Medicare May Cut Payments for ‘High-Tech’ Procedures
Medicare plans to "slash" reimbursements for 1,100 "innovative and frequently used" outpatient procedures, including medical devices and drugs, the Los Angeles Times reports. According to congressional and industry sources, the Centers for Medicare and Medicaid Services (formerly HCFA) within the next few days will issue a new rule, to take effect Jan. 1, that would "mandate substantial reductions" in Medicare reimbursements for a "wide range" of high-tech services, including chemotherapy treatments and the implantation of pacemakers. Although the new rule will not order a "single across-the-board percentage cut" for all high-tech services, some observers worry that individual products could see "deep cuts" in reimbursement levels that would cause hospitals that use them to lose money. The proposed cuts are "driven" by a law passed by Congress in 1999 capping Medicare spending on high-tech care at 2.5% of total outpatient spending, the Times reports. Today, high-tech Medicare spending has increased to about 10% of total outpatient spending, "forcing a cutback," sources said.
Medical experts warn that cutting reimbursements for outpatient services could "backfire," prompting hospitals "unnecessarily" to admit Medicare beneficiaries who need the affected devices and drugs in order to receive the larger reimbursements allowed under Medicare for inpatient care. For example, Dr. Michael Karpf, vice provost of UCLA Hospital Systems and director of the UCLA Medical Center, said that if the cuts take effect and UCLA "suffers big financial losses on outpatient procedures," the hospital would "have to admit" the patients for a hospital stay in order to "avoid losing money." He pointed out that staying overnight can "double or triple" the cost of services, which would drive up the "taxpayers' total bill for Medicare" despite the attempt to restrain spending. Several lawmakers have asked CMS administrator Thomas Scully to delay the new rule "until more information is available about the costs of the ... high-tech items affected by the cutbacks," hoping that officials will "take a closer look at how the new technology is used and determine whether some of these procedures should be reclassified as standard medicine." In a July 27 letter to Scully, Reps. Bill Thomas (R-Calif.), Nancy Johnson (R-Conn.) and Pete Stark (D-Calif.) said that Medicare must "prevent any train wreck in hospital outpatient payments for services using drugs or devices," adding, "We must ensure that seniors have access to efficacious health care treatments and innovative technologies" (Rosenblatt, Los Angeles Times, 8/20).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.