Life Science Compliance Update

December 20, 2016

CMS Scraps Part B Demo


On Thursday, December 15, 2016, the Centers for Medicare & Medicaid Services decided not to go forward with the agency’s controversial Part B payment proposal, noting that “there was a great deal of support from some,” but there were “a number of stakeholders” who “expressed strong concerns about the model.” The spokesman continued, “While CMS was working to address these concerns, the complexity of the issues and the limited time available led to the decision not to finalize the rule at this time. We appreciate the robust dialogue with our stakeholders on this important topic and value the feedback on this proposal and other CMMI [Center for Medicare & Medicaid Innovation] models.”

Medicare Part B pays for drugs that are administered in a physician's office or hospital outpatient department. Currently, Medicare pays the physician the drug's average sales price (ASP) plus a 6% add-on payment. But CMS officials argued that because of that payment structure, physicians may be incentivized to choose a higher-priced drug.

The proposed demonstration project, outlined in a proposed rule, would have reduced the add-on payment to 2.5%, but also added a flat fee of $16.80 per drug per day. The flat fee would be updated at the beginning of each year. According to CMS, “the proposal was intended to test whether alternative drug payment structures would improve the quality of patient care and the value of Medicare drug spending.”

Positive Feedback

The decision saw mostly positive feedback from industry and medical professionals.

Sharad Lakhanpal, MBBS, MD, president of the American College of Rheumatology applauded the decision, “We thank CMS for listening to the rheumatology community’s concerns about the negative and disproportionate impact this proposal would have on our Medicare patients living with rheumatic diseases by not moving forward with this [project]. This positive outcome will help ensure Medicare beneficiaries living with rheumatic diseases are able to continue receiving the therapies they need to manage their chronic conditions and avoid pain and disability.”

Ted Okon, executive director of the Community Oncology Alliance, released a statement, saying, “Cancer patients and their providers across the country can breathe a sigh of relief now that the Part B experiment on cancer care is finally dead. It was encouraging to have such strong support from Congress to end this proposed model that was, at best, an overreach by CMS, created with no stakeholder input.”

The American Medical Association (AMA) also expressed pleasure with the decision, with AMA president Andrew Gurman, MD, releasing a statement, “This is a model for how Washington should – but often doesn’t – work. When CMMI made the recommendation to make changes to Medicare Part B, CMMI and CMS officials welcomed feedback. The AMA and others explained how the proposal would hurt patient care. CMMI then re-evaluated its original proposal, resulting in the announcement that CMS would not go forward with these changes. We are grateful that CMS came to the right decision after listening to stakeholders.”

Dr. Gurman also added, “The Innovation Center can be a valuable tool in developing innovative health care payment and service delivery models. We look forward to continue working with it as Washington grapples with ways to implement MACRA [the Medicare Access and CHIP Reauthorization Act] and to reform healthcare payment systems.

Negative Feedback

Not everyone was happy with the CMS decision, however, including the Medicare Rights Center. “Some inside the beltway will call this a victory,” said Joe Baker, president of the Medicare Rights Center. “But let’s be 100% clear – people with Medicare are not the winners here. Our helpline counselors will continue taking calls from distraught seniors and people with disabilities who simply cannot afford soaring prescription drug prices. The new Administration, Congress, and many decision-makers in Washington would do well to live a day in the lives of these callers.”

December 15, 2016

Updated Medicare and Medicaid Drug Spending Data Released


On November 15, 2016, the Centers for Medicare and Medicaid Services (CMS) released updated Medicare and Medicaid drug spending data, to include information for calendar year (CY) 2015 through its online interactive dashboards for Medicare and Medicaid. The inclusion of the Medicaid drug spending data on the public dashboard is new this year, as is the addition of high-level (aggregated) Medicare drug rebate data.

CMS noted that “there is significant growth in spending on prescription drugs, representing a significant burden.” In CY 2015, total prescription drug costs amounted to roughly $457 billion – an estimated 16.7 percent of personal health care spending. “This is up from $367 billion, or 15.4 percent of personal health care spending in 2012. With annual growth expected to average 6.7 percent annually for 2025, [CMS] expect[s] increasing costs to continue to put pressure on families and programs that cover prescription drugs.”

The dashboard provides spending, utilization, and other trend data for the drugs chosen to be included in the dashboards. CMS selected drugs for inclusion that met the following criteria: (1) drugs with high spending on a per user basis (Medicare) and drugs with high spending on a per prescription fill basis (Medicaid); (2) drugs with high total program spending; and (3) drugs with high costs increases in recent years.


CMS identified a total of eighty drugs for inclusion on the dashboard: 40 Part D drugs, and 40 Part B drugs. Even though eighty is a “relatively small set of medications,” their overall inclusion on the dashboard “represents a very large proportion of program spending, including 34 percent of all Part D spending and 69 percent of Part B drug spending in 2015, which was similar to the 2014 drug dashboard.” The dashboard also includes aggregated Part D manufacturer rebate information for CY 2014, with CY 2015 data to be incorporated once available.

The Part D drugs with the highest total spending in CY 2015 were: Spiriva, Advair Diskus, Crestor, Lantus/Lantus Solostar, and Harvoni. Spiriva, Lantus, and Harvoni are new additions to the CY 2015 list, as compared to CY 2014. (See below chart).


The Part B drugs with the highest total spending in CY 2015 were: Lucentis, Remicade, Neulasta, Rituxan, and Eylea. This is the same group of five drugs with the highest Part B spending in CY 2014. (See below chart).



For the Medicaid dashboard, CMS identified 70 drugs for inclusion on the dashboard (roughly 41 percent of Medicaid covered outpatient drug spending in 2015).

The drugs with the highest total Medicaid spending in CY 2015 were: Abilify, Harvoni, Humira/Humira Pen, Lantus/Lantus Solostar, and Vyvanse. The below chart shows trends in Medicaid total spending for the top five drugs in 2015.


CMS also went a step further, highlighting the top five drugs with the largest increases in average cost per unit from CY 2014 to CY 2015. Ativan had the largest increase in cost per unit at 1,264 percent and a spending increase from $1.7 million to $5.3 million. All five of the below drugs, as shown below, had increases in cost per unit of more than 400 percent.


December 07, 2016

Tips for Avoiding Claim Denials Related to ICD-10


On October 1, 2016, the ICD-10 coding grace period came to an end and physicians are no longer able to submit unspecified codes on certain Medicare claims. With the end of the grace period just behind us, it is too soon to tell whether it has led to an increase in post-payment audits or quality reporting errors, but it has been predicted that one or both of those will happen.

ICD-10 Coding Changes

The organized medical community protested the ICD-10 codes that are more numerous, longer and more exact than the ICD-9 code set they are replacing. The new codes extend to seven characters, with a category code of for the basic condition, followed by four more characters to indicate its etiology, location, and laterality, just to name a few.

CMS has claimed that the new codes will modernize patient care and research and work to prevent billing fraud.

Since October 1, 2015, providers have been given quite a bit of leeway from Centers for Medicare and Medicaid Services (CMS) on their ICD-10 claims. During the grace period, CMS did not reject claims solely on the basis of specificity, but did require claims to include a valid code from the correct ICD-10 family. For example, a claim for chronic gout would have been paid if the physician or coder at least gets the M1A part of the code right, but misses on the cause, body location, or tophus.

Slavitt’s Take

CMS Acting Administrator Andy Slavitt wrote a blog post on February 24, 2016, about the early results from the ICD-10 changeover. He noted that “the ICD-10 implementation had all the hallmarks of how CMS could drive a successful implementation and aim for excellence. The approach we took, which has become our doctrine for getting things done, had four major elements.” Those four elements were: (1) be customer focused; (2) be highly collaborative; (3) be responsive and accountable; and (4) be driven by metrics.

He included a chart showing the Final 2015 ICD-10 Claims Dashboard Medicare Fee-for-Service Metrics, as proof of how serious CMS is taking metrics.


Tips to Avoid Claim Denials

The following are some tips for physician practices to prepare and avoid claim denials:

  1. Be specific. Documentation is used for more than just billing. According to Ann Bina, vice president of compliance fulfillment at West Salem, Wisconsin’s Compliance Specialists, noted that “from a continuity of care and a risk management standpoint, documenting to the highest specificity is in the best interest of all providers.”
  2. Pay attention to trends in denials. Once we start seeing denial trends, they can be red flags and practices must make sure to keep an eye out for accounts receivable unpaid charges and denials to flag potential issues.
  3. Emphasize ICD-10 codes that focus on quality initiatives. Rhonda Buckholtz, vice president of strategic development at Salt Lake City’s AAPC, believes that it is particularly vital for practices to discuss and understand how to use codes to the highest level of specificity reporting co-morbid conditions when necessary for patients with complex care needs.


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