Medicare payment ample for cancer drugs, GAO says

The American Society of Clinical Oncology questions the findings and continues to worry about the impact of next year's reimbursement changes.

By David Glendinning, AMNews staff. Dec. 20, 2004.

Washington -- Cancer doctors are on track to do just fine next year, at least when it comes to Medicare reimbursements, according to the Government Accountability Office.

Oncologists had warned that many of their practices soon would be unable to cover their medication expenses under Medicare, forcing them to shift some of their patients to local hospitals for outpatient treatments. But when 2005 rates kick in next month, total Medicare payments to physicians for obtaining cancer drugs and administering them in their offices will exceed doctors' costs, the GAO says in a new report.

The oversight agency estimates that even though their drug reimbursements will go down, oncologists still stand to receive more than $200 million above their expenses for these drugs next year, after receiving payments in excess of costs by nearly $800 million during 2004.

In addition, significant boosts in reimbursement for dispensing chemotherapy will result in doctors receiving total administration payments that are 130% higher than they were in 2003, assuming a stable level of patient utilization, the GAO found. Before Congress approved a new payment system for cancer drugs last year, Medicare significantly overpaid physicians for the drugs themselves but underpaid them for administering the treatments.

The financial outlook for oncologists likely will improve further with several policy changes that the Centers for Medicare & Medicaid Services adopted too late to be included in the GAO assessment. An upcoming $300 million demonstration project on patient pain reporting and improved codes for chemotherapy administration that CMS approved last month will boost the doctors' profit margin by another several percentage points, the agency says.