HCFA Reevaluations May Affect Chemo Administration Cost Codes

January 1, 1996
Volume 5, Issue 1

PITTSBURGH--The Health Care Financing Administration's current re-evaluation of reimbursements for physician work and practice expenses could have "a major impact" on chemotherapy administration cost codes, Joseph S. Bailes, MD, said at the Association of Community Cancer Center's 1995 Oncology Symposium.

PITTSBURGH--The Health Care Financing Administration's currentre-evaluation of reimbursements for physician work and practiceexpenses could have "a major impact" on chemotherapyadministration cost codes, Joseph S. Bailes, MD, said at the Associationof Community Cancer Center's 1995 Oncology Symposium.

Dr. Bailes, chairman of the ASCO Clinical Practice Executive Committee,explained that HCFA is required by law to re-evaluate physicianwork values and make changes effective January 1, 1997. In addition,Congress has ordered the agency to develop a more accurate methodto reflect practice expenses, and have that method in place byJanuary 1, 1998.

Most important for Medicare provider reimbursement is the practiceexpense component, Dr. Bailes said. Practice expenses are currentlybased on average allowed historical charges. HCFA is doing a surveyof 3,000 physician practices that their expert panels will useto determine new codes for practice expenses.

"In theory, the new method will shift money from specialtieswhere practice expense is overpaid, ie, surgical, to those whereexpenses are underpaid, ie, nonsurgical," Dr. Bailes said.

Because there is no scientifically accurate methodology to determineindirect costs, HCFA is focusing on direct costs. Therefore, thepractice expense component for chemotherapy administration willdepend on whether oncology office indirect costs are allocatedto visits or to chemotherapy administration, he said.

"There is a downside risk to changes in chemotherapy administrationcost codes: Suppose they take hoods, chemo chairs, specializedinfusion areas, etc, and allocate those across all 7,000 servicecost codes. Odds are this will lower the chemo administrationcode price. We believe these should be separate, that indirectcosts should be allocated directly to the chemo administrationcodes," he said.

Another HCFA initiative may impact payment for cancer drugs. HCFA'sCarrier Work Group for Cancer Drugs is trying to develop a nationalpricing mechanism that would estimate acquisition costs and paythose amounts.

"If HCFA comes up with a way that is workable, most privateinsurers will adopt that same method rapidly, as they did withthe RBRVS [resource-based relative value scale] and DRGs [diagnostic-relatedgroups]," Dr. Bailes said.