February 21, 2001
Dear Fellow Allergists:
We received many telephone calls and other communications relative to our recent letter explaining the change in Medicare billing for allergen extract under CPT code 95165. The purpose of this letter is to explain the background for the changes.
FIRST - It is important to understand the "how" and "why" of the changes in Medicare policy.
- 1994 - Congress enacted a law which required Medicare to develop a method for reimbursing the practice expense component of the Medicare fee schedule using a resource-based system To implement this, it was necessary for HCFA to evaluate the actual costs of providing each service paid for by Medicare. This requirement took effect January 1, 1999 and is being phased in over 4 years.
- May, 1998 - HCF A, without notice and without any rationale, changed the definition of a "dose" for purposes of billing under CPT code 95165, This change effectively decreased allergists' income from allergy extract for Medicare patients Sponsoring because doses from two or more different vials were counted as one dose instead of two or more. This change was enacted without any consultation with the allergy community and without any notice or opportunity for comment.
- MAY 1998 - SEPTEMBER 2000 : JCAAI worked to get HCF A to Board of Directors: change its policy on the definition of dose, We essentially hit a brick wall until new staff at HCFA agreed to meet with us in the summer of 2000. At this meeting, HCFA "dropped a bomb" on us, based on actual cost, they are no longer willing to pay for dilutions since IN THEIR VIEW they have already paid for the antigen once when they pay for the concentrated vial from which the dilutions are made. This conclusion is based on HCFA's review of cost data which demonstrates that approximately 80% of the total cost of a dose of extract is the cost of the allergen itself with only 20% representing clinical staff time, administrative overhead, supplies, etc. For example, allergen costs per cc are $6.05; nurse time is $0.92 per cc; supplies are even less. HCFA told us that the incremental costs incurred in making dilution vials were not sufficient for them to pay for these dilutions separately.
- HCFA also agreed to change the definition of dose as we have explained it below. The new rule recognizes that there are certain allergens which cannot be mixed in the same bottle and that placing too many allergens in one vial will result in insufficient amounts of specific allergens being administered to patients to achieve an appropriate therapeutic result.
- JCAAI is currently developing cost information for these incremental costs of preparing dilute vials in an effort to convince HCF A to allow some payment for the additional physician work, staff time and supplies.
- However, it seems that HCF A may have a point with respect to not paying the same amount for a diluted vial as for concentrate, since the cost of extract in the diluted vial is much less than the concentrated vial. We do not believe we can convince HCF A to completely reverse its decision with respect to dilutions, but we are hopeful HCF A will agree to a reasonable reimbursement for vial dilutions. If any JCAAI member believes they have a good argument to help convince HCF A to reverse their decision, we would be very happy to hear it and present it to the staff at HCF A.
- The rule change in the recent FEDERAL REGISTER, became effective January 1, 2001. However, the rule must be explained to the various Medicare Carriers and Intermediaries so that enforcement of the new rule will be the same over the entire country .We have not seen HCF A ' s carrier instructions, except as I will indicate at the end of this paragraph, therefore our answers to your questions are our best efforts at analysis of the FEDERAL REGISTER. When the "carrier instruction" is issued, it may cause us to change our advice and if it does, we will notify you. The only carrier instruction released changes our ability to bill for allergen extract for Medicare patients from 12 weeks to 12 months and the carriers were instructed to pay in 1 cc amounts for the doses, but the major carrier instructions are still to come.
Remember, this rule applies only to Medicare insured patients. Remember also, that our initial advice, which we continue to believe is correct, is that however you make doses for the rest of your patients, you need to change to making treatment sets for your Medicare patients. This would involve making one bottle of "concentrate" (defined below) containing the antigens necessary for the individual patient and then making serial dilutions if necessary. While you may bill for the concentrate vial(s) when the patient receives the first injection from any dilution made from that concentrate, or a shot of the concentrate (if they have been built up to that level) you may not bill again until you make up the next bottle of concentrate and handle it in the same way as just described.
- What is the definition of "concentrate"?
We believe HCF A considers this to refer to the highest concentration of allergen you expect the patient to receive at "maintenance dosage".
- What is the definition of a "dose"? This term has two definitions. In allergy practice, it means the amount of allergen administered to a patient in one syringe at one time. There is no requirement from anyone as to how much allergen you may administer to a patient at anyone time. This is a clinical judgment.
The second definition is the HCF A definition for payment purposes only. They calculated our reimbursement based upon the cost to prepare "lcc." This has nothing to do with how much you administer. It is merely most convenient for HCF A to calculate antigen costs and administrative overhead (defined above) in 1cc amounts. If they had to calculate this in .5cc amounts, they would merely reduce the payment by 50%. Thus the Medicare payment of approximately $10.33 is for 1cc amounts referred to as doses. If they recalculated this for .5cc amounts, the reimbursement would then change to approximately $5.16.
We recognize this may result in significant income change for allergists. We have attempted to get fair reimbursement for all of us. We would welcome any additional thoughts/arguments from any of you which might help us get HCF A to correct this negative effect on all of our incomes.
We know there are many additional questions, but we wanted to get this information to you in the hopes that it would clear up the major areas of confusion. We also want you to know that we do continue to work with a great deal of effort to protect all of our common interests.
Sincerely,
David F. Graft, MD
JCAAI President
Donald W. Aaronson, MD
Acting Executive Director
Gary N. Gross, MD
Exec. Vice President
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