1. Risë Marie Cleland President, Oplinc Rise@Oplinc.com Evaluating CAP Participation ANCO 2005 Annual Meeting Yosemite

2. Agenda ASP in 2006 ASP in 2006 ASP issues ASP issues CAP & ASP CAP & ASP CAP Issues CAP Issues Physicians Physicians Vendors Vendors Practice Determinations Practice Determinations

3. ASP Issues Going Forward Two quarter lag continues Two quarter lag continues Where are you on ASP scale? Where are you on ASP scale? High volume purchaser High volume purchaser Exclusive contracts – formularies Exclusive contracts – formularies Some ASP +6% rates below cost Some ASP +6% rates below cost Current OIG “audits” Current OIG “audits”

4. CAP & ASP CAP pricing included in the Average Sales Price (ASP) calculation CAP pricing included in the Average Sales Price (ASP) calculation Section 1847A of the Social Security Act Section 1847A of the Social Security Act ASP will decrease in proportion to the volume of drug sold at the CAP price ASP will decrease in proportion to the volume of drug sold at the CAP price US Oncology? US Oncology? CAP pricing extended to all customers? CAP pricing extended to all customers? “Under-water” ASP adjustments “Under-water” ASP adjustments Physicians referred to the CAP Physicians referred to the CAP

5. CAP Viability Will CAP be implemented? Will CAP be implemented? Section 303(d) of the MMA of 2003 requires the implementation of a competitive acquisition program for Medicare Part B drugs not paid on a cost or prospective payment system basis Section 303(d) of the MMA of 2003 requires the implementation of a competitive acquisition program for Medicare Part B drugs not paid on a cost or prospective payment system basis Other specialties are supportive Other specialties are supportive Nephrology Nephrology Internal Medicine Internal Medicine Mental Health Mental Health Infectious Disease Infectious Disease

6. CAP Drugs One category of CAP drugs including most of the drugs now administered “incident to” in the oncology clinic. One category of CAP drugs including most of the drugs now administered “incident to” in the oncology clinic. Oncolytics Oncolytics Chemotherapy adjuncts Chemotherapy adjuncts Anti-emetics Anti-emetics Hematologics Hematologics Drugs in the HCPCS J9000 series (with the exception of J9999) Drugs in the HCPCS J9000 series (with the exception of J9999) The following drugs will not be included: The following drugs will not be included: Drugs that don’t meet the claims volume threshold; Drugs that don’t meet the claims volume threshold; Drugs billed with the not otherwise classified code (NOC); Drugs billed with the not otherwise classified code (NOC); Depot Lupron Depot Lupron Immune globulins Immune globulins Drugs administered through DME Drugs administered through DME Orphan drugs Orphan drugs

7. CAP Issues for Physicians & Patients: CAP Issues for Physicians & Patients: Off-label use Off-label use How will vendor react to “medical necessity” denials? How will vendor react to “medical necessity” denials? Practice must appeal these denials Practice must appeal these denials Possible negative impact on referrals Possible negative impact on referrals Non-CAP providers sending pts elsewhere for treatment Non-CAP providers sending pts elsewhere for treatment Impact on ancillary services Impact on ancillary services Patient assistance/ drug replacement programs Patient assistance/ drug replacement programs

8. Delivery of Drugs Refusal to ship drug when copay is late Refusal to ship drug when copay is late How will physician be notified of the action? How will physician be notified of the action? Will site-of-care be affected? Will site-of-care be affected? Pt must pay invoice within 45 days of postmark Pt must pay invoice within 45 days of postmark Request for financial assistance info provides a 15 day extension Request for financial assistance info provides a 15 day extension The Physician may opt out of CAP if he/she wishes to continue treatment of this patient under “buy & bill” The Physician may opt out of CAP if he/she wishes to continue treatment of this patient under “buy & bill” Must opt out for all Medicare patients Must opt out for all Medicare patients If group practice the practice opts out If group practice the practice opts out

9. Delivery of Drugs Drugs are to be shipped in unopened manufacturers packaging Drugs are to be shipped in unopened manufacturers packaging Packages containing multiple individual units may be divided & shipped in unopened individual vials. Packages containing multiple individual units may be divided & shipped in unopened individual vials. CAP vendor can not refuse shipment of drug based on reimbursement the vendor may: CAP vendor can not refuse shipment of drug based on reimbursement the vendor may: Contact the ordering physician to discuss the order Contact the ordering physician to discuss the order Seek an ABN from the patient Seek an ABN from the patient The vendor must send the drug regardless of whether or not they are able to obtain a signed ABN from the patient The vendor must send the drug regardless of whether or not they are able to obtain a signed ABN from the patient

10. Who Will Participate in CAP? PhysiciansVendors

11. Association of Community Cancer Centers www.accc-cancer.org How likely are you to participate in CAP?

12. Your decision to participate in CAP will be based on:

13. If you had to choose between CAP & sending Medicare patients elsewhere for treatment?

14. If the CAP vendor offered additional services such as an EMR or billing services for all payers would that affect your decision to participate in CAP?

15. Influencing Vendor Participation Vendor could capture and develop a database that is valued by health plans and manufacturers including: Vendor could capture and develop a database that is valued by health plans and manufacturers including: Drug utilization Drug utilization Dosing Dosing Diagnosis Diagnosis Treatment cost Treatment cost Strategic positioning with pharmaceutical companies, private payers, employer health plans and government programs Strategic positioning with pharmaceutical companies, private payers, employer health plans and government programs Market share increase Market share increase Practices might elect to have the CAP vendor supply and bill for all drugs, making up for losses on the Medicare side Practices might elect to have the CAP vendor supply and bill for all drugs, making up for losses on the Medicare side

16. Evaluating CAP Participation Key issues to consider: Key issues to consider: Ability to meet program requirements Ability to meet program requirements How will waste & returns be handled? How will waste & returns be handled? The percentage of patients on treatment who would be affected by CAP The percentage of patients on treatment who would be affected by CAP The percentage of your cost and revenue that would be impacted by participation in CAP The percentage of your cost and revenue that would be impacted by participation in CAP Top regimens used for Medicare fee-for-service patients Top regimens used for Medicare fee-for-service patients

17. Evaluating CAP Participation Are the drugs most frequently used by this patient population those drugs that represent a revenue loss at ASP + 6%? Are the drugs most frequently used by this patient population those drugs that represent a revenue loss at ASP + 6%? Include all rebates and discounts when comparing acquisition cost to reimbursement Include all rebates and discounts when comparing acquisition cost to reimbursement Will the drugs on those regimens be available through the CAP vendor? Will the drugs on those regimens be available through the CAP vendor? A complete list of drugs included in the CAP can be found in the Interim Final Rule A complete list of drugs included in the CAP can be found in the Interim Final Rule How often do you administer drugs on an emergency basis? How often do you administer drugs on an emergency basis? Supportive care drugs Supportive care drugs Antibiotics Antibiotics

18. Evaluating CAP Participation How will your contracts with pharmaceutical manufacturers and distributors/ GPO’s be affected? How will your contracts with pharmaceutical manufacturers and distributors/ GPO’s be affected? Contracts and rebates based on volume and/or market share Contracts and rebates based on volume and/or market shareExample: Purchases of $300,000 per quarter = 1% rebate Purchases of $500,000 per quarter =3% rebate Purchases of over $500,000 per quarter = 5% rebate If drugs purchased under CAP are removed from your total volume calculation is the loss of revenue through rebates and volume discounts greater than the savings achieved through CAP participation? If drugs purchased under CAP are removed from your total volume calculation is the loss of revenue through rebates and volume discounts greater than the savings achieved through CAP participation?

19. Evaluating CAP Participation If you outsource your billing how will CAP participation affect your contract? If you outsource your billing how will CAP participation affect your contract? Contracts based on a percentage of collections Contracts based on a percentage of collections Billing companies may want to renegotiate the contract based on: Billing companies may want to renegotiate the contract based on: Reduced collections Reduced collections Increased administrative burden Increased administrative burden If you pay B&O tax CAP would reduce tax burden If you pay B&O tax CAP would reduce tax burden

20. Evaluating CAP Participation Can technology currently in place in your office automate or streamline the transfer of information necessary for CAP? Can technology currently in place in your office automate or streamline the transfer of information necessary for CAP? Can your practice management system, EMR or drug inventory cabinet generate a document (electronic or hard-copy) containing all necessary information for ordering drugs through the CAP vendor? Can your practice management system, EMR or drug inventory cabinet generate a document (electronic or hard-copy) containing all necessary information for ordering drugs through the CAP vendor? Do you regularly generate a treatment order form (either electronically or hard-copy) for each new treatment? Do you regularly generate a treatment order form (either electronically or hard-copy) for each new treatment?

21. Evaluating CAP Participation Are practice efficiencies, effective claims and collections procedures in place? Are practice efficiencies, effective claims and collections procedures in place? If your practice is currently unable to file claims in 14 days you would not meet the billing requirements of CAP If your practice is currently unable to file claims in 14 days you would not meet the billing requirements of CAP Is your billing software program capable of storing and transmitting multiple prescription numbers? Is your billing software program capable of storing and transmitting multiple prescription numbers? Do you currently have an effective and efficient system and processes for handling denied claims? Do you currently have an effective and efficient system and processes for handling denied claims?

22. Evaluating CAP Participation Which staff member(s) will perform additional administrative duties for CAP? Which staff member(s) will perform additional administrative duties for CAP? CAP drugs will likely be ordered and received on a daily basis requiring additional staff time for: CAP drugs will likely be ordered and received on a daily basis requiring additional staff time for: Ordering and stocking drugs Ordering and stocking drugs Maintaining separate inventory – patient specific Maintaining separate inventory – patient specific CAP drugs must be delivered to the location at which they will be administered CAP drugs must be delivered to the location at which they will be administered Is the CAP vendor offering other valuable services? Is the CAP vendor offering other valuable services? CAP vendor can offer other services as long as it does not violate any Federal or State Law CAP vendor can offer other services as long as it does not violate any Federal or State Law

23. Evaluating CAP Participation In response to the question of whether a CAP physician can enter into an agreement with the CAP vendor to purchase drugs for their non- Medicare patients CMS states: In response to the question of whether a CAP physician can enter into an agreement with the CAP vendor to purchase drugs for their non- Medicare patients CMS states: “This interim final rule does not prohibit approved CAP vendors and physicians from entering into a contract or agreement governing their arrangements for the provision of CAP drugs or other items or services. However, parties to such arrangements must ensure that the arrangements do not violate the physician self-referral (‘‘Stark’’) prohibition (section 1877 of the Act), the Federal anti-kickback statute (section 1128B(b) of the Act), or any other Federal or State law or regulation governing billing or claims submission. For example, an agreement under which the approved CAP vendor provides billing services to a physician must comply with the Stark law, antikickback statute, and Medicare rules regarding billing agents (§ 447.10). On the other hand, an approved CAP vendor may not contract to furnish drugs at below market rates to a physician or a group for their private pay patients in exchange for the physician’s or group’s CAP business.”

24. Additional Information All relevant CAP information will be posted on the CAP web-page at: www.cms.hhs.gov/providers/drugs/compbid www.cms.hhs.gov/providers/drugs/compbid