Impact of Proposed Hospital Outpatient PPS Rule for 2008 On Drugs, Biologicals, and Radiopharmaceuticals
On July 16, 2007, the Centers for Medicare & Medicaid Services (CMS) released the proposed 2008 Hospital Outpatient Prospective Payment System Rule. Here is a summary of the major impacts that the proposed rule will have on drugs, biologicals, and radiopharmaceuticals.
Overall, payments made specifically for drugs, biologicals, and radiopharmaceuticals under the proposed hospital outpatient prospective payment system would fall by about $28 million in 2008 compared to 2007.
Estimated total direct payments for drugs experiencing payment reductions (or becoming packaged) would drop about $136 million while total direct payments for drugs experiencing increases would rise about $108 million.
These estimates need to be interpreted cautiously and in the context of the expanded packaging and bundling in the proposed rule. For example, the four items experiencing the largest reductions, totaling an estimated $86 million for the four (as shown in the table below), exhibit such large reductions because their payments will be packaged with the procedure. Although a direct payment will no longer be made for the packaged items, their cost is included in determining the payment amounts for the associated procedures; hospitals will be paid the bundled rate. This phenomenon has a significant effect in the drug impact tables because CMS is proposing to package all contrast agents and diagnostic radiopharmaceuticals.
| Q9949 | Low osmolar contrast material, 300-349 mg/ml iodine concentration, per ml | -$43.0 |
| Q9952 | Injection, gadolinium-based magnetic resonance contrast agent, per ml | -$20.6 |
| Q9950 | Low osmolar contrast material, 350-399 mg/ml iodine concentration, per ml | -$14.0 |
| Q9947 | Low osmolar contrast material, 200-249 mg/ml iodine concentration, per ml | -$8.4 |
| Total for the four | -$86.0 | |
Another area of caution is consideration of the payment rates for therapeutic radiopharmaceuticals. After two years of reimbursing these products based on billed charges adjusted to costs, the proposed rule sets payment amounts using mean costs calculated from 2006 claims data. Because the APC rates for 2007 do not show a payment amount for the therapeutic radiopharmaceuticals, the amounts shown for them in the 2008 proposed rule might appear to reflect large increases. In fact, the opposite is true. The proposed rates generally are substantially below hospitals’ costs for these items.
Proposed payment rates for drug administration services are higher, many by six to eight percent or more, resulting in an estimated aggregate increase of about $4.9 million.
Issues to consider for possible comments include:
- packaging of all contrast agents and diagnostic radiopharmaceuticals
- reduction of payment rate from ASP+6 percent to ASP+5 percent combined with no separate payment for pharmacy handling and overhead
- indexation of the packaging threshold and its increase to $60
- indication that CMS is considering greater packaging of drugs and biologicals for the future
- adequacy of payment amounts for therapeutic radiopharmaceuticals, including nuclear pharmacy preparation and handling costs
- adequacy of proposed rates for brachytherapy sources
- requirement that hospitals include separate charges for pharmacy handling and overhead on an appropriate revenue center line (charges can be shown for individual drugs or can be combined)
- intent to include pharmacy handling and overhead costs in the drug administration APC rates rather than in the drug APCs in the future when data are available from the required separate billing of those charges beginning in 2008.
Click here for detailed list of drugs, biologicals, and radiopharmaceuticals with HCPCS codes, APC number, 2008 proposed payments, and percentage change between 2007 and 2008.
Don Jewler, Communications Director
