New federal legislation eases contrast dilemma

January 31, 2001

Concerns that the use and sale of contrast agents would suffer under ambulatory payment classifications (APCs) were put to rest in late December when then-president Clinton signed the Benefits Improvement and Protection Act of 2000.The legislation, which

Concerns that the use and sale of contrast agents would suffer under ambulatory payment classifications (APCs) were put to rest in late December when then-president Clinton signed the Benefits Improvement and Protection Act of 2000.

The legislation, which will take effect in July, directs the Health Care Financing Administration to create additional APCs for contrast-enhanced diagnostic procedures under the Hospital Outpatient Prospective Payment System (HOPPS). The legislation also defines contrast agents as drugs under Medicare, which allows the possibility that certain newer contrast agents will be eligible for pass-through payments at 95% of the average wholesale price. Contrast agents could also be covered in physician offices at 95% of the AWP.

Before HOPPS was implemented, Medicare billing for contrast agents was not standardized, although payment was usually approved, said Richard White, legislative counsel for the Medical Imaging Contrast Agents Association (MICAA). CPT codes had been assigned for the use of contrast agents, providing a mechanism for their reimbursement in many instances.

"When we moved to APCs, the goal was to move the drug and procedure costs into one payment for the hospital outpatient setting," White said. "HCFA proposed APCs that were based upon the modality used but did not (provide for additional payment) when contrast was administered."

That one-size-fits-all payment strategy in effect discouraged use of contrast agents, said White, whose organization educates the government and public about the benefits, appropriate use, and cost-effectiveness of contrast agents. Under the new law, the contrast agent distinction will be restored.

"What we were concerned about was the creation of a system that was a disincentive to use contrast and a disincentive for Medicare patients to have contrast agent procedures available to them in an outpatient setting," White said.

One company that foresees benefits extending from the new law is Du Pont Pharmaceuticals, which is awaiting FDA approval of its ultrasound contrast agent, Definity. Du Pont and others in the industry worked hard, albeit unsuccessfully, to convince HCFA, when writing HOPPS, to consider contrast agents as drugs and to provide additional payment classifications for procedures that use them.

"This legislation provides the basis for HCFA to address our request," said Jack J. Slosky, senior director of professional and payer relations for Du Pont. "The importance of this law cannot be underestimated."

That importance reflects an anticipated increase in patient access to noninvasive imaging procedures such as MRI, CT, and contrast-enhanced ultrasound, Slosky said. It also paves the way for efforts by companies such as Du Pont to develop additional contrast agents that will ultimately benefit more patients.

"The bottom line is that without appropriate medical payment, companies such as ours will not be in a position to continue developing these products," Slosky said.

Jack Defranco, vice president of marketing for Alliance Pharmaceuticals, agrees.

"This is the first time contrast agents have been recognized as drugs, and that's important for reimbursement," he said. "Secondly, having codes that differentiate between hospital and nonhospital reimbursement is the first step in getting universal coverage for these agents."

Even so, the law will have little direct effect on Alliance Pharmaceutical, at least in the short term, he said. The FDA has decided that Imavest, the company's ultrasound contrast agent, is approvable, but labeling issues must be worked out before the product can be marketed.