Medicare pay rate for cancer, hemophilia drugs preserved

Oncologists welcome HCFA's decision to postpone cutting Medicare payments for some cancer drugs until it sets appropriate physician reimbursements for chemotherapy services.

By Jane Cys, amednews staff. Oct. 2, 2000.

Washington -- The Health Care Financing Administration has backed off a plan that would have substantially cut Medicare reimbursement for 17 drugs commonly used for cancer and hemophilia treatment.

The agency still plans to move ahead with its proposal to encourage carriers to use more accurate prices as the basis for reimbursement for 32 other drugs, which most likely will result in payment reductions.

"We have concluded that Medicare payments for services related to the provision of chemotherapy drugs and clotting factors used to treat hemophilia and similar disorders are inadequate," explained HCFA Administrator Nancy-Ann DeParle in a letter to Congress.

DeParle, who was expected to leave her post Oct. 1, said the agency planned to include modifications in the 2002 physician fee schedule that would boost payments to doctors who provide chemotherapy services.

HCFA also hopes to solve the problem that inadequate Medicare reimbursement creates for hemophilia drug suppliers by proposing legislation that would establish payments to cover their administrative costs, such as shipping and storage, DeParle said.

Robert Young, MD, president of the Philadelphia-based Fox Chase Cancer Center, said HCFA's decision not to move ahead with the expected cuts in cancer drugs is a good sign. Even better news is the agency's plan to examine physician payments for providing chemotherapy, he said.

Oncologists currently rely on the drug payments to make up for Medicare's low chemotherapy reimbursements, Dr. Young said. "We might end up with a much more appropriate reimbursement schedule for what doctors actually do for cancer patients in the outpatient setting."

Access concerns diffused

The 1997 Balanced Budget Act required Medicare payments for covered drugs to equal 95% of their "average wholesale price." Carriers typically find that figure in pharmaceutical industry sources such as the Red Book or Medispan.

State and federal government investigations, however, turned up evidence that seems to indicate that the prices listed in those industry sources were inflated. The Dept. of Justice, for example, found that drug wholesale catalogs list a price of $22 for albuterol sulfate, which is substantially less than the $73 figure given in the Red Book.

The Justice Dept. gave its data to HCFA, which then decided to disseminate the updated average wholesale prices to carriers. HCFA provided carriers with the prices for all 49 Medicare-covered drugs, even though it directed them not to use the data when setting reimbursements for 17 of the drugs until it had more time to study the concerns of the medical profession and implement any needed changes.

For the remaining 32 drugs on the list, carriers must notify HCFA by Oct. 15 of the source they plan to use -- government data or the pharmaceutical industry's prices -- for updating the information needed to calculate Medicare's drug payments beginning Jan. 1, 2001.

HCFA originally said carriers could use the new prices for all 49 drugs, setting off a storm of protests from the American Society of Clinical Oncology and others who said the resulting cuts would put oncologists out of business. Dr. Young noted, for example, that the suggested average wholesale prices would reduce payments for some of the cancer drugs by as much as 50%.

That most likely would have created access problems for cancer patients, particularly since 85% of them get chemotherapy treatment in an outpatient setting, Dr. Young added. "If doctors in a clinic setting lose the capacity to cover their other expenses through their mark-ups, then they simply lose money with every patient they treat, and they can't do that."

Patrick Collins, director of government relations for the National Hemophilia Foundation, noted that hemophilia patients would have had trouble getting their drug treatments if suppliers refused to distribute the drugs because they couldn't cover their costs.

The Sept. 8 program memorandum that contains a list of all 49 Medicare-covered drugs and their suggested average wholesale prices can be found on HCFA's Web site (http://www.hcfa.gov/pubforms/transmit/memos/comm_date_dsc.htm).