MEDICARE II: White House to Cut Payments for Cancer Drugs

      The Clinton administration is planning to cut Medicare payments for anticancer drugs administered in doctors' offices, the New York Times reports. Until 1998, Medicare reimbursed doctors the full average wholesale price of cancer drugs. But after a 1997 HHS study showed that Medicare payments for 22 drugs, including anticancer medications, exceeded the actual wholesale prices by 29% in 1996, a law was passed to reduce Medicare payments to 95% of the average wholesale price. Recently President Clinton proposed cutting payments even further -- to 83% -- to "eliminate the physician markup for outpatient drugs." Because Congress rejected such a cut, Clinton administration officials have redefined the "average wholesale price" by using data obtained from catalogs of "certain drug wholesalers." This way, federal officials believe they can "reduce payments for drugs without any change in federal law or regulations." HHS Secretary Donna Shalala said, "This is the most immediate action we can take without undergoing the formal rule-making process." The new payments could take effect as early as Oct. 1.

Patients Harmed?
      Patients, health care providers and some lawmakers have decried the proposed payment changes, arguing that the "cuts will make it financially impossible for many cancer specialists to provide chemotherapy in their offices." Over the last 10 years, most cancer chemotherapy has moved from hospitals into doctors' offices. Doctors have admitted that they receive more than they pay for some medications, but maintain that the overpayments "are essential to cover chemotherapy costs not reimbursed by Medicare," such as administrative costs. Dr. Barton McCann, former chief medical officer of Medicare, said that the cuts "may have the unintended consequence of making it financially impossible for oncologists to treat patients in their offices." He added that if patients cannot seek care in doctors' offices, they will go to hospitals, where the care is more expensive and could cost Medicare more. At least 120 members of Congress have signed letters to Shalala protesting the change, in which some argued that HHS "appeared to be acting unilaterally, without soliciting public comment, as agencies usually do before making major changes in federal regulations." Rep. Nita Lowey (D-N.Y.) said, "I am very concerned about the impact of these cuts on cancer patients. Many oncologists will find that it's financially impossible to provide chemotherapy services in their offices." But Chris Jennings, White House health policy coordinator, said: "Patients should not be hurt in any way, but taxpayers should get a fair deal. The current reimbursement policy is unsustainable. It's appropriate to reimburse doctors for the cost of the drugs they purchase, but they should not be allowed to mark up the price by 20%, 70% or 700%, as they do now in some cases" (Pear, 8/6).