HHS Officials Urge Lawmakers to Reform Medicare Part B Prescription Drug Reimbursement System
HHS officials yesterday asked lawmakers at a hearing of the Senate Finance Subcommittee on Health to reform the Medicare Part B prescription drug reimbursement system, which they blamed for "wasting billions of dollars" in federal funds, USA Today reports. Medicare spends more than $5 billion per year on a limited number of prescription drugs administered in hospitals and doctors' offices, including some intravenous cancer treatments, an anemia drug for some cancer and kidney disease patients and some treatments for asthma and emphysema. The HHS Office of Inspector General has released several reports about Medicare prescription drug overpayments. Among their findings:
- Medicare could have saved $1.9 billion on 24 drugs in 2000 if it had been able to pay the same prices as the Department of Veterans Affairs, which receives the "deepest discounts" from drug manufacturers.
- Medicare reimburses drug makers for the asthma drug albuterol at a rate three to five times higher than the medication's average wholesale price -- the rate at which the federal government sets prescription drug reimbursements.
- The Medicare program and its beneficiaries could save $279 million per year on ipratropium bromide, a drug used to treat bronchitis and emphysema, if payments for it were reimbursed at the median price paid by the VA.
"Until this problem is corrected, Medicare and its beneficiaries will unnecessarily pay more and more each year," HHS Inspector General Janet Rehnquist told lawmakers (Appleby, USA Today, 3/15).
Lawmakers yesterday agreed that Congress should reform the "flawed methodology" of the Medicare prescription drug reimbursement system. "Medicare is overpaying for drugs to the tune of about $1 billion a year," Sen. Jay Rockefeller (D-W.Va.) said, adding, "In some cases, the 20% coinsurance (paid by beneficiaries) exceeds 100% of the true cost of the drug. That is unacceptable." CMS Administrator Thomas Scully told lawmakers that "if Congress doesn't act this year [to reduce Medicare prescription drug costs], we will." However, he said that although CMS can reduce reimbursements for the prescription drugs covered under Medicare, the agency "cannot make offsetting increases" in reimbursement to providers that doctors -- particularly cancer physicians -- have said "would be required in order to prevent access problems" for patients. According to Larry Norton of the American Society of Clinical Oncology, cancer physicians use the profits earned on prescription drugs covered under Medicare to "cross-subsidize" the cost for services such as chemotherapy (Rovner, CongressDaily, 3/14). The testimony of Rehnquist, Scully and Norton are available online. Note: You must have Adobe Acrobat Reader to view the testimony.
In other Medicare news, HHS Secretary Tommy Thompson and White House Office of Management and Budget Director Mitch Daniels wrote in a letter to Reps. Bill Thomas (R-Calif.) and Nancy Johnson (R-Conn.) that the Bush administration "has no compelling evidence that there is a problem with the overall adequacy of provider payments" under Medicare. However, they added that the administration would "work with Congress to consider limited modifications to provider payment systems in order to address payment issues" (Rovner, CongressDaily/AM, 3/15). Medicare reduced physician reimbursement rates on Jan. 1 by 5.4% under a formula approved by Congress in 1997. The Bush administration has said that Congress must offset increases to Medicare provider reimbursements with other reductions in the budget, a policy that Thomas and Johnson criticized in a letter to Thompson and Daniels in February (California Healthline, 2/15). In their response, Thompson and Daniels wrote that the Medicare physician reimbursement system "is sound and effective." They added that the Bush administration would support proposals "that lessen [the] volatility" of the reductions but said that such proposals should cost "far less" than the $126 billion, 10-year plan recommended by the Medicare Payment Advisory Commission (CongressDaily/AM, 3/15). MedPAC has recommended a new Medicare provider reimbursement system that would increase reimbursements to physicians by 2.5% next year (California Healthline, 1/22). The letter did not recommend additional delay of a 15% reduction in home health reimbursements scheduled to take effect Oct. 1 (CongressDaily/AM, 3/15).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.