Download 0316065.01 - Society of Nuclear Medicine

NUCLEAR
MEDICINE APC
TASK FORCE
1850 Samuel Morse Drive
Reston, VA 22090-5316
(703) 708-9000
Fax: (703) 708-9015
Academy of Molecular Imaging
American College of Nuclear Physicians
American College of Radiology
American Society of Nuclear Cardiology
Council on Radionuclides and Radiopharmaceuticals, Inc.
National Electrical Manufacturers Association
Society of Nuclear Medicine
Society of Nuclear Medicine - Technologist Section
November 19, 2002
Via Facsimile and Federal Express
Thomas A. Gustafson, Ph.D.
Director, Purchasing Policy Group
Centers for Medicare and Medicaid Services
MS C4-01-26
7500 Security Boulevard
Baltimore, MD 21244-1850
Dear Dr. Gustafson:
We are reviewing the November 1, 2002 Federal Register final rule on the
Medicare hospital outpatient prospective payment system (HOPPS) for 2003. There are a
number of issues very important for nuclear medicine which merit closer attention dealing
with placement of nuclear medicine procedures into the nuclear medicine APCs and
packaging of radiopharmaceuticals. On November 8, we submitted to CMS an initial
request for clarification and will be developing more detailed comments and
recommendations.
An immediate priority for the Nuclear Medicine APC Task Force is CMS’ very sharp
change in policy for radiopharmaceuticals, classifying these drugs as diagnostic tests or
radioactive isotope therapies. The attached position paper strongly urges CMS to
reconsider this dramatic reversal in prior CMS policy and we request an opportunity to
meet with you at a mutually convenient time on December 12 or 13. We will contact your
office to determine an appropriate time and date.
We look forward to discussing these priority issues with you in the near future.
Sincerely,
/s/
Kenneth A. McKusick, M.D., FACR, FACNP
Chair
Enclosure
Nuclear Medicine APC Task Force
Thomas A. Gustafson, Ph.D.
May 5, 2017
Page 2
cc: Cindy Read
Paul Rudolf, M.D., J.D.
Joan H. Sanow
(w/encl.)
November 19, 2002
Summary Comment to CMS on
Change in Policy on Radiopharmaceuticals And
Need for Unique Medicare Payment Method for Radiopharmaceuticals
A. Introduction
This memorandum objects to the Centers for Medicare and Medicaid Services’
(CMS) radical change in Medicare payment policy, suggesting that
radiopharmaceuticals are not drugs. Below, we present CMS’ explanation for
reclassifying radiopharmaceuticals, and then discuss the factual, legal, and policy
reasons for continuing to treat radiopharmaceuticals as drugs. The Nuclear Medicine
APC Task Force further renews its initial recommendations to clarify and reform
payment for radiopharmaceuticals. These recommendations will help CMS implement
the radiopharmaceutical provisions of the Medicare hospital outpatient prospective
payment system (HOPPS) consistent with the law, advancing high quality care for
Medicare patients, and establishing reasonable payment for providers. In brief, CMS
should not reclassify radiopharmaceuticals as drugs for the following reasons:

Both diagnostic and therapeutic radiopharmaceuticals are regulated as drugs
or biologics by the Food and Drug Administration;

Radiopharmaceuticals meet Medicare’s statutory definition as drugs;

Reclassifying radiopharmaceuticals as diagnostic tests or radio-isotope
therapy is inconsistent with the HOPPS statute, that clearly defines
radiopharmaceuticals as drugs, and is inconsistent with CMS’ past practice to
pay radiopharmaceuticals as drugs;

CMS’ effort to reclassify radiopharmaceuticals will have adverse public policy
consequences in creating inconsistent regulatory schemes;

CMS’ effort to reclassify radiopharmaceuticals is a reversal of a significant
policy and can only be proposed with appropriate advance notice and a
reasonable opportunity for public comment; and

A comprehensive payment approach is needed to clarify how
radiopharmaceuticals should be paid under HOPPS, including consideration
of actual sales prices, and the unique features associated with administration
and disposal of radiopharmaceuticals.
B. New CMS Policy that Radiopharmaceuticals are Not Drugs
In the preamble to the most recent final rule on the Medicare HOPPS, the CMS
presented a new policy on payment for radiopharmaceuticals. See 67 Fed. Reg. 66757
(Nov. 1, 2002). In its discussion about payment for a newly approved
radiopharmaceutical, Zevalin, CMS stated that therapeutic radiopharmaceuticals would
not be recognized as drugs, for purposes of payment under HOPPS, but rather as
radioactive isotope therapy under Social Security Act section1861(s)(4). This section
addresses one of many “medical and other health services” covered under Medicare,
specifically listing:
“(4) X-ray, radium, and radioactive isotope therapy, including
materials and services of technicians.”
Further, CMS will not recognize diagnostic radiopharmaceuticals as drugs, but rather as
diagnostic tests, under Social Security Act § 1861(s)(3). This section specifically lists:
(3) diagnostic X-ray tests (including tests under the
supervision of a physician, furnished in a place of residence
used as the patient’s home, if the performance of such tests
meets such conditions relating to health and safety as the
Secretary may find necessary and including diagnostic
mammography if conducted by a facility that has a certificate
(or provisional certificate) issued under section 354 of the
Public Health Service Act), diagnostic laboratory tests, and
other diagnostic tests.
CMS states that it would not consider radiopharmaceuticals as drugs under the drug
definitions in the Social Security Act section 1861(t) which provides:
(t)(1) The term “drugs” and the term “biologicals”, except
for purposes of subsection (m)(5) and paragraph (2), include
only such drugs (including contrast agents) and biologicals,
respectively, as are included (or approved for inclusion) in
the United States Pharmacopoeia, the National Formulary,
or the United States Homeopathic Pharmacopoeia, or in
New Drugs or Accepted Dental Remedies (except for any
drugs and biologicals unfavorably evaluated therein), or as
are approved by the pharmacy and drug therapeutics
committee (or equivalent committee) of the medical staff of
the hospital furnishing such drugs and biologicals for use in
such hospital.
CMS states that a careful reading of this statutory language convinces them that
inclusion of an item in USPDI does not necessarily mean that the item is a drug or
biological. Inclusion is a necessary condition but, according to CMS, is not enough.
See 67 Fed. Reg. at 66757. Rather, if CMS is to call a drug for CMS purposes, CMS
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must make its own determination that the product is a drug or biologic. In the case of
Zevalin, CMS determined it not to be a drug or biologic. CMS then determined that the
entire class of therapeutic and diagnostic radiopharmaceuticals were not drugs or
biologics.
CMS identifies that Zevalin consists of a radioactive isotope that is delivered to
its target tissue by a monoclonal antibody. “Because of the specific requirements
associated with delivery of radioactive isotope therapy, any product containing a
therapeutic radioisotope will be considered under the category of benefits described
under Section 1861(s)(4) as a therapy.” Id.
CMS then suggests that “similarly, the appropriate benefit category for all
diagnostic radiopharmaceuticals, including the diagnostic formulation of Zevalin, is
under Section 1861(3) for other diagnostic tests.”
As discussed below, CMS’ characterization of Zevalin and the entire class of
radiopharmaceuticals fails to reflect the facts about these products, misconstrues the
law, is inconsistent with CMS’ prior policy and FDA regulatory status, and presents this
radical change in substantive policy in violation of the Administrative Procedures Act.
C. Factual Background on Radiopharmaceuticals
The vast majority of radiopharmaceuticals, diagnostic and therapeutic, are
included or approved for inclusion in the United States Pharmacopoeia, the National
Formulary, other compendia, such as USP-DI, or are approved by the pharmacy or
drug therapeutics committee (or equivalent committee) of the medical staff of the
hospital furnishing the radiopharmaceutical. Moreover, every radiopharmaceutical is
approved by the Food and Drug Administration as a drug or as a biologic.
Radiopharmaceuticals are administered as part of nuclear medicine diagnostic or
therapeutic procedures. The radiopharmaceutical is not the procedure, and commonly
is NOT procedure-specific. While the radiopharmaceutical is an integral component,
there are significant additional components of the procedure involving evaluation of the
patient, patient preparation, administration of the radiopharmaceutical for diagnostic or
therapeutic purposes, performance of diagnostic measurements of the biodistribution of
the radiolabeled drug, use of various types of equipment, such as a gamma camera,
physician supervision and interpretation services, nuclear medicine technologist
services, highly specialized protective materials for storing, administering and disposing
the radiopharmaceutical, to keep patients and hospital staff safe from over exposure,
and other highly sophisticated equipment to perform, monitor and manage the
procedure.
D. Analysis – Radiopharmaceuticals are Drugs
1. HOPPS Statute Clear on its Face that Radiopharmaceuticals are Drugs.
The Medicare statute authorizing transitional pass through payment for
radiopharmaceuticals expressly states, “A radiopharmaceutical drug or biological
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product used in diagnostic, monitoring and therapeutic nuclear medicine procedures…”
Social Security Act section1833(t)(6) A)(iii) (emphasis added). The statute is clear on
its face that radiopharmaceuticals are drugs for purposes of the pass through payment.
CMS ignores this clear statutory description, and gives no reason to reject legislative
direction, and administratively over-ride the statue, merely because a
radiopharmaceutical is new.
2. HOPPS Statute Includes Radiopharmaceuticals as One Product in a Class of
Drugs That Should be Treated Consistently.
Looking at the larger context of HOPPS pass through statutory provisions, the
statute consistently refers to a class of drugs, and specifically includes
radiopharmaceuticals in that class. For example, section 1833(t)(6)(C) addresses the
term of the pass through period and states “in the case of a drug or biological described
in clause (i), (ii), or (iii) of subparagraph (A).” The reference to (iii) is the earlier section
expressly on “radiopharmaceutical drugs” and clearly links radiopharmaceuticals as one
in a larger class of drugs.
Thus, the broader statutory context reinforces the specific statutory language
making clear that radiopharmaceuticals are drugs. Basic principles of statutory
construction require reading these provisions in a way that advances consistency in
implementing the program. CMS’ approach rejects a consistent approach.
3. CMS Characterization of Radiopharmaceuticals as Diagnostic Tests or
Therapy is a Misapplication of the Law.
CMS’ suggestion that a diagnostic radiopharmaceutical is a diagnostic test under
section 1861(s)(3) of the Social Security Act is a misapplication of the law. Simply
stated, a radiopharmaceutical is not a test. Rather, it is a component of the test, which
involves professional services, and a number of other products and resources. Using
such an approach, CMS would have us believe that an engine is a car, or that fuel is
an engine.
CMS has properly characterized electrocardiograms, electroencephalograms,
ultrasound procedures as diagnostic test under section 1861(s)(3), since these are
bona fide diagnostic tests. CMS has never suggested that the products which are used
to perform the test are the test. (CMS’ recent policy on home prothrombin testing
represents another departure from past practice characterizing durable medical
equipment as a diagnostic test.) CMS’ effort to recharacterize radiopharmaceuticals as
tests is incorrect and unprecedented in CMS policy on drugs.
4. Radiopharmaceuticals Meet Statutory Definition as Drugs
Radiopharmaceuticals meet the statutory definition as drugs under Social
Security Act §1861(t), since they are either reported in the various drug compendia, or
recognized by hospitals as drugs. For CMS to impose new conditions on
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radiopharmaceuticals, that exceed the statutory definition, especially with no notice and
comment, is arbitrary, capricious, and not within CMS’ authority.
5. The Food and Drug Administration (FDA) Regulates Radiopharmaceuticals
as Drugs or Biologics. Need for Reasonably Harmonized Regulatory
Schemes
The FDA regulates radiopharmaceuticals as drugs or biologics, historically and
currently finding that these products must meet the Federal Food Drug and Cosmetic
Act requirements as drugs or biologics. FDA holds the manufacturers to the standards
set for these products in the Center for Drug Evaluation and Research or the Center for
Biologics Evaluation and Research. FDA and CMS are both agencies of the
Department of Health and Human Services which should not allow its branches to
create double standards. While FDA’s statutory authority differs from CMS’ authority, it
is in the best policy interests for CMS and FDA to resolve potential ambiguities in
regulations in a way that harmonizes these regulatory schemes. If not, manufacturers
will be held to significantly different standards. Hospitals will also be at risk for
confusing and contradictory regulatory requirements with no improvement in public
health, safety or provider payment.
6. Prior CMS Practice has Been to Treat Radiopharmaceuticals as Drugs.
For over five years, CMS has treated radiopharmaceuticals as drugs for payment
purposes.1 CMS has processed HCPCS applications for radiopharmaceuticals as if
they were drugs. CMS advised the Nuclear Medicine APC Task Force, which includes
the Council for Radionuclides and Radiopharmaceuticals (CORAR) and manufacturers
that to be eligible for pass through payment, manufacturers needed to obtain AWPs for
radiopharmaceuticals. The AWPs have been the statutory basis for Medicare payment
for drugs. CMS has published payment amounts based on AWPs for
radiopharmaceuticals under HOPPS for three years. This November 1, 2002
discussion is a fundamental reversal in CMS’ prior practices and prior policy.
7. CMS Effort to Change Policy on Radiopharmaceuticals is Flawed
Procedurally.
CMS is making a radical change in prior policy with a procedure that is flawed
and inadequate under the Administrative Procedures Act. Such a substantive change
1
HCFA Transmittal No 1717 (July 1997) updating the Medicare Intermediary Manual
section 3631 instructed hospitals, among other things, to bill radiopharmaceuticals
under revenue code 636 Drugs requiring Detailed Coding.
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in policy for an entire class of products cannot be done simply by a comment in the
preamble. In fact, CMS’ new position is essentially hidden is a discussion titled
“Estimates of Pass through Spending” and within a discussion on Zevalin. CMS can
only make such a change through appropriate advance notice and an opportunity for
public comment.
Further, CMS states that it believes that the pricing for Zevalin was excessive
and would have placed an unnecessary burden on the Medicare trust fund. CMS has
reacted to one product’s pricing by fundamentally restructuring the statutory basis for
the entire class of products. We suggest this constitutes a regulatory over-reaction and
can be better addressed by dealing with particular products, as CMS has by
assignment to a new technology APC. There are other tools which CMS acknowledges
are available, but which CMS chose not to use, i.e., CMS’ authority to establish more
equitable payment under 1833(t)(2) (E) which could be considered if CMS exercised
such authority consistent with fair play and due process, including public notice and
comment.
E. Relief Requested – Procedural Fairness and Direct Discussion on Payment
Method for Radiopharmaceuticals
CMS is struggling to determine payment for one new radiopharmaceutical drug.
We acknowledge that payment for radiopharmaceuticals presents unique challenges
since they have all the features of drugs, plus additional clinical and technological
attributes which can make payment determinations more complex. The Nuclear
Medicine APC Task Force firmly believes that new approaches to determining payment
need to be fully explored with CMS, but not based on a unilateral and skewed analysis.
Instead of changing the definition under which all radiopharmaceuticals are
classified, CMS could issue a rulemaking proposing a payment methodology for
radiopharmaceuticals. This gives the public fair notice of a proposed policy change and
a reasonable opportunity to comment. To effectively prepare for such a public decisionmaking, the Nuclear Medicine APC Task Force requests the opportunity to meet with
CMS, to develop a proposal. We urge CMS to consider using features in the
“negotiated rulemaking process” which improve communication between the users of
radiopharmaceuticals, the manufacturers of radiopharmaceuticals, and CMS that can
efficiently arrive at a workable payment methodology within current authority. Such
improved communication is critical at this juncture, and the Task Force offers to meet
with CMS in November, December and January to expedite the process.
The Nuclear Medicine APC Task Force has provided and would renew proposals
for payment for radiopharmaceuticals, based on methods that use actual sales prices
and adjustments important for hospitals. Such an approach could establish payment
levels, likely quite different than those based on AWP, which more accurately reflect the
net prices paid by hospitals or physicians, and the reasonable costs of the
radiopharmaceuticals.
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END NOTES -Further Statutory Background – Medicare Definition of Drugs
Social Security Act section 1861(t) also includes a section defining anticancer
chemotherapeutic regimens which by and large reinforces the need for CMS to apply
drug definitions in harmony with FDA standards and authoritative sources. In
recharacterizing radiopharmaceuticals, CMS has rejected such approaches. The
provision on cancer drugs is as follows:
(2)(A) For purposes of
paragraph (1), the term “drugs” also includes any drugs or
biologicals used in an anticancer chemotherapeutic regimen
for a medically accepted indication (as described in
subparagraph (B)).
(B) In subparagraph (A),
the term “medically accepted indication”, with respect to the
use of a drug, includes any use which has been approved by
the Food and Drug Administration for the drug, and includes
another use of the drug if –
(i) the drug has been approved by the Food and Drug
Administration; and
(ii)(I) such use is supported by one or more citations
which are included (or approved for inclusion) in one or
more of the following compendia: the American Hospital
Formulary Service-Drug Information, the American
Medical Association Drug Evaluations, the United States
Pharmacopoeia-Drug Information, and other authoritative
compendia as identified by the Secretary, unless the
Secretary has determined that the use is not medically
appropriate or the use is identified as not indicated in one
or more such compendia, or
(II) the carrier involved determines, based upon
guidance provided by the Secretary to carriers for
determining accepted uses of drugs, that such use is
medically accepted based on supportive clinical evidence
in peer reviewed medical literature appearing in
publications which have been identified for purposes of
this subclause by the Secretary.
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The Secretary may revise the list of compendia in clause
(ii)(I) as is appropriate for identifying medically accepted
indications for drugs.
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