Evaluating CAP Participation

1. Evaluating CAP Participation ANCO 2005 Annual Meeting Yosemite Risë Marie Cleland President, Oplinc Rise@Oplinc.com

2. Agenda • ASP in 2006 • ASP issues • CAP & ASP • CAP Issues • Physicians • Vendors • Practice Determinations

3. ASP Issues Going Forward • Two quarter lag continues • Where are you on ASP scale? • High volume purchaser • Exclusive contracts – formularies • Some ASP +6% rates below cost • Current OIG “audits”

4. CAP & ASP • CAP pricing included in the Average Sales Price (ASP) calculation • Section 1847A of the Social Security Act • ASP will decrease in proportion to the volume of drug sold at the CAP price • US Oncology? • CAP pricing extended to all customers? • “Under-water” ASP adjustments • Physicians referred to the CAP

5. CAP Viability • Will CAP be implemented? • Section 303(d) of the MMA of 2003 requires the implementation of a competitive acquisition program for Medicare Part B drugs not paid on a cost or prospective payment system basis • Other specialties are supportive • Nephrology • Internal Medicine • Mental Health • Infectious Disease

6. CAP Drugs • One category of CAP drugs including most of the drugs now administered “incident to” in the oncology clinic. • Oncolytics • Chemotherapy adjuncts • Anti-emetics • Hematologics • Drugs in the HCPCS J9000 series (with the exception of J9999) • The following drugs will not be included: • Drugs that don’t meet the claims volume threshold; • Drugs billed with the not otherwise classified code (NOC); • Depot Lupron • Immune globulins • Drugs administered through DME • Orphan drugs

7. CAP Issues for Physicians & Patients: • Off-label use • How will vendor react to “medical necessity” denials? • Practice must appeal these denials • Possible negative impact on referrals • Non-CAP providers sending pts elsewhere for treatment • Impact on ancillary services • Patient assistance/ drug replacement programs

8. Delivery of Drugs • Refusal to ship drug when copay is late • How will physician be notified of the action? • Will site-of-care be affected? • Pt must pay invoice within 45 days of postmark • Request for financial assistance info provides a 15 day extension • The Physician may opt out of CAP if he/she wishes to continue treatment of this patient under “buy & bill” • Must opt out for all Medicare patients • If group practice the practice opts out

9. Delivery of Drugs • Drugs are to be shipped in unopened manufacturers packaging • Packages containing multiple individual units may be divided & shipped in unopened individual vials. • CAP vendor can not refuse shipment of drug based on reimbursement the vendor may: • Contact the ordering physician to discuss the order • Seek an ABN from the patient • The vendor must send the drug regardless of whether or not they are able to obtain a signed ABN from the patient

10. Who Will Participate in CAP? Physicians Vendors

11. How likely are you to participate in CAP? Association of Community Cancer Centers www.accc-cancer.org

12. Your decision to participate in CAP will be based on:

13. If you had to choose between CAP & sending Medicare patients elsewhere for treatment?

14. If the CAP vendor offered additional services such as an EMR or billing services for all payers would that affect your decision to participate in CAP?

15. Influencing Vendor Participation • Vendor could capture and develop a database that is valued by health plans and manufacturers including: • Drug utilization • Dosing • Diagnosis • Treatment cost • Strategic positioning with pharmaceutical companies, private payers, employer health plans and government programs • Market share increase • Practices might elect to have the CAP vendor supply and bill for all drugs, making up for losses on the Medicare side

16. Evaluating CAP Participation • Key issues to consider: • Ability to meet program requirements • How will waste & returns be handled? • The percentage of patients on treatment who would be affected by CAP • The percentage of your cost and revenue that would be impacted by participation in CAP • Top regimens used for Medicare fee-for-service patients

17. Evaluating CAP Participation • Are the drugs most frequently used by this patient population those drugs that represent a revenue loss at ASP + 6%? • Include all rebates and discounts when comparing acquisition cost to reimbursement • Will the drugs on those regimens be available through the CAP vendor? • A complete list of drugs included in the CAP can be found in the Interim Final Rule • How often do you administer drugs on an emergency basis? • Supportive care drugs • Antibiotics

18. Evaluating CAP Participation • How will your contracts with pharmaceutical manufacturers and distributors/ GPO’s be affected? • Contracts and rebates based on volume and/or market share Example: Purchases of $300,000 per quarter = 1% rebate Purchases of $500,000 per quarter =3% rebate Purchases of over $500,000 per quarter = 5% rebate • If drugs purchased under CAP are removed from your total volume calculation is the loss of revenue through rebates and volume discounts greater than the savings achieved through CAP participation?

19. Evaluating CAP Participation • If you outsource your billing how will CAP participation affect your contract? • Contracts based on a percentage of collections • Billing companies may want to renegotiate the contract based on: • Reduced collections • Increased administrative burden • If you pay B&O tax CAP would reduce tax burden

20. Evaluating CAP Participation • Can technology currently in place in your office automate or streamline the transfer of information necessary for CAP? • Can your practice management system, EMR or drug inventory cabinet generate a document (electronic or hard-copy) containing all necessary information for ordering drugs through the CAP vendor? • Do you regularly generate a treatment order form (either electronically or hard-copy) for each new treatment?

21. Evaluating CAP Participation • Are practice efficiencies, effective claims and collections procedures in place? • If your practice is currently unable to file claims in 14 days you would not meet the billing requirements of CAP • Is your billing software program capable of storing and transmitting multiple prescription numbers? • Do you currently have an effective and efficient system and processes for handling denied claims?

22. Evaluating CAP Participation • Which staff member(s) will perform additional administrative duties for CAP? • CAP drugs will likely be ordered and received on a daily basis requiring additional staff time for: • Ordering and stocking drugs • Maintaining separate inventory – patient specific • CAP drugs must be delivered to the location at which they will be administered • Is the CAP vendor offering other valuable services? • CAP vendor can offer other services as long as it does not violate any Federal or State Law

23. Evaluating CAP Participation • In response to the question of whether a CAP physician can enter into an agreement with the CAP vendor to purchase drugs for their non-Medicare patients CMS states: “This interim final rule does not prohibit approved CAP vendors and physicians from entering into a contract or agreement governing their arrangements for the provision of CAP drugs or other items or services. However, parties to such arrangements must ensure that the arrangements do not violate the physician self-referral (‘‘Stark’’) prohibition (section 1877 of the Act), the Federal anti-kickback statute (section 1128B(b) of the Act), or any other Federal or State law or regulation governing billing or claims submission. For example, an agreement under which the approved CAP vendor provides billing services to a physician must comply with the Stark law, antikickback statute, and Medicare rules regarding billing agents (§ 447.10). On the other hand, an approved CAP vendor may not contract to furnish drugs at below market rates to a physician or a group for their private pay patients in exchange for the physician’s or group’s CAP business.”

24. Additional Information All relevant CAP information will be posted on the CAP web-page at: www.cms.hhs.gov/providers/drugs/compbid