Bush Administration Proposes Medicare Payment Cuts for Outpatient Services
The Bush administration has proposed "deep reductions" in Medicare payments for certain services as part of a new system of reimbursing hospitals for outpatient care, the New York Times reports. Under the proposal, Medicare would pay less for prescription drugs and medical devices, as well as for "high-technology" procedures and blood products used to treat outpatients. Some of the new payment rates the government is considering include:
- $83 per pint of red blood cells, down from $137 this year, a decrease of 39%;
- $290 for a breast biopsy, down from $400, a decrease of 27.5%;
- $24 for an injection of cisplantin, a cancer drug, down from $42;
- $1,346 for implanting an infusion pump, down from $4,079, a 67% drop; and
- $0.52 per unit of a blood clotting factor used by hemophiliacs, down from $1.12 per unit. The cut effectively reduces a typical outpatient infusion of the factor from $2,800 to $1,300.
The government said that although the new payment rates are "far lower" than this year's amounts, the new rates "accurately reflect hospital costs." Previously, the government relied on data from drug and device manufacturers to set payment rates for hospitals. The new payment rates are based on actual claim data from hospitals, the first time such a system has been used, the Times reports. Federal health officials said that Medicare has been "overcharged" for outpatient services in the past and that the new payment rates are "more accurate." The Times reports that the formulas used for Medicare payments are "notoriously complex," and the government has difficulty setting rates because the services hospitals provide are "continually changing because of new technology." The Bush administration said the new system for outpatient reimbursements was "arguably the most complex and difficult in the history of the Medicare program." The new payment rates will take effect Jan. 1, after the government solicits public comment on its proposal and issues a final rule.
Doctors and patient advocates said they were concerned that the new payments would force hospitals to stop providing potentially money-losing services and would make it difficult for Medicare beneficiaries to access treatment. Teaching hospitals said the cuts would "hit them particularly hard," the Times reports. "Our biggest concern is the underpayment for new technology, especially cancer therapy drugs," William Petasnick, president of Milwaukee-based Froedtert Hospital, said. Stephen Ubl, executive vice president of the Advanced Medical Technology Association, added, "Hospitals tend to underreport the costs of high-tech items, and the government compounds the problem by reducing charges for all items by a standard percentage" (Pear, New York Times, 9/22).
In other Medicare news, Rep. Karen Thurman (D-Fla.), who is running for re-election, touted a Medicare drug benefit plan by Democrats during the party's weekly radio address on Saturday, saying it "guarantees seniors an affordable prescription drug benefit." She said a Republican-backed plan passed by the House this summer is a "sham of a bill that forces many seniors to rely on insurance companies that may or may not offer coverage to seniors at some unknown price." The $320 billion House bill would have private insurers, rather than the federal government, administer the drug benefit. Thurman said that in contrast, the Democratic proposal would "look, smell and feel like any other Medicare benefit because it would be part of Medicare" (AP/Boston Globe, 9/22). Regarding generic drug legislation, the Washington Post reports that in an interview Sen. John McCain (R-Ariz.) said he is "picking up on widespread 'frustration among voters'" concerning House Republicans' inaction on rising drug costs. He said that House Republicans could "pay a price at the polls" for their inaction and that it is "very, very likely" Democrats will win control of the House, the Post reports (VandeHei, Washington Post, 9/23). Meanwhile, New Hampshire U.S. senatorial candidates Gov. Jeanne Shaheen (D) and Rep. John Sununu (R-N.H.) on Saturday addressed a Medicare prescription drug benefit and other health care issues on CNN's "Novak, Hunt & Shields" (Hunt/Novak, "Novak, Hunt & Shields," CNN, 9/21). The full transcript of the program is available online.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.