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State eyes $7.4 mil savings by adjusting physician-administered drugs
e-Reports, April 19, 2010
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The ISMA is submitting comments and you’re urged to do the same.
Also prepare for changes in Medicaid reimbursement – mostly downward – for injectible drugs.

The Office of the Secretary of Family and Social Services Administration (FSSA) announced in the Indiana Register and a Medicaid bulletin a proposal “to modify reimbursement for physician-administered drugs” or J codes. The ISMA wants to make certain Medicaid physicians are aware of this upcoming change and send comments addressing it.

While state officials refer to this change as a modification or adjustment, the reality is an average 12.5 percent cut in reimbursement for 524 of the 539 J codes for physicians who use injectible drugs. The exact percentage depends on the volume of these medications used in your practice.

“This will have significant impact on practices statewide in delivering these much-needed medications as a service to patients,” said Mike Rinebold, ISMA’s director of Government Relations.

Deemed necessary to avoid a budgetary shortfall, the new rates become effective May 1 and are based on 105 percent of the published wholesale acquisition cost (WAC) of the benchmark National Drug Code. FSSA indicated the change is necessary because of the phase-out of publication of the average wholesale price (AWP), coming in September 2011. Current J codes are based on the lowest AWP.

Physicians respond
ISMA Past President Bernard J. Emkes M.D., medical director of Managed Care Services for St. Vincent Health, said, “We all know volume drives acquisition cost, so buying certain of these products in smaller quantities might result in ACTUAL acquisition costs being higher than AVERAGE acquisition costs. In such cases, reimbursement could be set below actual cost.”

Dr. Emkes is concerned about whether smaller offices can actually buy these products at the stated ASP or WAC. It’s difficult for the ISMA or anyone to determine what practices or physicians will be impacted the most since cost is determined by volume discounts.

In Merrillville, Bharat Barai, M.D., has one of the larger oncology practices in the state, Premier Oncology/Hematology Associates. Dr. Barai told the ISMA, “Historically, Medicaid has paid less for office visits and physician-administered drugs. What physicians were able to receive under Medicaid for office-administered drugs helped offset the poor reimbursement for the office visit.

“By adjusting the amount of the office administered drugs for practices such as mine, we will find it very difficult to cover administration and overhead expenses.”

Registering your objection
The ISMA prepared comments on these changes, at the direction of the Physician Medicaid Task Force. The ISMA urges you to register your opinion.

Send comments to:

IFSSA, Office of Medicaid Policy and Planning 
Attention: Yvonne Burke 
402 W. Washington St., Room W374 
P.O. Box 7083 
Indianapolis, IN 46207-7083

Identify your correspondence with the notation: “Comment Re: Physician-Administered Drugs Reimbursement Change.”

Find the proposed rates on this Web site. Read the Medicaid Bulletin on this issue here.

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