1. Economic Considerations Lynn Webster M.D. Lifetree Clinical Research and Pain Clinic Salt Lake City, Utah

2. Economic Factors Site of Service – Hospital Inpatient, Hospital Outpatient, ASC, Office Management Cost – Cost of drugs, refill kits and office overhead Management Reimbursement – Drugs – Cognitive skills

3. Payment by Site of Service: Trial CodeDescriptionFacility PymtMD Pymt w/Fix MD Pymt w/o Fix 62319Injection, including catheter placement, cont infusion $485$92$71 Total $485$92$71 DescriptionDRGFacility PymtMD Pymt w/Fix MD Pymt w/o Fix Medical back problems w/MCC 552$4487$92$71 Total $4487$92$71 Inpatient Hospital Trial Outpatient Hospital Trial The drug used for the trial is included in the DRG for Inpatient Trials. For outpatient hospital trials, Lioresal and Prialt are reimbursed separately, Infumorph is packaged in the APC payment. CPT Copyright 2008 American Medical Association. All rights reserved. CPT is a registered trademark of the American Medical Association. Changes to the Hospital Outpatient Prospective Payment System and FY 2010 Payment Rates. Federal Register Display Date: October 30, 2009 Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2010. Federal Register Display Date: October 30, 2009

4. Payment by Site of Service: Implant CodeDescriptionFacility PymtMD Pymt w/Fix MD Pymt w/o Fix 62350Catheter Implant * multiple surg reduction is reflected $1443$184$146 62362Programmable Pump Implant $13305$385$306 Total $14748$569$452 DescriptionDRGFacility PymtMD Pymt w/Fix MD Pymt w/o Fix Peripheral/Cranial and Other Nervous System W/CC or Peripheral Neurostimulator 41$11967$184 $385 $146 $306 Total $11967$569$452 Inpatient Hospital Implant Outpatient Hospital Implant The DRG assignment varies depending on diagnoses and severity of illness (MCC or CC). For illustration above a pain disorder diagnoses was used. CPT Copyright 2008 American Medical Association. All rights reserved. CPT is a registered trademark of the American Medical Association. Changes to the Hospital Outpatient Prospective Payment System and FY 2010 Payment Rates. Federal Register Display Date: October 30, 2009 Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2010. Federal Register Display Date: October 30, 2009

5. Payment by Site of Service Refill Programming and Analysis CodeDescriptionFacility Pymt MD Pymt w/Fix MD Pymt w/o Fix 62368 Pump Programming and Analysis $171$37$28 95990Refill – Non- Phys NA$64$56 95991Refill – Physician $127$37$28 J2275Morphine, 10 mg N/A Total $298$74$56 CodeDescriptionMD Pymt w/Fix MD Pymt w/o Fix 62368 Pump Programming and Analysis $54$43 95990*Refill – Non-Phys$75$56 95991Refill – Physician$93$79 J2275Morphine, 10 mg$14 Total $161$136 Physician Office RefillOutpatient Hospital Refill Fee not established for 95990 in facility Totals calcuated using MD Refill For illustration, Infumorph 50 mg used for calculating payment http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/01a1_2009aspfiles.asp Refill kits are used in both sites of services and are included in the payment reflected above CPT Copyright 2008 American Medical Association. All rights reserved. CPT is a registered trademark of the American Medical Association. Changes to the Hospital Outpatient Prospective Payment System and FY 2010 Payment Rates. Federal Register Display Date: October 30, 2009 Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2010. Federal Register Display Date: October 30, 2009

6. Drug Reimbursement Methods AWP ASP Fee Schedules Rebate Programs

7. Medicare Administrative Contractor (MAC) Drug Reimbursement All contractors instructed to utilize ASP pricing for commercially prepared drugs used in infusion pumps – http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/01a19_2010aspfiles.asp http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/01a19_2010aspfiles.asp Because of some confusion, a couple MACs still paying at 95% of Average Wholesale Price (AWP) Compounded Drugs are Paid at MAC discretion – Payment Varies – Coding/reporting requirements vary

8. Current ASP* Payment Amounts Physician Office Reimbursement = ASP + 6% Facility Reimbursement = ASP + 5% Difference HCPCs Code DrugDosageCost10/1/2010 J0475Baclofen 10 MG injection 10 MG $203.93$200.08$3.85 J0476Baclofen intrathecal trial 50 MCG $73.15$71.77$1.37 J2275Morphine sulfate injection 10 MG $2.42$2.37$0.05 J2278Ziconotide injection1 MCG $6.61$6.480.3 *Average Sales Price

9. Current AWP* Amounts Baclofen 10 mg$215.18 Baclofen 50 mcg$ 79.80 Morphine Sulfate 10mg$4.39 approx Ziconitide only priced at ASP *Average Wholesale Price

10. IT Reimbursement Industrial Claims – Each state’s Industrial Commission sets the fee schedule Some states pay at invoice plus ~15% Private Payers – Most use the Medicare ASP + 6% fee schedule Noridian Medicare – J3490 code – Pay from invoice with no additional payment allowed

11. IT Therapy Costs LOWHIGH IT Prialt Average dose 4 mcg/day in 20-mL Medtronic pump ASP + 6% = $6.51/mcg IT Morphine Average dose 6 mcg/day in 20-mL Medtronic pump ASP + 6% = $2.83/10 mg $ $ $ $ $ $ $ $ $

12. Oral Therapy Costs LOWHIGH Oxycontin® 80 mg TID Percocet® 10/325 mg 8x day Lyrica® 150 mg BID Cymbalta® 60 mg QD Klonopin® 1 mg BID Ambien® CR 12.5 mg QHS Methadone® 10 mg QID Oxycodone® 15mg QID Gabapentin® 400 mg QID Desipramine® 10mg TID Trazodone® 50mg QHS $ $ $ $ $ $ $ $ $

13. Cost Comparison of 2 Intrathecal Medications to an Oral Brand Name Medication Regimen and an Oral Generic Medication Regimen Deer and Smith, et al. Manuscript in Progress

14. Economic Considerations IT therapy can be less expensive than using oral medications Reimbursement depends on payer and site of service Drug invoice pricing may not provide payment for handling and acquisition

15. Economic Considerations The Neuromodulation Therapy Access Foundation (NTAC) is working with multiple organizations to provide appropriate payment for all aspects of pump therapy – Palmetto GBA recently implemented fee schedule that replaces invoice only methodology (California, Nevada, Hawaii) – Allows for fee schedule to cover drug and separate compounding fee Thanks to Drs Schwachmann, Helm and William Stuart PharmD