Academy comments to CMS on the interim Final Rule with comment period, "Medicare Program; Competitive Acquisition of Outpatient Drugs and Biologicals Under Part B"

Mark B. McClellan, M.D.
Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Attention: CMS-1325-IFC
P.O. Box 8013
Baltimore, MD 21244-8013

Dear Dr. McClellan:

I am writing on behalf of the American Academy of Family Physicians, which represents more than 94,000 family physicians and medical students nationwide. Specifically, I am writing to offer our comments on the interim final rule with comment period, “Medicare Program; Competitive Acquisition of Outpatient Drugs and Biologicals Under Part B,” as published in the Federal Register on July 6, 2005.

The competitive acquisition program (CAP) is a statutorily created alternative payment methodology for currently covered Medicare Part B drugs, most of which are provided incident-to a physician’s service. Under the CAP, physicians obtain these drugs from vendors selected through a competitive bidding process, and the vendors submit claims to Medicare for the drugs after the physician has administered them. The physician, in essence, bears no financial risk for the drugs under the CAP. The other alternative is for physicians to directly purchase these drugs, as they do now, and receive payment from Medicare under the average sales price (ASP) system. Medicare covered vaccines are excluded from both the CAP and ASP systems and continue to be paid under the historical average wholesale price methodology.

As we have reviewed the interim final rule, it has become apparent to us that the CAP is not really an alternative at all for family physicians, since, in many ways, it does not fit the family medicine model of practice. For instance, CMS notes that it expects “to phase-in multiple drug categories, probably defined around the drugs commonly used by physicians’ specialties (for example, urology, rheumatology)” as it refines and develops the CAP. Such a strategy ignores the fact that family physicians and other primary care physicians diagnose and treat a variety of conditions that cross-over other single-organ-system specialties. Maintaining a broad, single category of drugs commonly furnished incident to physicians’ services, as is created in the interim final rule, would make the CAP more relevant to family physicians.

The operational aspects of the CAP also do not seem to fit the family medicine model. As we understand it, under the CAP, a physician must submit a written order to a CAP vendor for a specific drug to be administered to a specific Medicare beneficiary at a future date. The CAP vendor delivers the drug to the physician’s office within two days, after which the physician can administer the drug to the beneficiary in question. As part of the deal, the physician must maintain a separate electronic or paper inventory for each CAP drug maintained.

We do not believe this will work in most family physicians’ offices. Family physicians often administer drugs at the time of the initial encounter with the patient and delaying administration simply for the sake of the CAP program would make no sense. For example, a Medicare beneficiary in need of a joint injection does not want or need to be inconvenienced with a return visit to the physician two days hence when the injection could otherwise be given today. Likewise, most family physicians’ offices do not have the time, personnel, or other resources to maintain a separate electronic or paper inventory for each CAP drug administered.

The CAP program does include a provision under which a participating CAP physician may acquire drugs under the CAP to resupply his or her private inventory. However, all of the following provisions must be met to take advantage of this provision:

The interim final rule clearly suggests that resupply would be an exceptional circumstance, and the situations in which family physicians commonly administer drugs would not often meet all of these conditions (since the drugs are often administered in non-emergency situations). Thus, a provision of the CAP that might otherwise work for family physicians is unavailable to them in most cases.

Another way in which the CAP program is antithetical to family medicine is the requirement that the physician may not transport CAP drugs from one location to another. In essence, the physician must use the CAP drugs in the location to which they have them shipped. As CMS acknowledges in the interim final rule, this provision effectively prohibits physicians from administering CAP drugs in Medicare beneficiaries’ homes. This is another area in which the CAP program is at odds with family medicine, since family physicians are key providers of home visits to Medicare beneficiaries.

Given all the disadvantages of the CAP program from a family medicine perspective, we are also concerned about the CAP provision related to physicians in group practices. Under that provision, if a physician group practice using a group billing number elects to participate in the CAP, all physicians in the group are considered to be participating CAP physicians when using the group’s billing number. This means that family physicians in a multi-specialty group practice may be bound by the CAP if the group elects to participate in the CAP, despite its disadvantages to family physicians.

As may be obvious from our comments, we do not expect many family physicians will find the CAP to be a viable alternative to the ASP methodology that CMS otherwise uses to pay for covered Part B drugs furnished incident to a physician’s service. CMS apparently shares the same assessment; in the interim final rule, it estimates only 10,000 physicians will fill out an application for the CAP.

Thus, family physicians, indeed most physicians, are left with only one alternative: the ASP methodology. Unfortunately, that methodology also puts family physicians at a disadvantage. As an “average” sales price, it reflects volume discounts and other price incentives that family physicians, who often practice in solo or small group settings, cannot access. As such, payment at ASP plus six percent, the current rate under the ASP methodology, still does not cover family physicians’ cost in many instances. For instance, we have received complaints from some of our members that the Medicare payment rate for rocephin is well-below their cost.

We would have hoped that a true competitive acquisition program would have allowed family physicians to take advantage of the incredible market power that CMS could wield in purchasing covered Part B drugs. It is clear from the resupply exception, that it is administratively feasible for CMS to pay for covered Part B drugs in a way that makes more sense to family physicians than ordering the drugs two days in advance of administering them and tracking them separately from other drugs maintained in the office. Whether the limitations are statutory or regulatory, we believe CMS needs to make major changes in the CAP program, so it truly is an alternative to ASP for most physicians, rather than a mirage of the oasis it is for select physicians in select specialties that can meet its limited circumstances.

Thank you for the opportunity to comment on this aspect of the Medicare program.

Sincerely,


Michael Fleming, M.D.
Board Chair