By Peter J. Webner RT(N),CNMT with Tamar Thompson, MS, CCS-CCS-P

The Centers for Medicare and Medicaid Services (CMS) issued its proposed payment policy rules and regulations for Calendar Year 2014 on July 8, 2013. Upon initial review of the proposed regulations, my reaction was positive. The Hospital Outpatient Prospective Payment System (OPPS) rates for SPECT and PET, as well as Oncologic PET, received substantial proposed payment increase over CY 2013 payment rates.

However, as I read on, I quickly realized that the CMS is really proposing policies that ultimately lead to comprehensive Ambulatory Payment Classifications (APC) bundling for not only the 29 devices mentioned in the rule but, in effect, for almost all services provided in the OPPS care setting. The removal of status indicator X and the addition of status indicator Q1 along with the bundling of drugs that function as supplies (including stress agents), the collapse of five levels of Evaluation and Management (E/M) codes into one "G" nomenclature code, bundling of add-on procedure codes, and the bundling of laboratory services, could have devastating effects for the hospital community.

Although the bundling proposals are significant, the most concerning issue is that for the first time since the inception of the OPPS, CMS failed to release the data files to compliment their proposals, leaving the public with no way to replicate the proposal to determine the true value of the positive increases in payment or determine the negative impacts of the seven categories proposed for greater bundling.

Some of the immediate issues that I considered for the nuclear medicine community were:

—Bundling of the stress agents detracts focus from clinical decisions (i.e. efficiency and side effects) and instead limits provider and patient choice based upon financial incentives. Previously a hospital had the option to choose the most appropriate stress agent and be reimbursed for the full cost (plus 6% for pharmacy overhead) for that choice in addition to payment for supervision/interpretation of the stress study. Under this proposal, the agency will bundle all of these services into a single payment.

—The elimination of radiopharmaceutical to procedure edits means that hospitals are less likely to continue to fully report cost associated with nuclear medicine procedures thereby resulting in payment erosion over time.

—Packaging policies drive toward the use of generic drug products, and this concept might seem reasonable when you consider that the Technetium based SPECT Myocardial Perfusion Imaging is off-patent and now generic or PET-based FDG or NAF. One notable exception to the bundling concept for a product that is no longer on patent is Rb82, where manufacturing, distribution, or cost recovery is a challenge since every site bears fixed costs for the generator but has variable volumes.

—However, as technological improvements allow the nuclear medicine community to move forward in accessing N13, C-11 Choline, and where the industry is looking toward new PET perfusion compounds in the ability to make the right clinical choice for the patient, this does become a challenge under the bundling concepts.

Ultimately, the challenge with bundling is that the CMS makes its payment policy decisions based upon hospital charge data submitted two years in retrospect and attempts to tease out what radiopharmaceuticals were used in conjunction with the packaged CPT codes. The agency then attempts to derive an average reimbursement rate. A past survey of hospital charge data showed that a dose of Sestamibi was reported to cost between $15 and $1,800, demonstrating that the hospital charge data is less than consistent, and the reported costs for radiopharmaceuticals vary widely from institution to institution.

Another good example of the disadvantages of bundling is white blood cell tumor imaging. If an institution chooses to use gallium or thallium, the reimbursement is very fair. However, if the best choice for the patient is the use of Prostascint, or Octreoscan, the drug costs far exceed the packaged reimbursement for the overall procedure. Based upon the system of averages used in the prospective payment system bundling algorithm, low volume of newer agents will always present a problem. Inherently, newer, specific agents will have lower volumes than higher volume. Therefore, the contribution to the margin for less specific agents in the overall payment package is nominal, creating a huge disparity resulting in lower financial incentives for use of an often more appropriate, but more expensive test.

Will the packaging policies proposed by the CMS policy hinder innovation for the imaging industry and its ability to develop new compounds? Further, even if industry can find ways to innovate, will the facility have the means to afford to use new treatment options? Full exploration and response to this question takes more time and word count afforded to us in this article, but let's examine a few current challenges that perhaps offer some insight into the thinking of the U.S. Department of Health and Human Services (HHS) and its vision to reshape health care in this country and how the Administration is leveraging the Medicare program as a catalyst for change.

Today, the CMS discriminates among radiopharmaceuticals. It allows new diagnostic and therapeutic products to enter the market and enjoy separate payment under a policy called "pass-through" for up to three years. When the "pass-through" period expires, diagnostics are bundled while therapeutics continue to be separately reimbursable. For most manufacturers, reimbursement is a tremendous hurdle. Approval by the U.S. Food and Drug Administration (FDA) does not guarantee reimbursement. A great example of this issue is Eli Lilly's compound Amyvid. Amyvid received approval of its New Drug Application (NDA) more than one year ago and in July of this year the CMS only further complicated reimbursement concerns for Lilly by publishing a proposed National Coverage Decision (NCD) memo proposing to only allow very limited coverage for Amyvid. The agency concluded that the evidence does not support routine payment for use of the scan to "rule out" Alzheimer's in patients with early signs of dementia.

The proposed coverage decision goes on to limit payment for the scan solely to use in clinical trials that are intended to demonstrate the value of the test in some tangible measure of clinical utility — or to enrich a patient population for development of a potential therapeutic.

The current and recently proposed reimbursement policies indeed pose a great challenge to innovation and medicine's drive toward personalize health care which includes the use of more specific diagnostic radiopharmaceutical compounds. If given the choice, most of us would likely want all radiopharmaceuticals to be paid as specified covered outpatient drugs (SCOD) and in the same fashion as most other drugs in addition to a fair payment rate for the procedure because we know that performing the least costly test often does not provide the physician or the patient with the information needed to arrive at the most appropriate care outcome, and negatively affects specialty and tertiary care centers which see higher volumes of rarer diseases.

At the end of the day, the federal government makes it clear that it intends to limit (and possibly eliminate) reimbursement for new technologies (drugs and devices) upon FDA approval if that technology does not meet an alternate set of clinical data requirements designed to also satisfy the government as a health care purchaser (CMS). Commenting on the proposed rules and regulations is always a great way to make your voice heard and to get your position on record. If you want to submit a comment on the proposed 2014 rule, post your comment at www.regulations.gov. Conversely, true federal affairs and coalition strategies are needed to preserve a successful pathway toward nuclear medicine innovation. The comment deadline is close of business September 6, 2014.

Peter J. Webner is vice president of business and clinical development at Zevacor Molecular, a healthcare firm that manufactures PET and SPECT Radiopharmaceuticals.

Tamar Thompson is a health policy and reimbursement strategist with an extensive background in reimbursement strategy for cutting-edge molecular diagnostic and therapeutic treatments options. She's currently vice president at ADVI.