Medicare aims to fix doctor drug payments

CMS would return some savings to oncologists and other physicians hurt by the change.

By Markian Hawryluk, AMNews staff. Nov. 25, 2002.

Washington -- The government will take steps to lower the prices it pays for the handful of Medicare-covered prescription drugs, generally administered in physician offices. But it is struggling to ensure that the move won't undercut doctors.

Medicare pays for outpatient prescription drugs only when they are administered "incident to" physician services. The medications are mainly cancer treatments, inhalation therapy drugs and oral immunosuppressive medications. Medicare reimburses physicians for those drugs at 95% of the manufacturer-reported average wholesale price. But government audits have found that this price is often higher than the amount physician practices actually pay for the drugs and that some companies have manipulated their prices to provide additional incentives for physicians to use their products.

While there is widespread support for revamping the pricing structure for Part B drugs, Congress has been unable to do so this year.

In a meeting with reporters in October, Tom Scully, administrator of the Centers for Medicare & Medicaid Services, said the agency would reform the way it pays for these drugs, probably following the model it used to revise its payment policy on self-injectable drugs. In that revision, CMS turned to one of its 23 Part B carriers to propose a nationwide approach.

But Scully acknowledged that CMS would have to make other changes to protect access to services, for which Medicare has underpaid physicians for practice expense costs and which are being subsidized by the overpayment for drugs. "In our view, we should pay them the right amount for the service and the right amount for outpatient drugs," he said. [...]