat visits

13 2009 Final Rules Outpatient Prospective Payment System (OPPS)

14 OPPS 2009 ASP + 4% for separately payable, non- pass-through drugs ASP + 6% for pass-through drugs Pass-through drug list updated ASP + 6% for physician offices No more pre-administration fee for IVIG

15 OPPS 2009 (con.) Packaging threshold = $60.00 Drug administration’s APC structure decreased from 6 to 5 APCs CMS decided against separating drugs & biologicals into 2 cost centers (high and low) to reflect overhead costs

16 ASP + 2%? CMS calculated ASP + 2% to be “actual”cost of drugs & biologicals Includes acquisition plus pharmacy overhead costs 6% 5% 4% Future rate?

17 Objectives 2009 IPPS and OPPS The bottom line Why you should care Specific knowledge and use Key relationships and data

18 The Bottom Line Equation Drug prices & usage + = Reimbursement ________________ REVENUE

19 Novation’s National Economic Impact Survey 2009 Current and future impacts over next 12 months 60% of responding hospitals have already been impacted 47% foresee staff cuts

20 Novation’s National Economic Impact Survey (con.) 73% have seen costs due to meeting patient safety standards 84% plan to spending with 49% anticipating a 6-10% reduction 44% will product utilization

21 Health Leaders Media Industry Survey 2009 70% of hospital CEOs concerned that reimbursement cuts will have a “strongly negative effect” # 1 wish? “Find a solution to reimbursement cuts.”

22 American Hospital Association Study “Report of the Economic Crisis: Initial Impact on Hospitals” January 2009 736 CEOs responded

23 AHA Study Results 59% of hospitals plan on cutting administrative costs 53% Reducing staff 27% Reducing services 12% Divesting assets 8% Considering merger 21% Other

24 Thomson Reuters Study “Impact of recession on hospitals” 3/2/09 Median profit margin of U.S. hospitals has declined to ZERO Balance sheets of over 400 hospitals nationwide Included all sizes and types of hospitals

25 Out of money experience


27 Example A- Epo Audit performed on reimbursement of erythropoietin (epo) given in the hospital outpatient department over four months. Performed by Patient Financial Services, Pharmacy and Compliance Successful reimbursement rate for Medicare patients = 30% Estimated loss of revenue = $100,000 annualized to $300,000 per year

28 Why Was Revenue Lost? Audit showed*: 50% charged as NESRD when ESRD 25% lacked a lab report 25% charged with wrong billing units 10% charged with expired HCPCS codes 15% charged under incorrect Medicare provider number * Some bills had multiple errors *

29 Example B-Remicade Infliximab (Remicade®) 100mg vial Usual dose = 100mg 1 billing unit = 10mg ($55.85) If bill for 1 (vial)$55.85 If bill for 10 billing units$558.50 Conversion factor = 10

30 Example C- Botox Patients in non-hospital owned pediatric clinic administered Botox Clinic ordered Botox from hospital pharmacy Hospital pharmacy charged patients for drug Hospital gave away thousands of dollars of free drug

31 Example D - Blood Factor Products Hemophilia patient covered by Medicare suffered a fall at his home In ICU in a coma for 3 months Administered $1.7 million of Factor VIIa Hospital did not realize eligibility of reimbursement for inpatients

32 BFPs (con.) Filed an adjustment claim with Medicare The hospital made a couple of million dollars that would have been written off.

33 Objectives 2009 IPPS and OPPS update The bottom line Why you should care Specific knowledge and use Key relationships and data

34 Would you like fries with that?

35 Objectives 2009 IPPS and OPPS The bottom line Why you should care Specific knowledge and use Key relationships and data

36 Don’t kid yourself. You’re just a deer in the headlights.. Knowledge

37 Can you answer these questions? Can we? Will we? How much can we? Did we? …..get reimbursed for drug X?

38 Pt. Location PayerDrug HCPCs Code Billing Unit ICD-9 codes Rev. Code Status Ind. The Decks

39 Flow Of Drug Through Purchasing, Billing, I.S. To Inventory Valuation

40 Have to know (Hospital) Fiscal intermediary/carrier/MAC Medicare/Medicare numbers Information Services (all applicable computer programs) Payer mix Contracts Key players

41 Have to Know (Pharmacy) Budget Acquisition costs Purchasing /GPO contracts/ Wholesaler substitutions Information/billing system/staff Responsibility reports

42 Contracts Per diem Charges -% Carve outs Specialty drugs

43 Have to Know Where to Find Drug /administration payment rates HCPCs codes ICD-9 codes MS-DRGs/APCs Specific patient information Changes

44 The Ivana Moore Money Health System You can’t get reimbursed without it. GOOD► 1/2010 THRU TransDescInsChBillBillRev Price CodeCovInCD1CD2CD

45 ChargeMaster Who is the master of your chargemaster? Has “make or break” effects on revenue capture- could spell disaster Multiple chargemasters? Hospital chargemaster

46 Coverage International Classification of Diseases, ninth edition (ICD-9 diagnosis codes) Approved indications for drugs Local Coverage Determinations (LCD) National Coverage Determinations (NCD) Pre-approval Medical necessity

47 Pegfilgrastim- LCD (Palmetto GBA) ICD-9 codes that support medical necessity: –205.00 Acute ALL w/o remission –205.01 Acute ALL w/ remission –205.10 Chronic ALL w/o remission –205.11 Chronic CLL w/ remission –238.7 Neoplasm of uncertain behavior of other lymphatic and hematopoietic tissues –288.0 Agranulocytosis –V42.9 Unspecified organ or tissue replaced by transplant –V59.8 Donors of specified organs or tissue –V66.2 Convalescence following chemo –V66.5 Convalescence following other treatment

48 Other Payers & Coverage

49 Did you know? Medical coders do not look at drugs when looking through an inpatient’s chart? Day hospital pts are considered to be outpatients? In-house dialysis units have a separate Medicare number?

50 Did you know? MS-DRGs mention drugs? HCPCS codes for quality measures? Different drug reimbursement given in hospital outpatient departments, physician owned clinics & ASCs?

51 Did you know? Medicare will reimburse hospitals separately for blood factor products given to hemophilia patients? (Specific ICD-9 diagnosis codes required) Med D has and will continue to affect hospitals?

52 MS-DRGs That Mention Drugs Acute ischemic stroke with use of thrombolytic agent Craniotomy with major device implant or acute complex CNS principal diagnosis with MCC or chemotherapeutic implant (Gliadel® wafers)

53 HCPCS Codes for Quality Measurement involving drugs Does your hospital use them? Example: G8006 – Acute myocardial infarction (AMI) patient received Aspirin at arrival

54 Quality Measure HCPCS Codes (con.) G8006- AMI pt recd aspirin at arrival G8012- Pneum pt recv antibiotic 4h G8027- HF pt not elig for Bblocker G8214- Clini not doc order VTE

55 Hospital Outpatient Departments versus Physician Owned Clinics Claim forms Addendum B Part B Average Sales Price HCPCS codes Fiscal intermediary Carrier

56 Ambulatory Surgical Centers In 2008, CMS started OPPS-like payment 65% of OPPS reimbursement rate Added 790 ASC procedures In 2009, CMS added 30 surgical procedures payable in ASC settings

57 How Has MED D Affected Hospitals? Manufacturers’ Medication Assistance Programs Former program patients can’t afford their co-pays, don’t take meds (e.g transplant meds after 3 years) Re-admissions and E.D. visits Donut hole by July

58 Resources? Fiscal intermediary, carrier, MAC Medicare website

59 Finding the needle is easy. Finding the right haystack? Impossible! FUTILITY

60 Have to Think About Appropriate use Collaborative guidelines Replacement programs Charge for wastage? Patient Assistance Program LOS and outpatient drug affordability

61 Pharmaceutical Reimbursement Specialist Do you have a pharmaceutical reimbursement specialist? If you have a business person on staff, does he or she “speak” pharmacy ?

62 Watch For Drug reps distributing information to M.D.s about off-label/ new drug use GPO contracts Wholesaler substitution “Gray market”use New drugs without a HCPCS code

63 Readmissions and E.D.Visits Annals of Internal Medicine, 2/3/2009: “Pharmacists follow up helps cut hospital readmissions and E.R. use by 30% at a Boston hospital” Patient Assistance Programs Replacement programs Cost of drug vs. cost of admission

64 Rounding Doses “Minor decrease in calculated doses result in substantial cost savings without more risk to patients” Oxaliplatin (Eloxatin) $17,905/year stage III advanced colorectal CA $25,876 for stage IV Wastage avoided (P resented @ GI Cancer Symposium (ASCO), January 19, 2009 )

65 Specialty Pharmacies & Exclusivity Some payers restrict certain high cost drugs to specialty pharmacies In contract—get involved! Some manufacturers grant exclusivity of purchasing to certain entities

66 Objectives 2009 IPPS and OPPS update The bottom line Why you should care Specific knowledge and use Key relationships and data


68 PERSISTANCE Go ahead. Give yourself permission to be irritating.

69 In the Know –Finance department –Reimbursement accounting –Billing and Collections –Social work –Medicare/Medicaid –Contracting –CFO –Compliance

70 Challenges CFOs Face MS-DRGs Charge to cost based Medicare Recovery Audit Contractor RACs Audits ICD-10-CM Pay for performance Consumer directed health care

71 Data Information systems Payer mix Co-pay collection rate Contracts Reimbursement rate Indigent and charity care

72 Need to Know Negotiated carve-outs Top MS-DRGs/APCs by dollar Outlier payments Benchmarks Cost to charge ratio Base payment

73 Stay ahead of the train Finally you see the light at the end of the tunnel. It’s a train coming down the tracks.

74 Keep Up Make yourself aware of all the numerous changes in a timely manner The only thing that stays constant is change.

75 The Future?

76 Healthcare Reform This is your government This is your Government on drugs

77 Government Efficiency

78 You can’t afford not to buy it ! Reimbursitol® NEW!

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