Medicare sets deadline to fix doctor outpatient drug pay

The Bush administration says it can boost practice cost reimbursements for physicians relying on such funds.

By Markian Hawryluk, amednews staff. May 26, 2003.

Washington -- After two years of trying to convince lawmakers to change the way Medicare pays for physician-administered prescription drugs, the Bush administration has taken matters into its own hands. Unless Congress acts, the Centers for Medicare & Medicaid Services will overhaul the payment system by Jan. 1, 2004.

But that means Congress could lose the potential savings that could help fund an outpatient prescription drug benefit and Medicare pay increases. It also has doctor groups concerned whether the cost of administering the drugs will be adequately covered.

Medicare pays for certain outpatient drugs when administered with physician services. The vast majority of these drugs are for chemotherapy. The program pays according to the manufacturer-reported average wholesale price. Recent government investigations have shown that some manufacturers inflated prices they report to Medicare, while lowering prices for physicians. This spread, lawmakers say, is costing the program millions each year.

But physicians administering the drugs say those spreads help offset the shortfall in Medicare payments for their services. Lawmakers and regulators have agreed that lowering drug prices cannot be done without also increasing practice expense payments to the affected doctors.

"Clearly we're overpaying for AWP, and clearly we're underpaying for some physician practices. It may not be a one-for-one match, but we ought to be paying the right amount for both," CMS Administrator Tom Scully said. "No Blue Cross plan would consciously do this. It's nuts."

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» Medicare aims to fix doctor drug payments Nov. 25, 2002

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