As we related on Friday afternoon, the Centers for Medicare & Medicaid Services (CMS) released the final rule on the 2010 Medicare Physician Fee Schedule.  The good news is that through the political outreach of community oncology practices, the severe payment cuts planned for 2010 were averted; however, CMS will implement annual cuts impacting community oncology through 2013.  These will include reimbursement reductions to drug administration, consultations, and diagnostic imaging.  Fortunately, cuts to therapeutic radiation were averted and not included in the final rule.

The Community Oncology Alliance (COA) worked through the weekend to provide you with a tool to estimate the impact of the Medicare cuts on your practice.  Go to the COA website at www.communityoncology.org under Immediate Action Needed to access this modeling tool.  It is very easy to use.

COA Analysis of Actual Practice Data — Overall Impact

Relying on data from approximately 15 community oncology practices around the country, COA has used this tool to corroborate the macro impact numbers provided by CMS and to show the details behind these numbers.  The following results will provide a benchmark for your practice. 

Drug administration payments will be cut by approximately 5% in 2010.  Additionally, consultation codes will be eliminated but offsetting a portion of these cuts is an increase in E&M codes to boost primary care payments.  The net is that the typical oncology practice should see a reduction of 1% in Medicare services payments in 2010.

Drug administration payments will then be cut each year such that by 2013 the cuts will be 19%.  Although increased E&M payments will partially offset these cuts, they will still result in a 6% cut in Medicare services by 2013.

You need to understand a few factors that may make these cuts substantially worse.  First, these numbers assume that Congress acts to avert the 21.5% general physician payment cut for 2010.  If Congress does not act, the net reimbursement cuts will be 22% in 2010 and by 2013 will reach a cut of 26%.  Second, even if Congress acts to avert the 21.5% reimbursement reduction, CMS may still change the conversion factor such that the cuts in 2010 will be greater.  This is what occurred earlier this year when Congress acted to avert the 10.6% cut with a 0.1% increase.  Practices saw their drug administration payments drop by 2-4%.

Also, understand that these changes in the codes used by Medicare will also impact private payer reimbursement to the extent they use Medicare codes, although their conversion factors may vary.  And CMS is removing the geographic practice cost index floor so, depending on your practice’s location, your payment reductions may be slightly greater.

Diagnostic imaging cuts are not modeled in this tool but are reported to be as great as 38%.

What Did CMS Do to Oncology-Specific Reimbursement and Why?

CMS did two things that averted the severe cuts planned for 2010.  First, CMS decided not to implement the AMA survey for oncology but instead fell back to the current ASCO/Lewin data that has been in use since 2004, after passage of the Medicare Modernization Act of 2003.  Rather than result in a 21% cut based on the AMA survey, the ASCO/Lewin data results in the 19% cut, so this helped just a little bit.  A key factor here is that CMS has decided to phase in the cuts over a 4-year period.  This averted a severe decline in reimbursement for 2010 but is still unacceptable because any further cuts to the service component of cancer care is inappropriate.  Data from the COA Components of Care Study shows that Medicare only pays for half of the costs of cancer care services.  

The outreach of so many community oncology practices was instrumental in the CMS decision.  With the health care debate raging in DC, everything is about politics.  The letters generated by individual Representatives and Senators capped by the massive outreach of the community in getting one letter signed by 113 Representatives to HHS Secretary Sebelius sent a clear message.  Additionally, the importance of the meeting that practice administrators from the COA Administrators’ Network had with HHS/CMS staff accompanied by health staff from key congressional offices cannot be underscored enough in the political outreach effort.  

As we have said, no cuts to cancer care are acceptable, especially those that cut payment to the one service component distinct to oncology; that is, administration of chemotherapy. COA intends to continue to fight this hard and has already heard from practices across the country encouraged that the severe cuts to 2010 have been averted but upset at the cuts still planned through 2013.

As was just proved, the engagement of your Representatives and Senators is critical. It works!  We will provide specific details on next steps in another email this week.