Cost adjustment

The $10 extra per dose also might not be enough to cover the greater expense of using LEU-derived Tc-99m. In its letter, AHA requested that CMS explain how the adjustment would be enough to "incent hospital behavior."

For one, the product seems to be more expensive to produce. Covidien noted that capital expenses involved in the shift to LEU, such as building new reactors or particle accelerators, as well as the cost of long-term storage of the greater amounts of waste produced, all could increase product costs. Also, because of the tight supply, increased demand for non-HEU moly driven by the CMS policy could raise the price even further.

Hospitals, in turn, would also have to bear new administrative burdens and their associated costs, the AHA said.

To get the price adjustment, hospitals would have to report a new HCPCS code, QXXXX, for each dose. While they wouldn't need to certify the Tc-99m dose was derived from a non-HEU source in that filing, they would need documentation on hand in case of an audit, AHA said in its letter. That means hospitals would have to create and maintain compliance policies to monitor HEU and non-HEU purchases, which would require additional personnel time and an IT infrastructure built around the dual-track recordkeeping, the AHA said.

"On the hospital side, for instance, implementing a new code, tracking which product is used, determining if it is certified, and then ensuring billing accuracy, results in higher administrative costs in addition to the actual price difference of the product," Premier's Lloyd said.

Mixing it up

As with some other respondents, AHA said if CMS goes ahead with its non-HEU moly plan, it should at least give participants higher per-dose payment adjustments and phase it in over several years, as the LEU-sourced supply chain becomes more diversified and robust.

One recommendation largely shared among CMS' correspondents was to allow the payment adjustments to apply to mixed doses: blended non-HEU and HEU generators, rather than ones exclusively derived from non-weapons grade sources. This would take into account the relatively scarcer supply of the material. Also, Covidien said requiring only 100 percent non-HEU sources for the adjustment would force manufacturers to segregate HEU from non-HEU sources in the supply chain, a "significant operational challenge" that in turn could create "hidden supply risks and costs beyond those estimated."

"The administration is proposing this as a way to incentivize manufacturing to produce more, but it's not going to work if the payment is inadequate and the policy is burdensome," Schulman observed.

For now, though, stakeholders have to wait to see what CMS decides. The agency is expected to release the final rule by November.

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