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NATIONAL INFUSION CENTER ASSOCIATION – Overview of Establishing an Infusion Center, Federal Guidance

Overview. The market for infusion therapy continues to grow. Many physician practices consider adding an infusion practice to increase ancillary services revenue, offer additional health care services to their existing patient population, or to further integrate care and care coordination. Although a variety of potential structures exist, many infusion centers are established either as free-standing infusion centers or integrated under an existing physician group practice. As evidenced in their name, free-standing infusion centers are independent infusion centers that are independent and stand apart from provider organizations (e.g., group practices, hospitals). Depending on state law restrictions regarding who may own such centers, non-practitioners, non-physicians, or even corporate entities may own free-standing infusion centers. Infusion centers integrated under an existing group practice are infusion centers affiliated with, and integrated into, existing provider organizations (e.g., group practices). These centers usually are co-located at existing physician group practices and service existing group practice patient populations. In many cases, physicians within the group practice own these affiliated infusion centers.

Before establishing an infusion practice, either through a free-standing infusion center or by incorporating an infusion center into an existing clinical practice, consider the important federal regulatory and operational issues discussed in this resource. You should also consider state law implications, which are addressed in separate modules.

How will the center be paid?

Patient mix – that is, whether you will service cash-paying patients, patients with commercial insurance, or Medicare beneficiaries – may affect how you establish an infusion center. Providers considering establishing a free-standing infusion center may find it difficult to estimate a potential center’s patient mix, whereas providers incorporating a center into their existing practice can consider historic patient populations. In either case, patient mix may have a significant effect on a potential center’s future revenue.

Infusion centers that service commercially-insured patients or Medicare beneficiaries may be able to count on receiving more reliable reimbursement amounts, particularly when centers have obtained prior authorization for such services. However, infusion center services and drugs must qualify for reimbursement in accordance with commercial payer and Medicare reimbursement rules. Under Medicare Part B – the Medicare benefit applicable to infusion services and drugs – a center and practitioners must, among other things, be enrolled in Medicare to receive reimbursement for such services and drugs. For the center, this requires the center to enroll as a Medicare Part B

Practice Tip: Sanctions/revocations may occur if a clinic bills for infusion services provided by a practitioner who has not reassigned his or her rights to the clinic.

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clinic using the Centers for Medicare and Medicaid Services (CMS) Form 855B. Unlike other enrollment processes, the Part B clinic enrollment process is straightforward and does not require a state survey or accreditation process. Practitioners must enroll as a Medicare Part B provider using CMS Form 855I. For the infusion center to bill for the practitioners’ services, practitioners must reassign their Medicare reimbursement to the infusion center (or group practice providing infusion services) which requires completion of CMS Form 855R. Practically speaking, enrollment is easy for infusion centers established and already enrolled in Part B; enrolled physician practices (and physicians) can bill for infusion services under their existing Medicare numbers.

Billing commercial payors for infusion services will vary based on the payor and any contract the provider already has with the payor. Many commercial payors permit physician practices to bill for infusion services under their general agreements, but others do not.

Cash paying patients often present less difficulties regarding reimbursement given that reimbursement is not subject to payer rules and regulations (as discussed below). However, cash-paying patients may present their own unique difficulties, such as collecting on amounts due. Given the high cost of infusion drugs, an infusion center may experience a significant financial impact if even a small number of infusion drugs go unreimbursed. Infusion centers with cash-paying patients may also face limited revenue streams. For example, some patients may directly purchase infusion drugs for their own use from pharmacies and then bring these drugs to an infusion center for administration (a practice commonly referred to as “brown-bagging”). Although brown-bagging may be a method of acquiring drug, this method raises concerns relating to drug handling, storage, and pedigree. Due to the risk associated with administering a brown-bagged drug, many infusion providers will not administer medications brought in by patients but may elect to administer white-bagged medications (i.e., those shipped from a specialty pharmacy directly to the infusion facility). Additionally, in such cases, professional services fees associated with drug administration serve as a center’s primary revenue stream; centers will not have the opportunity to obtain drug revenue. Infusion centers with high upfront capital investments (e.g., investment in equipment, space, personnel) may find it difficult to recover capital investments in establishing the center based on this limited revenue stream, but also do not have to make the financial outlays to purchase the drugs.

How much will the center be paid?

Even for Medicare Part B enrolled centers and providers, Medicare Part B will only provide reimbursement for infusion services and drugs that meet Medicare coverage requirements. Coverage amounts vary for infusion services versus infusion drugs. For infusion services, Medicare generally provides coverage pursuant to the Medicare physician fee schedule (PFS).1 Although Medicare allows non-physician practitioners (e.g., nurse practitioners, physician assistants) to supervise infusion services where certain requirements are met, the professional

1 See Cntrs. for Medicare & Medicaid Servs., Physician Fee Schedule, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/ (last visited Jun. 27, 2018).

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/

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services billed in connection with infusion services and supervised by non-physician practitioners are reimbursed at only 85% of the PFS.2 The drug fees are paid pursuant to the fee schedule as more thoroughly detailed below. You should consider staffing models (and any such associated reductions in reimbursement) associated with such models. For example, free-standing infusion centers may staff non-physician practitioners more frequently than centers integrated into an existing physician practice at which physician practitioners already are present. Regardless, it is helpful to consider the effects of staffing on reimbursement amounts in analyzing the viability of either model. Centers should bill claims for services and drugs under the supervising practitioner’s National Provider Identifier (“NPI”).

Unlike for infusion services, Medicare Part B payment for infusion drugs does not vary based on the type of supervising practitioner. However, as discussed more fully below, Medicare Part B generally only provides coverage for drugs in three scenarios. With only limited exceptions, Part B reimburses for infusion drugs based on the lesser of actual charges for the drug or 106% of the drug’s Average Sales Price (ASP), subject to applicable beneficiary deductibles and coinsurance.3 CMS publishes ASP in the Single Drug Pricer, which is publicly available online at cms.gov. Although permitted, reimbursement often does not include a dispensing or supply fee because those fees are only available to pharmacies.4

Commercial payer reimbursement will vary based on the exact terms of the payer agreement. Commercial payer reimbursement often corresponds with or in some way considers the Medicare reimbursement amount.

When will infusion drugs be covered?

Medicare Part B generally provides coverage for infusion services drugs in three ways:

• When Part B drugs meet Medicare “incident to” requirements;

• When specific drugs are listed under a benefit category specifically-identified for coverage by the Social Security Act (the Act); and

• When infusion drugs are administered through durable medical equipment (DME) at home.5

2 See, e.g., 42 C.F.R. §§ 414.52(d) (payment for physician assistant services), 414.56(c) (payment for nurse practitioner services). 3 Cntrs. for Medicare & Medicaid Serv.’s, Medicare Claims Processing Manual, Ch. 17, § 20.1.2; 42 U.S.C. § 1395u(o)(1)(A); 42 C.F.R. § 414.904(a). Notable exceptions include durable medical equipment (DME) infused drugs and certain statutory-covered drugs, among others. See also 42 C.F.R. § 414.904(h) (regarding cost-sharing). 4 42 U.S.C. § 1395u(o)(2). 5 This tool does not discuss this category of Part B drugs given that such drugs likely are not applicable to infusion clinics.

Practice Tip: To bill for infusion drugs under Medicare Part B, infusion clinics must be affiliated with the practitioner or clinical entity that performs the initial service leading to a course of infusion treatment. Infusion clinics cannot bill separately for drugs “incident to” unaffiliated referring practitioners’ (e.g., not employed, leased or contracted with the clinic) professional services.

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Incident to drugs. The category of drugs most applicable to infusion centers are Part B drugs that meet Medicare “incident to” requirements. To receive coverage, these drugs must be furnished “incident to” a physician or authorized practitioner’s (e.g., nurse practitioner, physician assistant)6 professional service; be reasonable, necessary, and effective for the patient’s condition; and not be usually self-administered.7 In order to be able to bill “incident to” the practitioner must have furnished a direct, personal, professional service to initiate the course of treatment.8 This may result in the ability to bill an E&M code on the first visit. A drug is “usually” self-administered if more than 50% of Medicare beneficiaries who use the drug self-administer it. Medicare Administrative Contractors (MACs) make local determinations regarding whether drugs are usually self-administered and publish these determinations on their websites, which persons may review to determine which products Medicare Part B may cover.9 While many infusion drugs administered at infusion centers are covered because they are delivered via intravenous or intramuscular injection (e.g., not self-administered via pill form or self-injection) “incident to” a physician or authorized practitioner service (e.g., administered at the center rather than at home), drugs listed on MAC self-administered drug lists (SAD lists) are not. However, many drugs on SAD lists may be covered under Medicare Part D, which generally covers outpatient prescription drugs approved by the Food and Drug Administration.

Drugs must meet all “incident to” requirements to receive coverage under Medicare Part B. Among other things, this requires a drug to be an integral, though incidental, part of the practitioner’s service in the course of diagnosing or treating an illness.10 At a high-level, this requires that an authorized practitioner perform a direct, personal professional service (e.g., evaluation and management service) to initiate the course of treatment and develop a plan of care

under which the drugs are then administered.11 Afterwards, however, the initial practitioner only need remain involved in the course of treatment (e.g., monitoring plan of care and treatment and making necessary adjustments).12 Medicare Part B coverage requirements do not require the practitioner to provide services at each infusion. The practitioner only must directly supervise

6 The scope of practice, and therefore ability to be the supervising practitioner, for mid-level practitioners varies from state to state. 7 Authorized practitioners are non-physician practitioners authorized by the Medicare statute to receive payment for services “incident to” their own services. This includes clinical psychologists, physician assistants, nurse practitioners, clinical nurse specialists, and nurse midwives. 42 C.F.R. §§ 410.26(a)(7), 410.71(a)(2), 410.74(b), 410.75(d), 410.76(d), 410.77(c). 8 Medicare Benefit Policy Manual, Ch. 15 § 60.2. 9 A list of MACs can be found here: https://www.cms.gov/Medicare/Medicare-Contracting/Medicare-Administrative-Contractors/Who-are-the-MACs.html 10 42 C.F.R. § 410.26(b)(2). 11 Medicare Benefit Policy Manual, Ch. 15, § 60.2. 12 Medicare Benefit Policy Manual, Ch. 15, § 60.1.B.

Practice Tip: For group practices, supervision may be provided by group practitioners, as well as the practitioner who initially serviced the patient.

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Practice Tip: Always verify the exact practitioner for which Part B provides coverage. Coverage sometimes allows for “physician” involvement, which may include nurse practitioners, while other times coverage requirements demand involvement by a doctor of medicine or osteopathy (e.g., for antigens).

the person administering the drug, which requires that the practitioner be present in the office suite and immediately available to furnish assistance.13

If the practitioner (or his or her practice group) does not incur a cost for the drug, then Medicare Part B does not cover the drug’s cost. For example, while Medicare Part B does cover the professional services for administering “white bag” or “brown bag” drugs (as discussed above), it does not cover the cost of white bag or brown bag drugs because the practitioner (or his or her group practice) did not incur their cost.

Drugs also must be furnished in accordance with state law. Depending on the state, a number of restrictions

may apply. As discussed above, under Medicare Part B rules, authorized practitioners like nurse practitioners and physician assistants may provide Part B covered services where regulatory requirements are met. For example, nurse practitioners must have an existing physician collaboration agreement to bill for Part B services under their own NPI.14 However, state laws will determine the scope of practice for such practitioners. These laws are addressed in the individual state modules.

Statutory-Covered Drugs. Part B also provides coverage for products specifically identified for Part B coverage by the Act. These products are commonly referred to as “statutory exceptions” because the Act specifically identifies the products and coverage requirements for each drug. They also may be referred to as “protected classes.” Although the majority of infusion drugs likely will fall within the “incident to” category, notable statutory exceptions include:

• Antigens; • Blood clotting factors; • Immunosuppressive drugs; • Erythropoietin drugs; and • Certain oral anti-cancer and anti-emetic drugs.15

National coverage determinations and local coverage determinations specify coverage criteria for these drugs, in addition to the statutory and regulatory requirements. Review these coverage determinations prior to making coverage determinations.16

13 42 C.F.R. § 410.26(a). 14 42 C.F.R. § 410.75(c)(3). 15 See 42 U.S.C. § 1395x(s)(2). 16 See, e.g., Cntrs. for Medicare & Medicaid Serv.’s, Nat’l Coverage Determination for Antigens Prepared for Sublingual Admin. (110.9.), https://www.cms.gov/medicare-coverage-database/details/ncd-details.aspx?NCDId=155&ncdver=1&bc=AAAAgAAAAAAA& (last visited Apr. 23, 2018); Cntrs. for Medicare & Medicaid Serv.’s, Medicare National Coverage Determinations Manual, Pub. 100-03.

https://www.cms.gov/medicare-coverage-database/details/ncd-details.aspx?NCDId=155&ncdver=1&bc=AAAAgAAAAAAA&https://www.cms.gov/medicare-coverage-database/details/ncd-details.aspx?NCDId=155&ncdver=1&bc=AAAAgAAAAAAA&

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Commercial payer coverage requirements vary with each payer and contract agreement. You should review payer agreements and reimbursement rules (e.g., reimbursement manuals and guidance) to determine commercial payer coverage requirements, which, in some cases, may mirror Medicare Part B coverage requirements.

How do I obtain the drugs?

Infusion centers generally obtain drugs used in their practices in three ways. First, infusion centers may purchase drugs from pharmaceutical manufacturers, usually through wholesalers (“direct purchasing”, also known as “buy-and-bill purchasing” or “buy-and-bill”). Direct purchasing allows infusion centers to directly negotiate drug costs. However, direct purchasing also requires centers to pre-pay for drugs, which generally are quite expensive. You should consider how such purchasing may affect funding for your center, particularly given that commercial and Medicare reimbursement generally occurs several months after centers provide services and submit claims. In many cases, services may occur several weeks or months after drugs are purchased, resulting in a significant lag time between drug purchasing and drug reimbursement. Second, infusion centers purchase drugs as needed for patients from infusion pharmacies (known as “administration only,” “Spec Rx, “ and “specialty pharmacy”). Buy and bill drug purchasing allows infusion centers to bill for purchased drugs (e.g., retain drug profit margins), while reducing the upfront costs associated with bulk direct purchasing. Lastly, infusion centers directly receive drugs for administration from specialty pharmacies that are either shipped to the center (“white bagging”) or to the patient’s home, who then brings the medication to the center for administration (“brown bagging”, as described above). Because infusion centers do not incur a cost for drugs acquired through specialty pharmacies, infusion centers cannot bill for such drugs, which limits center revenue streams (e.g., professional services fees for drug administration).

How do I submit claims?

For Medicare Part B payment, practitioners submit claims to Medicare Part B Medicare Administrative Contractors (MACs). Medicare Part B includes product-specific claims submission requirements for drugs, which detail how drugs must be billed (e.g., under certain Healthcare Common Procedure Codes (HCPCS)) and the information that must be included on submitted claims (e.g., diagnosis codes). Billing requirements are product (and often diagnosis) specific. For example, Medicare Part B requires that providers report a cancer diagnosis code for oral cancer drug claims and include the specific name of the drugs and dosage for injection claims.17 Where allowable, dispensing fees must be billed on the same claim as the drug or biologic.18 To avoid reimbursement interruptions, carefully review claims submission requirements for each product prior to billing.

17 Cntrs. for Medicare & Medicaid Serv.’s, Medicare Claims Processing Manual, Ch. 17, §§ 20.5.7, 80.1.3. 18 Cntrs. for Medicare & Medicaid Serv.’s, Medicare Claims Processing Manual, Ch. 17, § 80.7.

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Practitioners must only seek payment for Part B drugs on an assignment-related basis.19 This restricts providers from billing any person for charges associated with Part B drugs and biologics, other than for applicable cost-sharing amounts (e.g., deductible amounts, co-insurance).20

You should submit commercial payer claims in accordance with payer agreements.

What types of compliance concerns should I consider in establishing an infusion center?

Federal and state fraud and abuse laws may affect the potential ownership or structure of, as well as practitioner compensation relationships associated with, infusion centers. For example, the federal Physician Self-Referral Law (the Stark Law) prohibits a physician from referring a patient for any Medicare “designated health services” (“DHS”)21 to an entity with which the referring physician (or an immediate family member) has a financial relationship (e.g., ownership or compensation relationship), unless an exception applies.22 DHS include outpatient prescription drugs, like those provided by infusion centers. An infusion center may implicate the Stark Law where a physician owns an equity interest in the infusion center or receives compensation for services provided to the center (e.g., employee or independent contractor compensation).23 As a strict liability statute, centers and physicians with financial relationships that implicate the Stark Law must adhere to one of the Stark Law’s regulatory exceptions or face potential penalties.

Many financial relationships typical between infusion centers and physicians may be structured to meet a Stark Law exception. For example, an exception to the Stark Law exists for compensation paid to physicians who are bona fide employees. This exception requires, among other things, that employment compensation is commercially reasonable, consistent with fair market value, and does not vary with or take into account the volume or value of referrals by the physician.24 Largely used by group practices, the in-office ancillary services exception applies to referrals by physicians in a group practice where another physician in the group practice supervises or performs the referred services (e.g., another infusion center physician provides/supervises the administration of infusion drugs).25 This exception is quite technical, and the Stark Law identifies specific requirements that physician group practices (and affiliated infusion centers) must meet to qualify as a group practice under Stark. Among other things, this exception requires that services are provided in the same building or a centralized building of the group practice, which may present issues for free-standing infusion centers. Physician referrals to pharmacies may also implicate the Stark Law if physicians refer to pharmacies with which physicians have financial relationships (e.g., pharmacy ownership interests, personal services arrangement). You should conduct a careful review of this exception and its requirements before structuring any compliance plans around this exception.

19 42 U.S.C. § 1395u(o)(3)(A). 20 42 U.S.C. § 1395u(o)(3)(B), (b)(18)(b). 21 DHS include a broad array of services, including inpatient outpatient prescription drugs. See 42 C.F.R § 411.351. 22 42 C.F.R. § 411.353. 23 See 42 C.F.R. § 411.354. 24 42 C.F.R. § 411.357(c). 25 See 42 C.F.R. § 411.355(b).

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The federal Anti-Kickback Statute (the “AKS”) prohibits the knowing and willful direct or indirect payment, receipt, offering, or solicitation of remuneration (i.e., anything of value) with the intent to induce the referral of any item or service reimbursable in whole or in part by certain federal health care programs.26 Remuneration implicates the AKS even if one purpose of the remuneration is to induce patient referrals, even though another legitimate business purpose for its payment may exist. Unlike the Stark Law, the AKS is not a strict liability statute. Arrangements that do not meet a safe harbor are not necessarily illegal but may present significant risk.

Similar to the Stark Law exceptions, the AKS has regulatory safe harbors that may be relevant to infusion center relationships with practitioners (e.g., employment and personal services arrangements). For example, the AKS employment safe harbor applies to compensation paid by an employer (e.g., infusion center) to a bona fide employee (e.g., physician) for the employee to provide services covered under a federal health care program.27 Like the Stark Law, the AKS also allows personal services arrangements where, among other things, the parties have entered into a written agreement with at least a one-year term that specifies the scope of services and compensation. This safe harbor requires that compensation is fair market value and not determined in a way that takes into account the volume or value of referrals of federal health care program business.28

The AKS applies to remuneration and/or referrals by all persons, not just physicians. Infusion center relationships with pharmacies may implicate the AKS if, for example, pharmacies offer centers drugs below fair market value (i.e. remuneration) to incentivize center referrals of other federal health care program business (e.g., referrals for Medicare Part D drug business). Many pharmacies also provide pharmacy services, such as medication therapy management or medication adherence services, to infusion centers. centers may structure these arrangements to meet the personal services arrangements safe harbor discussed above. Given the significant financial penalties and consequences associated with non-compliance with the Stark Law and the AKS (e.g., risk of exclusion from federal health care programs, criminal charges), infusion centers should structures arrangements with healthcare providers and entities to fit within applicable exceptions and safe harbors. State modules will consider state analogues of the Stark Law and the AKS, as well as other state fraud and abuse laws.

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26 See 42 U.S.C. §1320a-7b. 27 See 42. C.F.R. § 1001.952(i). 28 See 42. C.F.R. § 1001.952(d).

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