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Lori Gardner, Senior Director
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For Immediate Release: August 15, 2005
Hospitals' Ability to Provide Quality Cancer Care to Medicare Beneficiaries May Be Weakened Under 2007 Medicare Proposed Hospital Outpatient Rule
Association of Community Cancer Centers Expresses Concerns About Rule's Impact
ROCKVILLE, Md.—The Centers for Medicare and Medicaid Services (CMS) released the proposed rule: Changes to the Hospital Outpatient Prospective Payment System and Calendar Year 2007 Payment Rates on August 8, 2006. While hospitals are scheduled to receive a 3.4 percent inflation update in Medicare payment rates in 2007 for outpatient services if they report quality measures, several of the specific provisions may weaken hospitals’ ability to provide quality cancer care to Medicare beneficiaries.
The rule sets the payment for acquisition and overhead costs of certain separately payable drugs and biologicals at the manufacturer’s average sales price (ASP) plus 5 percent, a reduction from the current rate of ASP plus 6 percent. Drugs and biologicals with pass-through status would be paid at the rate established under the Competitive Acquisition Program (CAP), if the drug is covered by the CAP, or ASP plus 6 percent. The CAP rates vary by drug, but often are less than ASP plus 6 percent. Therefore, the proposed hospital outpatient rates are significantly reduced from the current rates.
"The hospital outpatient department rule could adversely impact hospitals' ability to treat patients,” said Edward L. Braud MD, co-chair of ACCC’s Governmental Affairs Committee and a practicing physician in Springfield, Ill. “The rule may have significant consequences for Medicare patients and the hospitals that treat them. Hospitals are often the providers of last resort for patients who need advanced cancer care or other essential treatments, and inadequate reimbursement will have serious consequences for patient care. Inadequate Medicare payment rates for drugs may make it difficult for many hospitals to continue to offer critical cancer therapies. Should hospitals decide to close their infusion units entirely, the added strain on physician offices could be dire for patients.”
CMS is proposing to revise the APC payment structure for drug administration services, allowing hospitals to be paid separately for additional hours of infusion, in addition to their payment for the initial hour of infusion. Under the proposed policy, hospitals would be paid “more accurately for complex and lengthy drug administration services, while also receiving more appropriate payments for individual services when provided alone,” according to CMS. This stipulation may prove very important in partially offsetting the decrease in drug reimbursement rates; however, since no exact numbers have been released, physicians and hospitals will have to continue to monitor the situation to see the true financial impact. The proposed rule significantly cuts payment for both PET and PET-CT scans in calendar year 2007. ACCC is concerned about these and other reimbursement cuts in imaging services.
Hospitals would receive $32.5 billion in CY 2007 under the proposed rule that would revise policies and payment rates under the hospital outpatient prospective payment system (HOPPS) for outpatient services provided to Medicare beneficiaries. CMS estimates that hospitals will receive an overall average increase of 3.0 percent in Medicare payments for outpatient department services in 2007, but this will not mean that hospitals and physicians will not feel the decrease in drug reimbursement rates.
The Association of Community Cancer Centers (ACCC) continues to advocate for adequate reimbursement that will help to protect beneficiary access to care by maintaining aggregate Medicare hospital outpatient payments for drugs and biologicals. ACCC is undertaking a detailed analysis of the 2007 HOPPS proposed rule and will submit comments to CMS on behalf of the membership.