Government and Regulations

The Coming Challenges—and Opportunities—of Value-Based Purchasing

The Patient Protection and Affordable Care Act was signed into law in March, furthering the federal government’s commitment to increasing the efficiency of the U.S. healthcare system by decreasing cost and improving quality. An expansion of the “value-based purchasing” model, this law mandates that ratings and reimbursements to physicians and hospitals be increasingly tied to measured quality of care.

In this system, a physician’s quality profile will be determined by a variety of factors, including reported quality data, severity-adjusted clinical outcome measures, patient-safety indicators, and hospital-acquired conditions (HACs). Since all of these are, to a large extent, documentation issues, physicians are now forced to pay close attention to how they identify and describe diagnoses and procedures.

Medicare will, in effect, attempt to determine: “Did the clinical team correctly identify and appropriately treat all relevant patient conditions—without causing any adverse conditions—and do so safely, efficiently, and with good outcomes?”

The patient chart must “tell the story” of the episode of care in the hospital. It must accurately describe all of the patient’s conditions and demonstrate the complexity of medical decision-making and establishment of risk. Upon discharge, this risk must “match up” with the diagnoses that are being coded and the Medicare Severity Diagnostic Related Group (MS-DRGs) being assigned. Often, the information is present in the chart but is inconsistent from provider to provider, or documented in a way that is misunderstood by hospital coders.

If successful in improving our documentation skills, the reward will be a higher rating and increased reimbursement.

Medicare also is ramping up its claims denial and recovery business to help “clean up” the system. This includes the national rollout of the Recovery Audit Contactor (RAC) initiative (see “Attention to Detail,” April 2010, p. 1), as well as the new Medicare administrative contractors (MACs). Both rely on accurate documentation. The RACs will penalize hospitals and physicians financially for documentation lacking in specificity and accuracy; the MACs will deny payment for claims erroneously submitted (technical errors) or lacking documentation of medical necessity.

What makes many physicians even more uncomfortable in this new environment is that Medicare is striving to better align the priorities and financial incentives of hospitals and physicians. Alliances between the two are strongly encouraged through such programs as the Acute Care Episode (ACE) Demonstration Project (the precursor to hospital-physician bundled payments), and the establishment of accountable care organizations (ACOs).

This emerging environment presents a unique set of challenges and opportunities to HM groups. Hospitalists are historically more aligned with hospital administrations, as compared with most other specialties. Hospitalists also are asked to participate in the care of an increasingly large percentage of patients across all specialties. This could well be an opportunity to be rewarded for embracing both of these trends.

Hospitalists are uniquely positioned to function as the documentation improvement clinical team leaders, working closely with other physicians across all specialties and the administration to fulfill all documentation requirements—and to be rewarded for doing so. Though hospitalists should have a general understanding of the language and rules of documentation, a system must be in place that helps them identify and capture all the pertinent aspects of the medical record without the need to become coders themselves. To this end, a clinical documentation improvement (CDI) program is critical.

But it might not be enough.

What is needed is a clinical integration program, an enhancement of traditional CDI. This approach requires participation from ED physicians, along with clinical integration specialists, to document accurately and completely from the start. The clinical integration specialist ensures that medical necessity for inpatient admission and patient risk is being addressed and established, conditions are appropriately identified as being present on admission (POA), and all diagnoses are properly recognized and documented thoroughly and accurately. Clinical integration through collaborative documentation then continues throughout the hospitalization, with diagnostic authority and oversight from the hospitalist, all the way through discharge.

Hospitalists should welcome and champion this type of program. As documentation becomes the key to survival, a complete medical record will stand up to any and all scrutiny by Medicare or others.

As for the negatives, there are none.

Andrew H. Dombro, MD, national medical director, and Paul Weygandt, MD, JD, vice president of physician services, J.A. Thomas & Associates, Atlanta

The Coming Challenges—and Opportunities—of Value-Based Purchasing

The Patient Protection and Affordable Care Act was signed into law in March, furthering the federal government’s commitment to increasing the efficiency of the U.S. healthcare system by decreasing cost and improving quality. An expansion of the “value-based purchasing” model, this law mandates that ratings and reimbursements to physicians and hospitals be increasingly tied to measured quality of care.

In this system, a physician’s quality profile will be determined by a variety of factors, including reported quality data, severity-adjusted clinical outcome measures, patient-safety indicators, and hospital-acquired conditions (HACs). Since all of these are, to a large extent, documentation issues, physicians are now forced to pay close attention to how they identify and describe diagnoses and procedures.

Medicare will, in effect, attempt to determine: “Did the clinical team correctly identify and appropriately treat all relevant patient conditions—without causing any adverse conditions—and do so safely, efficiently, and with good outcomes?”

The patient chart must “tell the story” of the episode of care in the hospital. It must accurately describe all of the patient’s conditions and demonstrate the complexity of medical decision-making and establishment of risk. Upon discharge, this risk must “match up” with the diagnoses that are being coded and the Medicare Severity Diagnostic Related Group (MS-DRGs) being assigned. Often, the information is present in the chart but is inconsistent from provider to provider, or documented in a way that is misunderstood by hospital coders.

If successful in improving our documentation skills, the reward will be a higher rating and increased reimbursement.

Medicare also is ramping up its claims denial and recovery business to help “clean up” the system. This includes the national rollout of the Recovery Audit Contactor (RAC) initiative (see “Attention to Detail,” April 2010, p. 1), as well as the new Medicare administrative contractors (MACs). Both rely on accurate documentation. The RACs will penalize hospitals and physicians financially for documentation lacking in specificity and accuracy; the MACs will deny payment for claims erroneously submitted (technical errors) or lacking documentation of medical necessity.

What makes many physicians even more uncomfortable in this new environment is that Medicare is striving to better align the priorities and financial incentives of hospitals and physicians. Alliances between the two are strongly encouraged through such programs as the Acute Care Episode (ACE) Demonstration Project (the precursor to hospital-physician bundled payments), and the establishment of accountable care organizations (ACOs).

This emerging environment presents a unique set of challenges and opportunities to HM groups. Hospitalists are historically more aligned with hospital administrations, as compared with most other specialties. Hospitalists also are asked to participate in the care of an increasingly large percentage of patients across all specialties. This could well be an opportunity to be rewarded for embracing both of these trends.

Hospitalists are uniquely positioned to function as the documentation improvement clinical team leaders, working closely with other physicians across all specialties and the administration to fulfill all documentation requirements—and to be rewarded for doing so. Though hospitalists should have a general understanding of the language and rules of documentation, a system must be in place that helps them identify and capture all the pertinent aspects of the medical record without the need to become coders themselves. To this end, a clinical documentation improvement (CDI) program is critical.

But it might not be enough.

What is needed is a clinical integration program, an enhancement of traditional CDI. This approach requires participation from ED physicians, along with clinical integration specialists, to document accurately and completely from the start. The clinical integration specialist ensures that medical necessity for inpatient admission and patient risk is being addressed and established, conditions are appropriately identified as being present on admission (POA), and all diagnoses are properly recognized and documented thoroughly and accurately. Clinical integration through collaborative documentation then continues throughout the hospitalization, with diagnostic authority and oversight from the hospitalist, all the way through discharge.

Hospitalists should welcome and champion this type of program. As documentation becomes the key to survival, a complete medical record will stand up to any and all scrutiny by Medicare or others.

As for the negatives, there are none.

Andrew H. Dombro, MD, national medical director, and Paul Weygandt, MD, JD, vice president of physician services, J.A. Thomas & Associates, Atlanta

The Coming Challenges—and Opportunities—of Value-Based Purchasing

The Patient Protection and Affordable Care Act was signed into law in March, furthering the federal government’s commitment to increasing the efficiency of the U.S. healthcare system by decreasing cost and improving quality. An expansion of the “value-based purchasing” model, this law mandates that ratings and reimbursements to physicians and hospitals be increasingly tied to measured quality of care.

In this system, a physician’s quality profile will be determined by a variety of factors, including reported quality data, severity-adjusted clinical outcome measures, patient-safety indicators, and hospital-acquired conditions (HACs). Since all of these are, to a large extent, documentation issues, physicians are now forced to pay close attention to how they identify and describe diagnoses and procedures.

Medicare will, in effect, attempt to determine: “Did the clinical team correctly identify and appropriately treat all relevant patient conditions—without causing any adverse conditions—and do so safely, efficiently, and with good outcomes?”

The patient chart must “tell the story” of the episode of care in the hospital. It must accurately describe all of the patient’s conditions and demonstrate the complexity of medical decision-making and establishment of risk. Upon discharge, this risk must “match up” with the diagnoses that are being coded and the Medicare Severity Diagnostic Related Group (MS-DRGs) being assigned. Often, the information is present in the chart but is inconsistent from provider to provider, or documented in a way that is misunderstood by hospital coders.

If successful in improving our documentation skills, the reward will be a higher rating and increased reimbursement.

Medicare also is ramping up its claims denial and recovery business to help “clean up” the system. This includes the national rollout of the Recovery Audit Contactor (RAC) initiative (see “Attention to Detail,” April 2010, p. 1), as well as the new Medicare administrative contractors (MACs). Both rely on accurate documentation. The RACs will penalize hospitals and physicians financially for documentation lacking in specificity and accuracy; the MACs will deny payment for claims erroneously submitted (technical errors) or lacking documentation of medical necessity.

What makes many physicians even more uncomfortable in this new environment is that Medicare is striving to better align the priorities and financial incentives of hospitals and physicians. Alliances between the two are strongly encouraged through such programs as the Acute Care Episode (ACE) Demonstration Project (the precursor to hospital-physician bundled payments), and the establishment of accountable care organizations (ACOs).

This emerging environment presents a unique set of challenges and opportunities to HM groups. Hospitalists are historically more aligned with hospital administrations, as compared with most other specialties. Hospitalists also are asked to participate in the care of an increasingly large percentage of patients across all specialties. This could well be an opportunity to be rewarded for embracing both of these trends.

Hospitalists are uniquely positioned to function as the documentation improvement clinical team leaders, working closely with other physicians across all specialties and the administration to fulfill all documentation requirements—and to be rewarded for doing so. Though hospitalists should have a general understanding of the language and rules of documentation, a system must be in place that helps them identify and capture all the pertinent aspects of the medical record without the need to become coders themselves. To this end, a clinical documentation improvement (CDI) program is critical.

But it might not be enough.

What is needed is a clinical integration program, an enhancement of traditional CDI. This approach requires participation from ED physicians, along with clinical integration specialists, to document accurately and completely from the start. The clinical integration specialist ensures that medical necessity for inpatient admission and patient risk is being addressed and established, conditions are appropriately identified as being present on admission (POA), and all diagnoses are properly recognized and documented thoroughly and accurately. Clinical integration through collaborative documentation then continues throughout the hospitalization, with diagnostic authority and oversight from the hospitalist, all the way through discharge.

Hospitalists should welcome and champion this type of program. As documentation becomes the key to survival, a complete medical record will stand up to any and all scrutiny by Medicare or others.

As for the negatives, there are none.

Andrew H. Dombro, MD, national medical director, and Paul Weygandt, MD, JD, vice president of physician services, J.A. Thomas & Associates, Atlanta

New Drugs, Indications, Dosage Forms, and Approvals

• Hydromorphone extended-release tablets (Exalgo) have been approved by the FDA as a once-daily treatment for managing moderate to severe pain in opioid-tolerant patients needing continuous opioid analgesia for an extended period of time.¹ This formulation uses the OROS osmotic delivery system to control the release rate. It is a CII controlled substance and is accompanied by a comprehensive Risk Evaluation and Mitigation Strategy (REMS) to ensure that the medication’s benefits outweigh its risks.
• IMGN910 has received orphan drug status for treating Merkel cell carcinoma, a skin cancer that usually occurs on the head or neck.² It is in early-stage clinical trials.
• Immune globulin subcutaneous (human) 20% liquid (Hizentra) has been approved by the FDA as a once-weekly immunoglobulin replacement therapy for patients with primary immunodeficiency.³ It’s the first 20% subcutaneous immunoglobulin to receive FDA approval. This high-concentration product is stabilized with L-proline, a naturally occurring amino acid, which allows it to be stored at room temperature (up to 25°C [77°F]). Some adverse reactions include injection site bruising, pain, cysts, eczema, irritation, headache, cough, diarrhea, and fatigue.⁴
• Velaglucerase alfa for injection (VPRIV) has been approved by the FDA to treat adults and children with the rare genetic disorder Gaucher disease.⁵ Patients with Gaucher disease have a deficiency of the glucocerebrosidase enzyme. This enzyme prevents lipids from building up in the liver, spleen, bone marrow, and nervous system, which prevents them from working properly. VPRIV, a long-term replacement therapy, is approved for Type 1 Gaucher disease, the most common form, and is an alternative to imiglucerase (Cerezyme), which is in short supply. The most common reactions seen in clinical trials were allergic reactions, headache, dizziness, abdominal and back pain, nausea, fatigue/weakness, fever, and prolonged activated partial thromboplastin time.

Pipeline

• Betrixaban is a once-daily oral anticoagulant in Phase 2 clinical studies.⁶ Compared with warfarin in the EXPLORE-Xa study, betrixaban decreased the bleeding incidence in patients with nonvalvular atrial fibrillation or atrial flutter who had at least one stroke risk factor. The major and clinically relevant nonmajor bleeding episodes occurred less frequently in betrixaban-treated patients.
• Dabigatran etexilate is an oral anticoagulant in Phase 3 clinical trials.⁷ At the recent American College of Cardiology meeting in Ingelheim, Germany, dabigatran demonstrated consistent stroke prevention in patients with atrial fibrillation. It also reduced the number of strokes in patients with atrial fibrillation, compared with warfarin therapy. Additionally, dabigatran etexilate 110 mg and 150 mg twice daily was associated with a lower rate of major bleeding compared with warfarin in atrial fibrillation patients at low risk of stroke.
• Fentanyl sublingual spray (SL Spray) is in Phase 3 clinical trials to treat breakthrough pain in cancer patients. Sublingual administration of this product showed rapid, effective pain relief within five minutes.⁸
• Ketamine intranasal (Ereska) is a nonopioid NMDA receptor antagonist analgesic, which is undergoing Phase 3 clinical trials for managing moderate to severe acute pain.⁹ Studies have shown rapid, statistically significant relief of moderate to severe acute postoperative pain following dental surgery, following a variety of major orthopedic surgical procedures, and in cancer breakthrough pain.
• Lu AA21004 and Lu AA24530 are undergoing Phase 3 clinical trials for treating major depressive disorder (MDD).¹⁰ Lu AA21004 is a 5-HT3, 5-HT7 and 5-HT1B receptor antagonist, 5HT1A receptor agonist, and 5-HT transporter inhibitor. To date, it has shown a low propensity for drug-drug interactions and is extensively metabolized in the liver. Lu AA24530 has shown activity as a multimodal enhancer with reuptake inhibition at monoamine transporters, and having 5-HT3 and 5-HT2c receptor antagonist activity.
• Lurasidone is an atypical antipsychotic with high affinity and antagonist effects at the dopamine D2, serotonin 5-HT2, and serotonin 5-HT7 receptors.¹¹ It is a partial agonist at serotonin 5HT1A receptor. The NDA was filed for this agent Dec. 30, 2009.
• Mipomersen, an apo-B synthesis inhibitor, is in Phase 3 clinical trials for treating patients with homozygous familial hypercholesterolemia (HoFM).¹² This agent is proposed to reduce LDL-C by preventing the development of atherogenic lipids. In a study published in Lancet, mipomersen reduced LDL-C levels by an average of more than 100 mg/dL in HoFM patients.¹³
• Oxycodone/niacin (Acurox), an abuse deterrent formulation for this popular opioid, has been rejected by the FDA.¹⁴ According to the FDA and its review committee, the rejection was due to the “flushing” from the niacin, which was deemed ineffective as an abuse deterrent. In addition, the FDA said the “flushing” could be overcome by food intake or administration with over-the-counter pain relievers.
• Vilanterol/fluticasone is a combination of the inhaled corticosteroid fluticasone and the long-acting beta-agonist (LABA) vilanterol.¹⁵ It is in Phase 3 clinical trials for treating asthma. TH

Michele B. Kaufman, PharmD, BSc, RPh, is a freelance medical writer based in New York City and a clinical pharmacist at New York Downtown Hospital.

References

1. FDA approves Exaglo (hydromorphone HCl) extended-release tablets. Drugs.com website. Available at: www.drugs.com/newdrugs/fda-approves-exaglo-hydromorphone-hcl-extended-release-2033.html?printable=1. Accessed April 27, 2010.
2. ImmunoGen’s skin cancer drug gets orphan drug status. Reuters website. Available at: www.reuters.com/article/idUSSGE6270L720100308. Accessed April 27, 2010.
3. CSL Behring receives FDA approval of Hizentra, first 20 percent subcutaneous immunoglobulin therapy. Drugs.com website. Available at: www.drugs.com/newdrugs/csl-behring-receives-fda-approval-hizentra-first-20-percent-subcutaneous-immunoglobulin-therapy-2037.html. Accessed April 27, 2010.
4. Petrochko C. FDA okays 20% skin-injection immunodeficiency treatment. MedPage Today website. Available at: www.medpagetoday.com/tbprint.cfm?tbid=18858. Accessed April 27, 2010.
5. Gansz Bobo E. FDA approves therapy to treat Gaucher disease. U.S. Food and Drug Administration website. Available at: www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm202288.htm. Accessed April 27, 2010.
6. Portola Pharmaceuticals and Merck announce that Phase 2 study showed investigational factor Xa inhibitor, betrixaban, reduced incidence of bleeding compared to warfarin in patients with atrial fibrillation. Merck website. Available at: www.merck.com/newsroom/news-release-archive/research-and-development/2010_0315.html. Accessed April 27, 2010.
7. Dabigatran etexilate shows greater reductions than warfarin in stroke in patients with atrial fibrillation across all stroke risk groups. Beohringer Ingelheim website. Available at: www.boehringer-ingelheim.com/news/news_releases/press_releases/2010/15_march_2010.html. Accessed April 27, 2010.
8. INSYS Therapeutics, Inc. Announces Positive Phase III Efficacy Trial Results for Fentanyl Sublingual Spray. INSYS Therapeutics website. Available at: www.insysrx.com/news.htm. Accessed April 27, 2010.
9. Third party reexamination of Javelin Pharmaceuticals’ Phase III trial data for Ereska (intranasal ketamine) yields statistically significant primary endpoint. Javelin website. Available at: ir.javelinpharmaceuticals.com/releasedetail.cfm?ReleaseID=444353. Accessed April 27, 2010.
10. Lundbeck and Takeda finalise plans to initiate phase III pivotal clinical trials with Lu AA21004 and Lu AA24530. Takeda Pharmaceutical Company Limited website. Available at: www.takeda.com/press/article_35859.html. Accessed April 27, 2010.
11. Dainippon Sumitomo Pharma America announces FDA acceptance of lurasidone new drug application for treatment of schizophrenia. PR Newswire website. Available at: www.prnewswire.com/news-releases/dainippon-sumitomo-pharma-america-announces-fda-acceptance-of-lurasidone-new-drug-application-for-treatment-of-schizophrenia-87265597.html. Accessed April 27, 2010.
12. Mipomersen Phase 3 study in HoFH featured in The Lancet. Business Wire website. Available at: www.businesswire.com/portal/site/home/email/alert/?ndmViewId=news_view&newsLang=en&newsId=20100315005928. Accessed April 27, 2010.
13. Raal FJ, Santos RD, Blom DJ, et al. Mipomersen, an apolipoprotein B synthesis inhibitor, for lowering of LDL cholesterol concentrations in patients with homozygous familial hypercholesterolaemia: a randomised, double-blind, placebo-controlled trial. Lancet. 2010;375(9719):998-1006.
14. US FDA panel rejects King, Acura painkiller. Reuters website. Available at: www.reuters.com/assets/print?aid=USN2223552220100422. Accessed April 27, 2010.
15. Dennis M. GlaxoSmithKline begins late-stage clinical programme for asthma drug Relovair. FirstWord website. Available at: www.firstwordplus.com/Fws.do?articleid=E256469FBD8F4A2F80C5DD3E844CC1E1&logRowId=356423. Accessed April 27, 2010.

New Drugs, Indications, Dosage Forms, and Approvals

• Hydromorphone extended-release tablets (Exalgo) have been approved by the FDA as a once-daily treatment for managing moderate to severe pain in opioid-tolerant patients needing continuous opioid analgesia for an extended period of time.¹ This formulation uses the OROS osmotic delivery system to control the release rate. It is a CII controlled substance and is accompanied by a comprehensive Risk Evaluation and Mitigation Strategy (REMS) to ensure that the medication’s benefits outweigh its risks.
• IMGN910 has received orphan drug status for treating Merkel cell carcinoma, a skin cancer that usually occurs on the head or neck.² It is in early-stage clinical trials.
• Immune globulin subcutaneous (human) 20% liquid (Hizentra) has been approved by the FDA as a once-weekly immunoglobulin replacement therapy for patients with primary immunodeficiency.³ It’s the first 20% subcutaneous immunoglobulin to receive FDA approval. This high-concentration product is stabilized with L-proline, a naturally occurring amino acid, which allows it to be stored at room temperature (up to 25°C [77°F]). Some adverse reactions include injection site bruising, pain, cysts, eczema, irritation, headache, cough, diarrhea, and fatigue.⁴
• Velaglucerase alfa for injection (VPRIV) has been approved by the FDA to treat adults and children with the rare genetic disorder Gaucher disease.⁵ Patients with Gaucher disease have a deficiency of the glucocerebrosidase enzyme. This enzyme prevents lipids from building up in the liver, spleen, bone marrow, and nervous system, which prevents them from working properly. VPRIV, a long-term replacement therapy, is approved for Type 1 Gaucher disease, the most common form, and is an alternative to imiglucerase (Cerezyme), which is in short supply. The most common reactions seen in clinical trials were allergic reactions, headache, dizziness, abdominal and back pain, nausea, fatigue/weakness, fever, and prolonged activated partial thromboplastin time.

Pipeline

• Betrixaban is a once-daily oral anticoagulant in Phase 2 clinical studies.⁶ Compared with warfarin in the EXPLORE-Xa study, betrixaban decreased the bleeding incidence in patients with nonvalvular atrial fibrillation or atrial flutter who had at least one stroke risk factor. The major and clinically relevant nonmajor bleeding episodes occurred less frequently in betrixaban-treated patients.
• Dabigatran etexilate is an oral anticoagulant in Phase 3 clinical trials.⁷ At the recent American College of Cardiology meeting in Ingelheim, Germany, dabigatran demonstrated consistent stroke prevention in patients with atrial fibrillation. It also reduced the number of strokes in patients with atrial fibrillation, compared with warfarin therapy. Additionally, dabigatran etexilate 110 mg and 150 mg twice daily was associated with a lower rate of major bleeding compared with warfarin in atrial fibrillation patients at low risk of stroke.
• Fentanyl sublingual spray (SL Spray) is in Phase 3 clinical trials to treat breakthrough pain in cancer patients. Sublingual administration of this product showed rapid, effective pain relief within five minutes.⁸
• Ketamine intranasal (Ereska) is a nonopioid NMDA receptor antagonist analgesic, which is undergoing Phase 3 clinical trials for managing moderate to severe acute pain.⁹ Studies have shown rapid, statistically significant relief of moderate to severe acute postoperative pain following dental surgery, following a variety of major orthopedic surgical procedures, and in cancer breakthrough pain.
• Lu AA21004 and Lu AA24530 are undergoing Phase 3 clinical trials for treating major depressive disorder (MDD).¹⁰ Lu AA21004 is a 5-HT3, 5-HT7 and 5-HT1B receptor antagonist, 5HT1A receptor agonist, and 5-HT transporter inhibitor. To date, it has shown a low propensity for drug-drug interactions and is extensively metabolized in the liver. Lu AA24530 has shown activity as a multimodal enhancer with reuptake inhibition at monoamine transporters, and having 5-HT3 and 5-HT2c receptor antagonist activity.
• Lurasidone is an atypical antipsychotic with high affinity and antagonist effects at the dopamine D2, serotonin 5-HT2, and serotonin 5-HT7 receptors.¹¹ It is a partial agonist at serotonin 5HT1A receptor. The NDA was filed for this agent Dec. 30, 2009.
• Mipomersen, an apo-B synthesis inhibitor, is in Phase 3 clinical trials for treating patients with homozygous familial hypercholesterolemia (HoFM).¹² This agent is proposed to reduce LDL-C by preventing the development of atherogenic lipids. In a study published in Lancet, mipomersen reduced LDL-C levels by an average of more than 100 mg/dL in HoFM patients.¹³
• Oxycodone/niacin (Acurox), an abuse deterrent formulation for this popular opioid, has been rejected by the FDA.¹⁴ According to the FDA and its review committee, the rejection was due to the “flushing” from the niacin, which was deemed ineffective as an abuse deterrent. In addition, the FDA said the “flushing” could be overcome by food intake or administration with over-the-counter pain relievers.
• Vilanterol/fluticasone is a combination of the inhaled corticosteroid fluticasone and the long-acting beta-agonist (LABA) vilanterol.¹⁵ It is in Phase 3 clinical trials for treating asthma. TH

Michele B. Kaufman, PharmD, BSc, RPh, is a freelance medical writer based in New York City and a clinical pharmacist at New York Downtown Hospital.

References

1. FDA approves Exaglo (hydromorphone HCl) extended-release tablets. Drugs.com website. Available at: www.drugs.com/newdrugs/fda-approves-exaglo-hydromorphone-hcl-extended-release-2033.html?printable=1. Accessed April 27, 2010.
2. ImmunoGen’s skin cancer drug gets orphan drug status. Reuters website. Available at: www.reuters.com/article/idUSSGE6270L720100308. Accessed April 27, 2010.
3. CSL Behring receives FDA approval of Hizentra, first 20 percent subcutaneous immunoglobulin therapy. Drugs.com website. Available at: www.drugs.com/newdrugs/csl-behring-receives-fda-approval-hizentra-first-20-percent-subcutaneous-immunoglobulin-therapy-2037.html. Accessed April 27, 2010.
4. Petrochko C. FDA okays 20% skin-injection immunodeficiency treatment. MedPage Today website. Available at: www.medpagetoday.com/tbprint.cfm?tbid=18858. Accessed April 27, 2010.
5. Gansz Bobo E. FDA approves therapy to treat Gaucher disease. U.S. Food and Drug Administration website. Available at: www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm202288.htm. Accessed April 27, 2010.
6. Portola Pharmaceuticals and Merck announce that Phase 2 study showed investigational factor Xa inhibitor, betrixaban, reduced incidence of bleeding compared to warfarin in patients with atrial fibrillation. Merck website. Available at: www.merck.com/newsroom/news-release-archive/research-and-development/2010_0315.html. Accessed April 27, 2010.
7. Dabigatran etexilate shows greater reductions than warfarin in stroke in patients with atrial fibrillation across all stroke risk groups. Beohringer Ingelheim website. Available at: www.boehringer-ingelheim.com/news/news_releases/press_releases/2010/15_march_2010.html. Accessed April 27, 2010.
8. INSYS Therapeutics, Inc. Announces Positive Phase III Efficacy Trial Results for Fentanyl Sublingual Spray. INSYS Therapeutics website. Available at: www.insysrx.com/news.htm. Accessed April 27, 2010.
9. Third party reexamination of Javelin Pharmaceuticals’ Phase III trial data for Ereska (intranasal ketamine) yields statistically significant primary endpoint. Javelin website. Available at: ir.javelinpharmaceuticals.com/releasedetail.cfm?ReleaseID=444353. Accessed April 27, 2010.
10. Lundbeck and Takeda finalise plans to initiate phase III pivotal clinical trials with Lu AA21004 and Lu AA24530. Takeda Pharmaceutical Company Limited website. Available at: www.takeda.com/press/article_35859.html. Accessed April 27, 2010.
11. Dainippon Sumitomo Pharma America announces FDA acceptance of lurasidone new drug application for treatment of schizophrenia. PR Newswire website. Available at: www.prnewswire.com/news-releases/dainippon-sumitomo-pharma-america-announces-fda-acceptance-of-lurasidone-new-drug-application-for-treatment-of-schizophrenia-87265597.html. Accessed April 27, 2010.
12. Mipomersen Phase 3 study in HoFH featured in The Lancet. Business Wire website. Available at: www.businesswire.com/portal/site/home/email/alert/?ndmViewId=news_view&newsLang=en&newsId=20100315005928. Accessed April 27, 2010.
13. Raal FJ, Santos RD, Blom DJ, et al. Mipomersen, an apolipoprotein B synthesis inhibitor, for lowering of LDL cholesterol concentrations in patients with homozygous familial hypercholesterolaemia: a randomised, double-blind, placebo-controlled trial. Lancet. 2010;375(9719):998-1006.
14. US FDA panel rejects King, Acura painkiller. Reuters website. Available at: www.reuters.com/assets/print?aid=USN2223552220100422. Accessed April 27, 2010.
15. Dennis M. GlaxoSmithKline begins late-stage clinical programme for asthma drug Relovair. FirstWord website. Available at: www.firstwordplus.com/Fws.do?articleid=E256469FBD8F4A2F80C5DD3E844CC1E1&logRowId=356423. Accessed April 27, 2010.

New Drugs, Indications, Dosage Forms, and Approvals

• Hydromorphone extended-release tablets (Exalgo) have been approved by the FDA as a once-daily treatment for managing moderate to severe pain in opioid-tolerant patients needing continuous opioid analgesia for an extended period of time.¹ This formulation uses the OROS osmotic delivery system to control the release rate. It is a CII controlled substance and is accompanied by a comprehensive Risk Evaluation and Mitigation Strategy (REMS) to ensure that the medication’s benefits outweigh its risks.
• IMGN910 has received orphan drug status for treating Merkel cell carcinoma, a skin cancer that usually occurs on the head or neck.² It is in early-stage clinical trials.
• Immune globulin subcutaneous (human) 20% liquid (Hizentra) has been approved by the FDA as a once-weekly immunoglobulin replacement therapy for patients with primary immunodeficiency.³ It’s the first 20% subcutaneous immunoglobulin to receive FDA approval. This high-concentration product is stabilized with L-proline, a naturally occurring amino acid, which allows it to be stored at room temperature (up to 25°C [77°F]). Some adverse reactions include injection site bruising, pain, cysts, eczema, irritation, headache, cough, diarrhea, and fatigue.⁴
• Velaglucerase alfa for injection (VPRIV) has been approved by the FDA to treat adults and children with the rare genetic disorder Gaucher disease.⁵ Patients with Gaucher disease have a deficiency of the glucocerebrosidase enzyme. This enzyme prevents lipids from building up in the liver, spleen, bone marrow, and nervous system, which prevents them from working properly. VPRIV, a long-term replacement therapy, is approved for Type 1 Gaucher disease, the most common form, and is an alternative to imiglucerase (Cerezyme), which is in short supply. The most common reactions seen in clinical trials were allergic reactions, headache, dizziness, abdominal and back pain, nausea, fatigue/weakness, fever, and prolonged activated partial thromboplastin time.

Pipeline

• Betrixaban is a once-daily oral anticoagulant in Phase 2 clinical studies.⁶ Compared with warfarin in the EXPLORE-Xa study, betrixaban decreased the bleeding incidence in patients with nonvalvular atrial fibrillation or atrial flutter who had at least one stroke risk factor. The major and clinically relevant nonmajor bleeding episodes occurred less frequently in betrixaban-treated patients.
• Dabigatran etexilate is an oral anticoagulant in Phase 3 clinical trials.⁷ At the recent American College of Cardiology meeting in Ingelheim, Germany, dabigatran demonstrated consistent stroke prevention in patients with atrial fibrillation. It also reduced the number of strokes in patients with atrial fibrillation, compared with warfarin therapy. Additionally, dabigatran etexilate 110 mg and 150 mg twice daily was associated with a lower rate of major bleeding compared with warfarin in atrial fibrillation patients at low risk of stroke.
• Fentanyl sublingual spray (SL Spray) is in Phase 3 clinical trials to treat breakthrough pain in cancer patients. Sublingual administration of this product showed rapid, effective pain relief within five minutes.⁸
• Ketamine intranasal (Ereska) is a nonopioid NMDA receptor antagonist analgesic, which is undergoing Phase 3 clinical trials for managing moderate to severe acute pain.⁹ Studies have shown rapid, statistically significant relief of moderate to severe acute postoperative pain following dental surgery, following a variety of major orthopedic surgical procedures, and in cancer breakthrough pain.
• Lu AA21004 and Lu AA24530 are undergoing Phase 3 clinical trials for treating major depressive disorder (MDD).¹⁰ Lu AA21004 is a 5-HT3, 5-HT7 and 5-HT1B receptor antagonist, 5HT1A receptor agonist, and 5-HT transporter inhibitor. To date, it has shown a low propensity for drug-drug interactions and is extensively metabolized in the liver. Lu AA24530 has shown activity as a multimodal enhancer with reuptake inhibition at monoamine transporters, and having 5-HT3 and 5-HT2c receptor antagonist activity.
• Lurasidone is an atypical antipsychotic with high affinity and antagonist effects at the dopamine D2, serotonin 5-HT2, and serotonin 5-HT7 receptors.¹¹ It is a partial agonist at serotonin 5HT1A receptor. The NDA was filed for this agent Dec. 30, 2009.
• Mipomersen, an apo-B synthesis inhibitor, is in Phase 3 clinical trials for treating patients with homozygous familial hypercholesterolemia (HoFM).¹² This agent is proposed to reduce LDL-C by preventing the development of atherogenic lipids. In a study published in Lancet, mipomersen reduced LDL-C levels by an average of more than 100 mg/dL in HoFM patients.¹³
• Oxycodone/niacin (Acurox), an abuse deterrent formulation for this popular opioid, has been rejected by the FDA.¹⁴ According to the FDA and its review committee, the rejection was due to the “flushing” from the niacin, which was deemed ineffective as an abuse deterrent. In addition, the FDA said the “flushing” could be overcome by food intake or administration with over-the-counter pain relievers.
• Vilanterol/fluticasone is a combination of the inhaled corticosteroid fluticasone and the long-acting beta-agonist (LABA) vilanterol.¹⁵ It is in Phase 3 clinical trials for treating asthma. TH

Michele B. Kaufman, PharmD, BSc, RPh, is a freelance medical writer based in New York City and a clinical pharmacist at New York Downtown Hospital.

References

1. FDA approves Exaglo (hydromorphone HCl) extended-release tablets. Drugs.com website. Available at: www.drugs.com/newdrugs/fda-approves-exaglo-hydromorphone-hcl-extended-release-2033.html?printable=1. Accessed April 27, 2010.
2. ImmunoGen’s skin cancer drug gets orphan drug status. Reuters website. Available at: www.reuters.com/article/idUSSGE6270L720100308. Accessed April 27, 2010.
3. CSL Behring receives FDA approval of Hizentra, first 20 percent subcutaneous immunoglobulin therapy. Drugs.com website. Available at: www.drugs.com/newdrugs/csl-behring-receives-fda-approval-hizentra-first-20-percent-subcutaneous-immunoglobulin-therapy-2037.html. Accessed April 27, 2010.
4. Petrochko C. FDA okays 20% skin-injection immunodeficiency treatment. MedPage Today website. Available at: www.medpagetoday.com/tbprint.cfm?tbid=18858. Accessed April 27, 2010.
5. Gansz Bobo E. FDA approves therapy to treat Gaucher disease. U.S. Food and Drug Administration website. Available at: www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm202288.htm. Accessed April 27, 2010.
6. Portola Pharmaceuticals and Merck announce that Phase 2 study showed investigational factor Xa inhibitor, betrixaban, reduced incidence of bleeding compared to warfarin in patients with atrial fibrillation. Merck website. Available at: www.merck.com/newsroom/news-release-archive/research-and-development/2010_0315.html. Accessed April 27, 2010.
7. Dabigatran etexilate shows greater reductions than warfarin in stroke in patients with atrial fibrillation across all stroke risk groups. Beohringer Ingelheim website. Available at: www.boehringer-ingelheim.com/news/news_releases/press_releases/2010/15_march_2010.html. Accessed April 27, 2010.
8. INSYS Therapeutics, Inc. Announces Positive Phase III Efficacy Trial Results for Fentanyl Sublingual Spray. INSYS Therapeutics website. Available at: www.insysrx.com/news.htm. Accessed April 27, 2010.
9. Third party reexamination of Javelin Pharmaceuticals’ Phase III trial data for Ereska (intranasal ketamine) yields statistically significant primary endpoint. Javelin website. Available at: ir.javelinpharmaceuticals.com/releasedetail.cfm?ReleaseID=444353. Accessed April 27, 2010.
10. Lundbeck and Takeda finalise plans to initiate phase III pivotal clinical trials with Lu AA21004 and Lu AA24530. Takeda Pharmaceutical Company Limited website. Available at: www.takeda.com/press/article_35859.html. Accessed April 27, 2010.
11. Dainippon Sumitomo Pharma America announces FDA acceptance of lurasidone new drug application for treatment of schizophrenia. PR Newswire website. Available at: www.prnewswire.com/news-releases/dainippon-sumitomo-pharma-america-announces-fda-acceptance-of-lurasidone-new-drug-application-for-treatment-of-schizophrenia-87265597.html. Accessed April 27, 2010.
12. Mipomersen Phase 3 study in HoFH featured in The Lancet. Business Wire website. Available at: www.businesswire.com/portal/site/home/email/alert/?ndmViewId=news_view&newsLang=en&newsId=20100315005928. Accessed April 27, 2010.
13. Raal FJ, Santos RD, Blom DJ, et al. Mipomersen, an apolipoprotein B synthesis inhibitor, for lowering of LDL cholesterol concentrations in patients with homozygous familial hypercholesterolaemia: a randomised, double-blind, placebo-controlled trial. Lancet. 2010;375(9719):998-1006.
14. US FDA panel rejects King, Acura painkiller. Reuters website. Available at: www.reuters.com/assets/print?aid=USN2223552220100422. Accessed April 27, 2010.
15. Dennis M. GlaxoSmithKline begins late-stage clinical programme for asthma drug Relovair. FirstWord website. Available at: www.firstwordplus.com/Fws.do?articleid=E256469FBD8F4A2F80C5DD3E844CC1E1&logRowId=356423. Accessed April 27, 2010.

To no one’s surprise, federal legislation doesn’t always do what its architects originally intended. A bill designed to protect consumers from identify theft can instead leave small hospitalist practices and other healthcare businesses in the lurch over whether they must meet stringent antitheft requirements intended for credit-card companies and banks. A bill designed to add millions of patients to the ranks of the insured could instead subtract millions of dollars from the reimbursements hospitals and doctors receive from private insurers.

So What’s to Be Done?

An effort to correct one of these lingering headaches—known as the “Red Flags Rule”—is again on the table, though not everyone’s convinced it might finally be fixed seven years after it was first enacted. The rule, folded into the Fair and Accurate Credit Transactions Act of 2003, required the Federal Trade Commission (FTC) and other government agencies to come up with specific measures that “creditors” and “financial institutions” would have to design and implement to counter the growing risk of identity theft.

As intended, these measures would help businesses “identify, detect, and respond” to anything that might suggest identity theft. In other words, they could throw up red flags to warn of illegal activity.

But five years later, as the act’s Nov. 1, 2008, enforcement date was approaching, no one seemed to know exactly which businesses should be considered “creditors.” The act’s vague wording, in fact, created widespread fear that a measure designed principally for banks and credit-card companies would also apply to small accounting, legal, and healthcare practices, saddling them with cumbersome and expensive vetting protocols.

Thus began a series of requests by federal legislators that the FTC delay enforcement until the confusion could be sorted out. After three delays, including the latest pushback from June 1 through the end of this year, the commission’s patience is wearing thin. FTC Chairman Jon Leibowitz has been clear about the agency’s frustration over the extensions in lieu of a permanent resolution.

“Congress needs to fix the unintended consequences of the legislation establishing the Red Flags Rule—and to fix this problem quickly,” he said in a May 28 release. “As an agency, we’re charged with enforcing the law, and endless extensions delay enforcement.”

The not-so-subtle jab at Congressional inaction was aimed at one chamber in particular. Bill HR3763, which adds clarifying language to the rule and specifically excludes accounting, legal, and medical practices with 20 or fewer employees, sailed through the House of Representatives last October by a vote of 400-0. And then it promptly hit a giant sandbar in the form of the Senate. On May 25, Sen. John Thune (R-S.D.) and Sen. Mark Begich (D-Alaska) attempted a relaunch with their introduction of S3416, a near carbon copy of the House bill.

The measure is hardly a fait accompli, given the Senate’s recent track record, but a spokesman for Sen. Thune said the senator’s office is expecting a resolution before the FTC’s latest extension expires. Citing the commission’s decision to delay enforcement soon after the Senate bill’s introduction, he said, “We interpret that as an indication that they want to give Congress time to act, so we’re very optimistic that something will happen this year.”

Of course, the enforcement delay also might have something to do with the joint lawsuit filed May 21 by the American Medical Association, American Osteopathic Association, and the Medical Society of the District of Columbia. In their complaint, the three medical associations charged that the FTC’s application of the rule to physicians is “arbitrary, capricious, and contrary to the law.”

It’s now up to the Senate to decide whether that suit will become moot. TH

Bryn Nelson is a freelance medical writer based in Seattle.

To no one’s surprise, federal legislation doesn’t always do what its architects originally intended. A bill designed to protect consumers from identify theft can instead leave small hospitalist practices and other healthcare businesses in the lurch over whether they must meet stringent antitheft requirements intended for credit-card companies and banks. A bill designed to add millions of patients to the ranks of the insured could instead subtract millions of dollars from the reimbursements hospitals and doctors receive from private insurers.

So What’s to Be Done?

An effort to correct one of these lingering headaches—known as the “Red Flags Rule”—is again on the table, though not everyone’s convinced it might finally be fixed seven years after it was first enacted. The rule, folded into the Fair and Accurate Credit Transactions Act of 2003, required the Federal Trade Commission (FTC) and other government agencies to come up with specific measures that “creditors” and “financial institutions” would have to design and implement to counter the growing risk of identity theft.

As intended, these measures would help businesses “identify, detect, and respond” to anything that might suggest identity theft. In other words, they could throw up red flags to warn of illegal activity.

But five years later, as the act’s Nov. 1, 2008, enforcement date was approaching, no one seemed to know exactly which businesses should be considered “creditors.” The act’s vague wording, in fact, created widespread fear that a measure designed principally for banks and credit-card companies would also apply to small accounting, legal, and healthcare practices, saddling them with cumbersome and expensive vetting protocols.

Thus began a series of requests by federal legislators that the FTC delay enforcement until the confusion could be sorted out. After three delays, including the latest pushback from June 1 through the end of this year, the commission’s patience is wearing thin. FTC Chairman Jon Leibowitz has been clear about the agency’s frustration over the extensions in lieu of a permanent resolution.

“Congress needs to fix the unintended consequences of the legislation establishing the Red Flags Rule—and to fix this problem quickly,” he said in a May 28 release. “As an agency, we’re charged with enforcing the law, and endless extensions delay enforcement.”

The not-so-subtle jab at Congressional inaction was aimed at one chamber in particular. Bill HR3763, which adds clarifying language to the rule and specifically excludes accounting, legal, and medical practices with 20 or fewer employees, sailed through the House of Representatives last October by a vote of 400-0. And then it promptly hit a giant sandbar in the form of the Senate. On May 25, Sen. John Thune (R-S.D.) and Sen. Mark Begich (D-Alaska) attempted a relaunch with their introduction of S3416, a near carbon copy of the House bill.

The measure is hardly a fait accompli, given the Senate’s recent track record, but a spokesman for Sen. Thune said the senator’s office is expecting a resolution before the FTC’s latest extension expires. Citing the commission’s decision to delay enforcement soon after the Senate bill’s introduction, he said, “We interpret that as an indication that they want to give Congress time to act, so we’re very optimistic that something will happen this year.”

Of course, the enforcement delay also might have something to do with the joint lawsuit filed May 21 by the American Medical Association, American Osteopathic Association, and the Medical Society of the District of Columbia. In their complaint, the three medical associations charged that the FTC’s application of the rule to physicians is “arbitrary, capricious, and contrary to the law.”

It’s now up to the Senate to decide whether that suit will become moot. TH

Bryn Nelson is a freelance medical writer based in Seattle.

To no one’s surprise, federal legislation doesn’t always do what its architects originally intended. A bill designed to protect consumers from identify theft can instead leave small hospitalist practices and other healthcare businesses in the lurch over whether they must meet stringent antitheft requirements intended for credit-card companies and banks. A bill designed to add millions of patients to the ranks of the insured could instead subtract millions of dollars from the reimbursements hospitals and doctors receive from private insurers.

So What’s to Be Done?

An effort to correct one of these lingering headaches—known as the “Red Flags Rule”—is again on the table, though not everyone’s convinced it might finally be fixed seven years after it was first enacted. The rule, folded into the Fair and Accurate Credit Transactions Act of 2003, required the Federal Trade Commission (FTC) and other government agencies to come up with specific measures that “creditors” and “financial institutions” would have to design and implement to counter the growing risk of identity theft.

As intended, these measures would help businesses “identify, detect, and respond” to anything that might suggest identity theft. In other words, they could throw up red flags to warn of illegal activity.

But five years later, as the act’s Nov. 1, 2008, enforcement date was approaching, no one seemed to know exactly which businesses should be considered “creditors.” The act’s vague wording, in fact, created widespread fear that a measure designed principally for banks and credit-card companies would also apply to small accounting, legal, and healthcare practices, saddling them with cumbersome and expensive vetting protocols.

Thus began a series of requests by federal legislators that the FTC delay enforcement until the confusion could be sorted out. After three delays, including the latest pushback from June 1 through the end of this year, the commission’s patience is wearing thin. FTC Chairman Jon Leibowitz has been clear about the agency’s frustration over the extensions in lieu of a permanent resolution.

“Congress needs to fix the unintended consequences of the legislation establishing the Red Flags Rule—and to fix this problem quickly,” he said in a May 28 release. “As an agency, we’re charged with enforcing the law, and endless extensions delay enforcement.”

The not-so-subtle jab at Congressional inaction was aimed at one chamber in particular. Bill HR3763, which adds clarifying language to the rule and specifically excludes accounting, legal, and medical practices with 20 or fewer employees, sailed through the House of Representatives last October by a vote of 400-0. And then it promptly hit a giant sandbar in the form of the Senate. On May 25, Sen. John Thune (R-S.D.) and Sen. Mark Begich (D-Alaska) attempted a relaunch with their introduction of S3416, a near carbon copy of the House bill.

The measure is hardly a fait accompli, given the Senate’s recent track record, but a spokesman for Sen. Thune said the senator’s office is expecting a resolution before the FTC’s latest extension expires. Citing the commission’s decision to delay enforcement soon after the Senate bill’s introduction, he said, “We interpret that as an indication that they want to give Congress time to act, so we’re very optimistic that something will happen this year.”

Of course, the enforcement delay also might have something to do with the joint lawsuit filed May 21 by the American Medical Association, American Osteopathic Association, and the Medical Society of the District of Columbia. In their complaint, the three medical associations charged that the FTC’s application of the rule to physicians is “arbitrary, capricious, and contrary to the law.”

It’s now up to the Senate to decide whether that suit will become moot. TH

Bryn Nelson is a freelance medical writer based in Seattle.

When I started writing this, Congress hadn’t settled the issue of the 21% cut in Medicare reimbursement for services called for by the sustainable growth rate (SGR) formula. Fortunately, Congress stepped up and passed another extension with a 2.2% pay increase; however, the quick fix only lasts until November.

The process is all too routine: The deadline for these reimbursement cuts looms, Medicare instructs its fiscal intermediaries (the organizations that actually write the checks to providers) to hold claims rather than pay at the lower rate, and, within a few days of the deadline passing, Congress decides to pass an extension, which allows Medicare to continue paying the historical (higher) rate for the time being.

Imagine Medicare reimbursement rates dropping 21% overnight. I suspect it would be cataclysmic. But I hear remarkably little chatter about this possibility. In fact, while with 2,500 other hospitalists for several days at HM10 in April, I didn’t hear a single person bring up the SGR issue.

One reason there isn’t more handwringing about the looming, draconian cuts is that we’ve been there before. In fact, reimbursement cuts required by the SGR have come up every year since 2001. Each time, Congress has chosen not to implement the cuts; and in some years it has approved reimbursement increases instead. So most in healthcare circles basically have come to expect Congress to pass last-minute legislation to avoid the drastic cuts. (SHM and most other medical societies want a repeal of the flawed SGR formula. Visit SHM’s Legislative Action Center, http://capwiz.com/hospitalmedicine/home/, to write your legislators and urge repeal of the SGR. It only takes about two minutes, and you don’t even need to remember who your representatives are; you just need to know your ZIP code.)

Don’t Be Too Smug

There is another reason many hospitalists, and other doctors who are employed and salaried by a large entity like a hospital, might not be more concerned about proposed cuts: They probably think their own salaries will be unaffected by decreases in reimbursement from Medicare and other payors. My experience is that a lot of hospitalists are so unconcerned about payor reimbursement rates that they aren’t even aware of the threatened Medicare cuts.

Their thinking goes something like this: “I’m paid mostly via a fixed annual salary with a small productivity and quality incentive. None of this is connected to the payor mix or collection rates from the patients I see. So if the portion of uninsured patients I see goes up, my compensation is unaffected. Or if payors decrease their rates, my compensation is unaffected. So I don’t need to sweat the possibility of a 21% decrease in Medicare rates. The hospital will have to make up the difference, so my salary is unaffected, and it will be up to bean counters at the hospital to get the numbers to work out.”

In fact, this is true, in theory, for the majority of hospitalists. But I think it is a mistake to assume your salary is untouchable. If Medicare were to cut rates by 21%, you’d better run to your hospital CEO’s office right away, because a long line will form immediately. Every doctor who sees patients at your hospital will be in that line asking the CEO to provide some money to offset the Medicare cuts, and I doubt any hospital will be able to satisfy their doctors without spending so much money that the hospital goes bankrupt or out of business.

Even if you have a valid contract that calls for your compensation to be paid independent of the amount of professional fee collections, a dire shortage of money could lead a hospital to lay off hospitalists or cancel the contract (most contracts would allow the hospital to do this simply by giving a 90-day notice).

I suggest that no hospitalist feel too smug about how well their employment contract protects the group from broader market forces like reimbursement rates. I doubt we’ll ever see an overnight 21% reduction in Medicare rates, but over time, we could see ever-increasing pressure to limit the growth in our incomes.

I believe every hospitalist should spend at least a little time following broader financial issues like this one, and get involved in the political process to let your legislators know your thoughts. For the record, I think the financial underpinnings of our healthcare system are disastrously messed up and something has to be done. And I don’t think anyone’s salary, including mine, is untouchable. But I also believe the SGR is an ineffective way to make the system more financially sound. That said, you don’t need to agree with me; I only recommend that you have a reasonably informed opinion.

One approach might be for your HM group to appoint a “political” or “marketplace” watchdog. This person could be charged with following issues closely and reporting back to the whole group during regular meetings.

“Marketplace” Risk

Medicare rates are only one part of the complex financial ecosystem on which we depend. It is awfully common, and I think pretty reasonable, for hospitalists to have a contractual arrangement with hospitals. The majority of the time, the hospital has most—or all—of the risk for the financial performance of the practice. In fact, most prospective hospitalists, especially those seeking their first jobs out after residency, say one of the most attractive reasons for choosing work as a hospitalist is that many practices provide a salary that is nearly fixed. Any variable components to the salary, such as those based on production or quality, are typically very small.

A hospitalist might think, “I want a practice that pays a fixed salary so I don’t have to worry about any business and financial issues other than when to show up to work.” In fact, a lot of recruitment ads trumpet this very idea (i.e., “you handle the doctoring and get to enjoy the wonderful recreational opportunities and schools our locale provides, and we’ll worry about all the business issues”). That may sound nice, but I worry it is a little short-sighted.

Here is another point of view, which is only slightly more complicated. In most cases, you should try to negotiate a contract that insulates you from “payor risk” (e.g., changes in payor mix and rates paid by payors don’t flow through to your compensation). But you should think twice before asking your employer to assume all the risk for staffing and scheduling decisions, such as whether you get the work done with 10 hospitalists or 11, or whether you have an evening admitter (“swing”) shift. If the employer holds all the risk, then the hospitalists give up nearly all their autonomy to decide how hard they want to work and how they want to schedule themselves. This causes problems for many practices, and is the No. 1 reason I’m called in as a consultant. Contrary to being very risky and stressful, many hospitalists find it liberating to assume financial risk for their staffing and workload decisions.

You should realize that if your employer pays you a fixed compensation, then someone has to ensure that you do enough work to justify that compensation. This can mean that the employer “issues decrees” (i.e., “we won’t add another provide to the practice until we’ve averaged ‘X’ encounters per month for 6 months”). A hospitalist might see this as unreasonable, yet the group has limited recourse since the employer has already guaranteed the compensation.

If you’d rather have more autonomy in your staffing and workload, then you will need to connect your paycheck to these decisions. Although it might sound terribly risky, those who make the switch often say they wouldn’t have it any other way. Most importantly, it ensures hospitalists have much more say in big decisions. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

When I started writing this, Congress hadn’t settled the issue of the 21% cut in Medicare reimbursement for services called for by the sustainable growth rate (SGR) formula. Fortunately, Congress stepped up and passed another extension with a 2.2% pay increase; however, the quick fix only lasts until November.

The process is all too routine: The deadline for these reimbursement cuts looms, Medicare instructs its fiscal intermediaries (the organizations that actually write the checks to providers) to hold claims rather than pay at the lower rate, and, within a few days of the deadline passing, Congress decides to pass an extension, which allows Medicare to continue paying the historical (higher) rate for the time being.

Imagine Medicare reimbursement rates dropping 21% overnight. I suspect it would be cataclysmic. But I hear remarkably little chatter about this possibility. In fact, while with 2,500 other hospitalists for several days at HM10 in April, I didn’t hear a single person bring up the SGR issue.

One reason there isn’t more handwringing about the looming, draconian cuts is that we’ve been there before. In fact, reimbursement cuts required by the SGR have come up every year since 2001. Each time, Congress has chosen not to implement the cuts; and in some years it has approved reimbursement increases instead. So most in healthcare circles basically have come to expect Congress to pass last-minute legislation to avoid the drastic cuts. (SHM and most other medical societies want a repeal of the flawed SGR formula. Visit SHM’s Legislative Action Center, http://capwiz.com/hospitalmedicine/home/, to write your legislators and urge repeal of the SGR. It only takes about two minutes, and you don’t even need to remember who your representatives are; you just need to know your ZIP code.)

Don’t Be Too Smug

There is another reason many hospitalists, and other doctors who are employed and salaried by a large entity like a hospital, might not be more concerned about proposed cuts: They probably think their own salaries will be unaffected by decreases in reimbursement from Medicare and other payors. My experience is that a lot of hospitalists are so unconcerned about payor reimbursement rates that they aren’t even aware of the threatened Medicare cuts.

Their thinking goes something like this: “I’m paid mostly via a fixed annual salary with a small productivity and quality incentive. None of this is connected to the payor mix or collection rates from the patients I see. So if the portion of uninsured patients I see goes up, my compensation is unaffected. Or if payors decrease their rates, my compensation is unaffected. So I don’t need to sweat the possibility of a 21% decrease in Medicare rates. The hospital will have to make up the difference, so my salary is unaffected, and it will be up to bean counters at the hospital to get the numbers to work out.”

In fact, this is true, in theory, for the majority of hospitalists. But I think it is a mistake to assume your salary is untouchable. If Medicare were to cut rates by 21%, you’d better run to your hospital CEO’s office right away, because a long line will form immediately. Every doctor who sees patients at your hospital will be in that line asking the CEO to provide some money to offset the Medicare cuts, and I doubt any hospital will be able to satisfy their doctors without spending so much money that the hospital goes bankrupt or out of business.

Even if you have a valid contract that calls for your compensation to be paid independent of the amount of professional fee collections, a dire shortage of money could lead a hospital to lay off hospitalists or cancel the contract (most contracts would allow the hospital to do this simply by giving a 90-day notice).

I suggest that no hospitalist feel too smug about how well their employment contract protects the group from broader market forces like reimbursement rates. I doubt we’ll ever see an overnight 21% reduction in Medicare rates, but over time, we could see ever-increasing pressure to limit the growth in our incomes.

I believe every hospitalist should spend at least a little time following broader financial issues like this one, and get involved in the political process to let your legislators know your thoughts. For the record, I think the financial underpinnings of our healthcare system are disastrously messed up and something has to be done. And I don’t think anyone’s salary, including mine, is untouchable. But I also believe the SGR is an ineffective way to make the system more financially sound. That said, you don’t need to agree with me; I only recommend that you have a reasonably informed opinion.

One approach might be for your HM group to appoint a “political” or “marketplace” watchdog. This person could be charged with following issues closely and reporting back to the whole group during regular meetings.

“Marketplace” Risk

Medicare rates are only one part of the complex financial ecosystem on which we depend. It is awfully common, and I think pretty reasonable, for hospitalists to have a contractual arrangement with hospitals. The majority of the time, the hospital has most—or all—of the risk for the financial performance of the practice. In fact, most prospective hospitalists, especially those seeking their first jobs out after residency, say one of the most attractive reasons for choosing work as a hospitalist is that many practices provide a salary that is nearly fixed. Any variable components to the salary, such as those based on production or quality, are typically very small.

A hospitalist might think, “I want a practice that pays a fixed salary so I don’t have to worry about any business and financial issues other than when to show up to work.” In fact, a lot of recruitment ads trumpet this very idea (i.e., “you handle the doctoring and get to enjoy the wonderful recreational opportunities and schools our locale provides, and we’ll worry about all the business issues”). That may sound nice, but I worry it is a little short-sighted.

Here is another point of view, which is only slightly more complicated. In most cases, you should try to negotiate a contract that insulates you from “payor risk” (e.g., changes in payor mix and rates paid by payors don’t flow through to your compensation). But you should think twice before asking your employer to assume all the risk for staffing and scheduling decisions, such as whether you get the work done with 10 hospitalists or 11, or whether you have an evening admitter (“swing”) shift. If the employer holds all the risk, then the hospitalists give up nearly all their autonomy to decide how hard they want to work and how they want to schedule themselves. This causes problems for many practices, and is the No. 1 reason I’m called in as a consultant. Contrary to being very risky and stressful, many hospitalists find it liberating to assume financial risk for their staffing and workload decisions.

You should realize that if your employer pays you a fixed compensation, then someone has to ensure that you do enough work to justify that compensation. This can mean that the employer “issues decrees” (i.e., “we won’t add another provide to the practice until we’ve averaged ‘X’ encounters per month for 6 months”). A hospitalist might see this as unreasonable, yet the group has limited recourse since the employer has already guaranteed the compensation.

If you’d rather have more autonomy in your staffing and workload, then you will need to connect your paycheck to these decisions. Although it might sound terribly risky, those who make the switch often say they wouldn’t have it any other way. Most importantly, it ensures hospitalists have much more say in big decisions. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

When I started writing this, Congress hadn’t settled the issue of the 21% cut in Medicare reimbursement for services called for by the sustainable growth rate (SGR) formula. Fortunately, Congress stepped up and passed another extension with a 2.2% pay increase; however, the quick fix only lasts until November.

The process is all too routine: The deadline for these reimbursement cuts looms, Medicare instructs its fiscal intermediaries (the organizations that actually write the checks to providers) to hold claims rather than pay at the lower rate, and, within a few days of the deadline passing, Congress decides to pass an extension, which allows Medicare to continue paying the historical (higher) rate for the time being.

Imagine Medicare reimbursement rates dropping 21% overnight. I suspect it would be cataclysmic. But I hear remarkably little chatter about this possibility. In fact, while with 2,500 other hospitalists for several days at HM10 in April, I didn’t hear a single person bring up the SGR issue.

One reason there isn’t more handwringing about the looming, draconian cuts is that we’ve been there before. In fact, reimbursement cuts required by the SGR have come up every year since 2001. Each time, Congress has chosen not to implement the cuts; and in some years it has approved reimbursement increases instead. So most in healthcare circles basically have come to expect Congress to pass last-minute legislation to avoid the drastic cuts. (SHM and most other medical societies want a repeal of the flawed SGR formula. Visit SHM’s Legislative Action Center, http://capwiz.com/hospitalmedicine/home/, to write your legislators and urge repeal of the SGR. It only takes about two minutes, and you don’t even need to remember who your representatives are; you just need to know your ZIP code.)

Don’t Be Too Smug

There is another reason many hospitalists, and other doctors who are employed and salaried by a large entity like a hospital, might not be more concerned about proposed cuts: They probably think their own salaries will be unaffected by decreases in reimbursement from Medicare and other payors. My experience is that a lot of hospitalists are so unconcerned about payor reimbursement rates that they aren’t even aware of the threatened Medicare cuts.

Their thinking goes something like this: “I’m paid mostly via a fixed annual salary with a small productivity and quality incentive. None of this is connected to the payor mix or collection rates from the patients I see. So if the portion of uninsured patients I see goes up, my compensation is unaffected. Or if payors decrease their rates, my compensation is unaffected. So I don’t need to sweat the possibility of a 21% decrease in Medicare rates. The hospital will have to make up the difference, so my salary is unaffected, and it will be up to bean counters at the hospital to get the numbers to work out.”

In fact, this is true, in theory, for the majority of hospitalists. But I think it is a mistake to assume your salary is untouchable. If Medicare were to cut rates by 21%, you’d better run to your hospital CEO’s office right away, because a long line will form immediately. Every doctor who sees patients at your hospital will be in that line asking the CEO to provide some money to offset the Medicare cuts, and I doubt any hospital will be able to satisfy their doctors without spending so much money that the hospital goes bankrupt or out of business.

Even if you have a valid contract that calls for your compensation to be paid independent of the amount of professional fee collections, a dire shortage of money could lead a hospital to lay off hospitalists or cancel the contract (most contracts would allow the hospital to do this simply by giving a 90-day notice).

I suggest that no hospitalist feel too smug about how well their employment contract protects the group from broader market forces like reimbursement rates. I doubt we’ll ever see an overnight 21% reduction in Medicare rates, but over time, we could see ever-increasing pressure to limit the growth in our incomes.

I believe every hospitalist should spend at least a little time following broader financial issues like this one, and get involved in the political process to let your legislators know your thoughts. For the record, I think the financial underpinnings of our healthcare system are disastrously messed up and something has to be done. And I don’t think anyone’s salary, including mine, is untouchable. But I also believe the SGR is an ineffective way to make the system more financially sound. That said, you don’t need to agree with me; I only recommend that you have a reasonably informed opinion.

One approach might be for your HM group to appoint a “political” or “marketplace” watchdog. This person could be charged with following issues closely and reporting back to the whole group during regular meetings.

“Marketplace” Risk

Medicare rates are only one part of the complex financial ecosystem on which we depend. It is awfully common, and I think pretty reasonable, for hospitalists to have a contractual arrangement with hospitals. The majority of the time, the hospital has most—or all—of the risk for the financial performance of the practice. In fact, most prospective hospitalists, especially those seeking their first jobs out after residency, say one of the most attractive reasons for choosing work as a hospitalist is that many practices provide a salary that is nearly fixed. Any variable components to the salary, such as those based on production or quality, are typically very small.

A hospitalist might think, “I want a practice that pays a fixed salary so I don’t have to worry about any business and financial issues other than when to show up to work.” In fact, a lot of recruitment ads trumpet this very idea (i.e., “you handle the doctoring and get to enjoy the wonderful recreational opportunities and schools our locale provides, and we’ll worry about all the business issues”). That may sound nice, but I worry it is a little short-sighted.

Here is another point of view, which is only slightly more complicated. In most cases, you should try to negotiate a contract that insulates you from “payor risk” (e.g., changes in payor mix and rates paid by payors don’t flow through to your compensation). But you should think twice before asking your employer to assume all the risk for staffing and scheduling decisions, such as whether you get the work done with 10 hospitalists or 11, or whether you have an evening admitter (“swing”) shift. If the employer holds all the risk, then the hospitalists give up nearly all their autonomy to decide how hard they want to work and how they want to schedule themselves. This causes problems for many practices, and is the No. 1 reason I’m called in as a consultant. Contrary to being very risky and stressful, many hospitalists find it liberating to assume financial risk for their staffing and workload decisions.

You should realize that if your employer pays you a fixed compensation, then someone has to ensure that you do enough work to justify that compensation. This can mean that the employer “issues decrees” (i.e., “we won’t add another provide to the practice until we’ve averaged ‘X’ encounters per month for 6 months”). A hospitalist might see this as unreasonable, yet the group has limited recourse since the employer has already guaranteed the compensation.

If you’d rather have more autonomy in your staffing and workload, then you will need to connect your paycheck to these decisions. Although it might sound terribly risky, those who make the switch often say they wouldn’t have it any other way. Most importantly, it ensures hospitalists have much more say in big decisions. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

Many conditions once treated during an “inpatient” hospital stay are currently treated during an “observation” stay (OBS). Although the care remains the same, physician billing is different and requires close attention to admission details for effective charge capture.

Let’s take a look at a typical OBS scenario. A 65-year-old female with longstanding diabetes presents to the ED at 10 p.m. with palpitations, lightheadedness, mild disorientation, and elevated blood sugar. The hospitalist admits the patient to observation, treats her for dehydration, and discharges her the next day. Before billing, the hospitalist should consider the following factors.

Physician of Record

The attending of record writes the orders to admit the patient to observation; indicates the reason for the stay; outlines the plan of care; and manages the patient during the stay. The attending reports the initial patient encounter with the most appropriate initial observation-care code, as reflected by the documentation:¹

• 99218: Initial observation care, requiring both a detailed or comprehensive history and exam, and straightforward/low-complexity medical decision-making. Usually, the problem(s) is of low severity.
• 99219: Initial observation care, requiring both a comprehensive history and exam, and moderate-complexity medical decision-making. Usually, the problem(s) is of moderate severity.
• 99220: Initial observation care, requiring both a comprehensive history and exam, and high-complexity medical decision-making. Usually, the problem(s) is of high severity.

While other physicians (e.g., specialists) might be involved in the patient’s care, only the attending physician reports codes 99218-99220. Specialists typically are called to an OBS case for their opinion or advice but do not function as the attending of record. Billing for the specialist (consultation) service depends upon the payor.

For a non-Medicare patient who pays for consultation codes, the specialist reports an outpatient consultation code (99241-99245) for the appropriately documented service. Conversely, Medicare no longer recognizes consultation codes, and specialists must report either a new patient visit code (99201-99205) or established patient visit code (99212-99215) for Medicare beneficiaries.

Selection of the new or established patient codes follows the “three-year rule”: A “new patient” has not received any face-to-face services (e.g., visit or procedure) in any location from any physician within the same group and same specialty within the past three years.² There could be occasion when a hospitalist is not the attending of record but is asked to provide their opinion, and must report one of the “non-OBS” codes.

The attending of record is permitted to report a discharge service as long as this service occurs on a calendar day different from the admission service (as in the listed scenario). The attending documents the face-to-face discharge service and any pertinent clinical details, and reports 99217 (observation-care discharge-day management).

Length of Stay

Observation-care services typically do not exceed 24 hours and two calendar days. Observation care for more than 48 hours without inpatient admission is not considered medically necessary but might be payable after medical review. Should the OBS stay span more than two calendar days (as might be the case with “downgraded” hospitalizations), hospitalists should report established patient visit codes (99212-99215) for the calendar day(s) between the admission service (99218-99220) and the discharge service (99217).³ The physician must provide and document a face-to-face encounter on each date of service for which a claim was submitted.

A more likely occurrence is the admission and discharge from OBS on the same calendar date. The attending of record reports the code that corresponds to the patient’s length of stay (LOS). If the total LOS is less than eight hours, the attending only reports standard OBS codes (99218-99220). The hospitalist does not separately report the OBS discharge service (99217), even though the documentation must reflect the attending discharge order and corresponding discharge plan. If the total duration of the patient’s stay lasts more than eight hours and does not overlap two calendar days, the attending reports the same-day admit/discharge codes:¹

• 99234: Observation or inpatient care, same date admission and discharge, requiring both a detailed or comprehensive history and exam, and straightforward or low-complexity medical decision-making. Usually the presenting problem(s) is of low severity.
• 99235: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and moderate-complexity medical decision-making. Usually the presenting problem(s) is of moderate severity.
• 99236: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and high-complexity medical decision-making. Usually the presenting problem(s) is of high severity.

OBS discharge service (99217) is not separately reported with 99234-99236 because these codes are valued to include the discharge component (e.g., the comprehensive service, 99236 [4.26 wRVU, $211], is equivalent to its components, 99220 [2.99 wRVU, $148] and 99217 [1.28 wRVU, $68]). The attending must document the total duration of the stay, as well as the face-to-face service and the corresponding details of each service component (i.e., both an admission and discharge note).³TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center in Philadelphia. She is also on the faculty of SHM’s inpatient coding course.

References

1. Abraham M, Beebe M, Dalton J, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2010:11-16.
2. Medicare Claims Processing Manual: Chapter 12, Section 30.6.7A. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
3. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8C. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
4. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8D. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
5. Medicare Claims Processing Manual: Chapter 1, Section 50.3. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c01.pdf. Accessed May 12, 2010.

Many conditions once treated during an “inpatient” hospital stay are currently treated during an “observation” stay (OBS). Although the care remains the same, physician billing is different and requires close attention to admission details for effective charge capture.

Let’s take a look at a typical OBS scenario. A 65-year-old female with longstanding diabetes presents to the ED at 10 p.m. with palpitations, lightheadedness, mild disorientation, and elevated blood sugar. The hospitalist admits the patient to observation, treats her for dehydration, and discharges her the next day. Before billing, the hospitalist should consider the following factors.

Physician of Record

The attending of record writes the orders to admit the patient to observation; indicates the reason for the stay; outlines the plan of care; and manages the patient during the stay. The attending reports the initial patient encounter with the most appropriate initial observation-care code, as reflected by the documentation:¹

• 99218: Initial observation care, requiring both a detailed or comprehensive history and exam, and straightforward/low-complexity medical decision-making. Usually, the problem(s) is of low severity.
• 99219: Initial observation care, requiring both a comprehensive history and exam, and moderate-complexity medical decision-making. Usually, the problem(s) is of moderate severity.
• 99220: Initial observation care, requiring both a comprehensive history and exam, and high-complexity medical decision-making. Usually, the problem(s) is of high severity.

While other physicians (e.g., specialists) might be involved in the patient’s care, only the attending physician reports codes 99218-99220. Specialists typically are called to an OBS case for their opinion or advice but do not function as the attending of record. Billing for the specialist (consultation) service depends upon the payor.

For a non-Medicare patient who pays for consultation codes, the specialist reports an outpatient consultation code (99241-99245) for the appropriately documented service. Conversely, Medicare no longer recognizes consultation codes, and specialists must report either a new patient visit code (99201-99205) or established patient visit code (99212-99215) for Medicare beneficiaries.

Selection of the new or established patient codes follows the “three-year rule”: A “new patient” has not received any face-to-face services (e.g., visit or procedure) in any location from any physician within the same group and same specialty within the past three years.² There could be occasion when a hospitalist is not the attending of record but is asked to provide their opinion, and must report one of the “non-OBS” codes.

The attending of record is permitted to report a discharge service as long as this service occurs on a calendar day different from the admission service (as in the listed scenario). The attending documents the face-to-face discharge service and any pertinent clinical details, and reports 99217 (observation-care discharge-day management).

Length of Stay

Observation-care services typically do not exceed 24 hours and two calendar days. Observation care for more than 48 hours without inpatient admission is not considered medically necessary but might be payable after medical review. Should the OBS stay span more than two calendar days (as might be the case with “downgraded” hospitalizations), hospitalists should report established patient visit codes (99212-99215) for the calendar day(s) between the admission service (99218-99220) and the discharge service (99217).³ The physician must provide and document a face-to-face encounter on each date of service for which a claim was submitted.

A more likely occurrence is the admission and discharge from OBS on the same calendar date. The attending of record reports the code that corresponds to the patient’s length of stay (LOS). If the total LOS is less than eight hours, the attending only reports standard OBS codes (99218-99220). The hospitalist does not separately report the OBS discharge service (99217), even though the documentation must reflect the attending discharge order and corresponding discharge plan. If the total duration of the patient’s stay lasts more than eight hours and does not overlap two calendar days, the attending reports the same-day admit/discharge codes:¹

• 99234: Observation or inpatient care, same date admission and discharge, requiring both a detailed or comprehensive history and exam, and straightforward or low-complexity medical decision-making. Usually the presenting problem(s) is of low severity.
• 99235: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and moderate-complexity medical decision-making. Usually the presenting problem(s) is of moderate severity.
• 99236: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and high-complexity medical decision-making. Usually the presenting problem(s) is of high severity.

OBS discharge service (99217) is not separately reported with 99234-99236 because these codes are valued to include the discharge component (e.g., the comprehensive service, 99236 [4.26 wRVU, $211], is equivalent to its components, 99220 [2.99 wRVU, $148] and 99217 [1.28 wRVU, $68]). The attending must document the total duration of the stay, as well as the face-to-face service and the corresponding details of each service component (i.e., both an admission and discharge note).³TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center in Philadelphia. She is also on the faculty of SHM’s inpatient coding course.

References

1. Abraham M, Beebe M, Dalton J, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2010:11-16.
2. Medicare Claims Processing Manual: Chapter 12, Section 30.6.7A. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
3. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8C. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
4. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8D. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
5. Medicare Claims Processing Manual: Chapter 1, Section 50.3. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c01.pdf. Accessed May 12, 2010.

Many conditions once treated during an “inpatient” hospital stay are currently treated during an “observation” stay (OBS). Although the care remains the same, physician billing is different and requires close attention to admission details for effective charge capture.

Let’s take a look at a typical OBS scenario. A 65-year-old female with longstanding diabetes presents to the ED at 10 p.m. with palpitations, lightheadedness, mild disorientation, and elevated blood sugar. The hospitalist admits the patient to observation, treats her for dehydration, and discharges her the next day. Before billing, the hospitalist should consider the following factors.

Physician of Record

The attending of record writes the orders to admit the patient to observation; indicates the reason for the stay; outlines the plan of care; and manages the patient during the stay. The attending reports the initial patient encounter with the most appropriate initial observation-care code, as reflected by the documentation:¹

• 99218: Initial observation care, requiring both a detailed or comprehensive history and exam, and straightforward/low-complexity medical decision-making. Usually, the problem(s) is of low severity.
• 99219: Initial observation care, requiring both a comprehensive history and exam, and moderate-complexity medical decision-making. Usually, the problem(s) is of moderate severity.
• 99220: Initial observation care, requiring both a comprehensive history and exam, and high-complexity medical decision-making. Usually, the problem(s) is of high severity.

While other physicians (e.g., specialists) might be involved in the patient’s care, only the attending physician reports codes 99218-99220. Specialists typically are called to an OBS case for their opinion or advice but do not function as the attending of record. Billing for the specialist (consultation) service depends upon the payor.

For a non-Medicare patient who pays for consultation codes, the specialist reports an outpatient consultation code (99241-99245) for the appropriately documented service. Conversely, Medicare no longer recognizes consultation codes, and specialists must report either a new patient visit code (99201-99205) or established patient visit code (99212-99215) for Medicare beneficiaries.

Selection of the new or established patient codes follows the “three-year rule”: A “new patient” has not received any face-to-face services (e.g., visit or procedure) in any location from any physician within the same group and same specialty within the past three years.² There could be occasion when a hospitalist is not the attending of record but is asked to provide their opinion, and must report one of the “non-OBS” codes.

The attending of record is permitted to report a discharge service as long as this service occurs on a calendar day different from the admission service (as in the listed scenario). The attending documents the face-to-face discharge service and any pertinent clinical details, and reports 99217 (observation-care discharge-day management).

Length of Stay

Observation-care services typically do not exceed 24 hours and two calendar days. Observation care for more than 48 hours without inpatient admission is not considered medically necessary but might be payable after medical review. Should the OBS stay span more than two calendar days (as might be the case with “downgraded” hospitalizations), hospitalists should report established patient visit codes (99212-99215) for the calendar day(s) between the admission service (99218-99220) and the discharge service (99217).³ The physician must provide and document a face-to-face encounter on each date of service for which a claim was submitted.

A more likely occurrence is the admission and discharge from OBS on the same calendar date. The attending of record reports the code that corresponds to the patient’s length of stay (LOS). If the total LOS is less than eight hours, the attending only reports standard OBS codes (99218-99220). The hospitalist does not separately report the OBS discharge service (99217), even though the documentation must reflect the attending discharge order and corresponding discharge plan. If the total duration of the patient’s stay lasts more than eight hours and does not overlap two calendar days, the attending reports the same-day admit/discharge codes:¹

• 99234: Observation or inpatient care, same date admission and discharge, requiring both a detailed or comprehensive history and exam, and straightforward or low-complexity medical decision-making. Usually the presenting problem(s) is of low severity.
• 99235: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and moderate-complexity medical decision-making. Usually the presenting problem(s) is of moderate severity.
• 99236: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and high-complexity medical decision-making. Usually the presenting problem(s) is of high severity.

OBS discharge service (99217) is not separately reported with 99234-99236 because these codes are valued to include the discharge component (e.g., the comprehensive service, 99236 [4.26 wRVU, $211], is equivalent to its components, 99220 [2.99 wRVU, $148] and 99217 [1.28 wRVU, $68]). The attending must document the total duration of the stay, as well as the face-to-face service and the corresponding details of each service component (i.e., both an admission and discharge note).³TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center in Philadelphia. She is also on the faculty of SHM’s inpatient coding course.

References

1. Abraham M, Beebe M, Dalton J, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2010:11-16.
2. Medicare Claims Processing Manual: Chapter 12, Section 30.6.7A. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
3. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8C. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
4. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8D. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
5. Medicare Claims Processing Manual: Chapter 1, Section 50.3. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c01.pdf. Accessed May 12, 2010.

AMANE KANEKO

Is it true that the Drug Enforcement Administration (DEA) is going to allow doctors to prescribe controlled drugs electronically?

Will I still be able to prescribe on my prescription pads, or is this big government forcing me to use a computer for prescriptions?

J. Hockenstein, DO

Des Moines, Iowa

Dr. Hospitalist responds: On March 31, the DEA published in the Federal Register an interim final rule regarding the “electronic prescription for controlled substances.” (View the entire rule at www.gpoaccess.gov/fr.) The DEA is seeking comment on the proposed rule for the next 60 days. Some of us might remember that the DEA proposed a similar rule for electronic prescribing in June 2008, but that rule did not meet the security requirements already in place at federal healthcare facilities.

Under the current system, providers can create prescriptions electronically, but the prescription has to be printed on paper. The new rule proposes a system of true electronic prescribing; data can be transmitted electronically from the hospital or doctor’s office to the pharmacy without the use of a printer or fax.

This proposed rule does not eliminate the traditional method of paper and pen for prescriptions but allows providers the voluntary option of prescribing controlled substances electronically. This proposed rule also allows pharmacies to receive, dispense, and archive these electronic prescriptions.

For those providers who choose to prescribe electronically, there will be specific requirements to prevent diversion and maintain privacy. Providers must utilize software that meets the rule’s specific requirements. For example, the software system will require a two-step process to authenticate the prescribing provider. These measures might include a password, a token, or the use of biometric identifier (e.g., fingerprint or handprint). For some of us, this might sound space-aged, but such biometric systems are commonplace in other industries. For example, I provided my fingerprint as part of the test center security system when I checked in for my American Board of Internal Medicine (ABIM) recertification examination.

There are several other issues with the proposed rule that one should consider. The new proposal does not affect the existing rule regarding emergency prescriptions. The current law allows physicians to prescribe a Schedule II controlled substance by telephone and the pharmacist to dispense this substance, provided that the amount being dispensed is limited to what is reasonably required during the emergency time period and that the provider provides a hard copy of the prescription to the pharmacist within seven days of the telephone prescription. Under the proposed rule, providers will still be able to prescribe Schedule II substances by telephone under emergency situations but will have the option of providing an electronic copy of the prescription, rather than a paper one, within seven days.

There are other components of the proposed rule that could change your practice. The rule clearly states that an electronic prescription cannot be changed after transmission and that any change to the content of the prescription will render it invalid. This might be important in a handful of situations. For example, if the provider electronically prescribes a brand-name drug, the pharmacist would not be able to make a generic substitution.

Another component of the proposed rule is that it precludes the printing of an electronic prescription, which already has been transmitted and precludes the electronic transmission of a prescription that already has been printed. This situation might arise if the electronic prescription did not transmit due to a computer problem. The provider would not be able to print or fax a copy of the electronic prescription.

The proposed rule has the potential to reduce medical errors, reduce prescription forgeries, and help providers and hospitals integrate their medical records. True electronic prescribing is long overdue. In the future, I envision hospitalists prescribing from their handheld devices.

The key to success, like any computerized system, will be the ability to keep the system running and continuously maintaining and upgrading security measures. For more information regarding electronic prescriptions for controlled substances, visit www.DEAdiversion.usdoj.gov. TH

AMANE KANEKO

Is it true that the Drug Enforcement Administration (DEA) is going to allow doctors to prescribe controlled drugs electronically?

Will I still be able to prescribe on my prescription pads, or is this big government forcing me to use a computer for prescriptions?

J. Hockenstein, DO

Des Moines, Iowa

Dr. Hospitalist responds: On March 31, the DEA published in the Federal Register an interim final rule regarding the “electronic prescription for controlled substances.” (View the entire rule at www.gpoaccess.gov/fr.) The DEA is seeking comment on the proposed rule for the next 60 days. Some of us might remember that the DEA proposed a similar rule for electronic prescribing in June 2008, but that rule did not meet the security requirements already in place at federal healthcare facilities.

Under the current system, providers can create prescriptions electronically, but the prescription has to be printed on paper. The new rule proposes a system of true electronic prescribing; data can be transmitted electronically from the hospital or doctor’s office to the pharmacy without the use of a printer or fax.

This proposed rule does not eliminate the traditional method of paper and pen for prescriptions but allows providers the voluntary option of prescribing controlled substances electronically. This proposed rule also allows pharmacies to receive, dispense, and archive these electronic prescriptions.

For those providers who choose to prescribe electronically, there will be specific requirements to prevent diversion and maintain privacy. Providers must utilize software that meets the rule’s specific requirements. For example, the software system will require a two-step process to authenticate the prescribing provider. These measures might include a password, a token, or the use of biometric identifier (e.g., fingerprint or handprint). For some of us, this might sound space-aged, but such biometric systems are commonplace in other industries. For example, I provided my fingerprint as part of the test center security system when I checked in for my American Board of Internal Medicine (ABIM) recertification examination.

There are several other issues with the proposed rule that one should consider. The new proposal does not affect the existing rule regarding emergency prescriptions. The current law allows physicians to prescribe a Schedule II controlled substance by telephone and the pharmacist to dispense this substance, provided that the amount being dispensed is limited to what is reasonably required during the emergency time period and that the provider provides a hard copy of the prescription to the pharmacist within seven days of the telephone prescription. Under the proposed rule, providers will still be able to prescribe Schedule II substances by telephone under emergency situations but will have the option of providing an electronic copy of the prescription, rather than a paper one, within seven days.

There are other components of the proposed rule that could change your practice. The rule clearly states that an electronic prescription cannot be changed after transmission and that any change to the content of the prescription will render it invalid. This might be important in a handful of situations. For example, if the provider electronically prescribes a brand-name drug, the pharmacist would not be able to make a generic substitution.

Another component of the proposed rule is that it precludes the printing of an electronic prescription, which already has been transmitted and precludes the electronic transmission of a prescription that already has been printed. This situation might arise if the electronic prescription did not transmit due to a computer problem. The provider would not be able to print or fax a copy of the electronic prescription.

The proposed rule has the potential to reduce medical errors, reduce prescription forgeries, and help providers and hospitals integrate their medical records. True electronic prescribing is long overdue. In the future, I envision hospitalists prescribing from their handheld devices.

The key to success, like any computerized system, will be the ability to keep the system running and continuously maintaining and upgrading security measures. For more information regarding electronic prescriptions for controlled substances, visit www.DEAdiversion.usdoj.gov. TH

AMANE KANEKO

Is it true that the Drug Enforcement Administration (DEA) is going to allow doctors to prescribe controlled drugs electronically?

Will I still be able to prescribe on my prescription pads, or is this big government forcing me to use a computer for prescriptions?

J. Hockenstein, DO

Des Moines, Iowa

Dr. Hospitalist responds: On March 31, the DEA published in the Federal Register an interim final rule regarding the “electronic prescription for controlled substances.” (View the entire rule at www.gpoaccess.gov/fr.) The DEA is seeking comment on the proposed rule for the next 60 days. Some of us might remember that the DEA proposed a similar rule for electronic prescribing in June 2008, but that rule did not meet the security requirements already in place at federal healthcare facilities.

Under the current system, providers can create prescriptions electronically, but the prescription has to be printed on paper. The new rule proposes a system of true electronic prescribing; data can be transmitted electronically from the hospital or doctor’s office to the pharmacy without the use of a printer or fax.

This proposed rule does not eliminate the traditional method of paper and pen for prescriptions but allows providers the voluntary option of prescribing controlled substances electronically. This proposed rule also allows pharmacies to receive, dispense, and archive these electronic prescriptions.

For those providers who choose to prescribe electronically, there will be specific requirements to prevent diversion and maintain privacy. Providers must utilize software that meets the rule’s specific requirements. For example, the software system will require a two-step process to authenticate the prescribing provider. These measures might include a password, a token, or the use of biometric identifier (e.g., fingerprint or handprint). For some of us, this might sound space-aged, but such biometric systems are commonplace in other industries. For example, I provided my fingerprint as part of the test center security system when I checked in for my American Board of Internal Medicine (ABIM) recertification examination.

There are several other issues with the proposed rule that one should consider. The new proposal does not affect the existing rule regarding emergency prescriptions. The current law allows physicians to prescribe a Schedule II controlled substance by telephone and the pharmacist to dispense this substance, provided that the amount being dispensed is limited to what is reasonably required during the emergency time period and that the provider provides a hard copy of the prescription to the pharmacist within seven days of the telephone prescription. Under the proposed rule, providers will still be able to prescribe Schedule II substances by telephone under emergency situations but will have the option of providing an electronic copy of the prescription, rather than a paper one, within seven days.

There are other components of the proposed rule that could change your practice. The rule clearly states that an electronic prescription cannot be changed after transmission and that any change to the content of the prescription will render it invalid. This might be important in a handful of situations. For example, if the provider electronically prescribes a brand-name drug, the pharmacist would not be able to make a generic substitution.

Another component of the proposed rule is that it precludes the printing of an electronic prescription, which already has been transmitted and precludes the electronic transmission of a prescription that already has been printed. This situation might arise if the electronic prescription did not transmit due to a computer problem. The provider would not be able to print or fax a copy of the electronic prescription.

The proposed rule has the potential to reduce medical errors, reduce prescription forgeries, and help providers and hospitals integrate their medical records. True electronic prescribing is long overdue. In the future, I envision hospitalists prescribing from their handheld devices.

The key to success, like any computerized system, will be the ability to keep the system running and continuously maintaining and upgrading security measures. For more information regarding electronic prescriptions for controlled substances, visit www.DEAdiversion.usdoj.gov. TH