OIG: Medicare pays doctors enough for cancer drugs

Oncologists, however, say continuing payment problems force them to recover their costs through private-pay patients.

By David Glendinning, AMNews staff. Sept. 17, 2007.

Washington -- At least on paper, Medicare appears to pay most doctors enough to buy chemotherapy drugs and other physician-administered cancer medications for their patients, according to an August report by the Dept. of Health and Human Services Office of Inspector General. Whether the program is paying them enough to administer the care, however, is far less clear, OIG said.

Investigators compared what 12 practices paid for cancer drugs from April through June 2005 with the Medicare reimbursement they received for the medication. OIG found that nine out of the 12 were able to buy more than half their drugs at prices at or below what Medicare paid.

At the beginning of 2005, the Centers for Medicare & Medicaid Services started paying for physician-administered drugs according to a new formula. Before then, reimbursements were based on average wholesale prices, a system that lawmakers and the Bush administration said was leading to large overpayments to physicians for drug purchases.

Medicare now pays 106% of each drug's average sales price, a typically lower figure determined by data provided to CMS by drug manufacturers.

The program also phased in a new system to pay doctors for administering Part B drugs, which is handled separately from reimbursement for medication costs. Physicians had complained that the rates were much too low, and the reforms generally boosted the amount paid for drug administration.

But OIG was unable to determine how well the new administrative payments are covering practice costs. Only one of the 12 practices included on its Medicare drug claims the optional procedural codes that estimated whether the rates were high enough to pay for the time and resources required to inject the cancer drugs. The OIG did not evaluate the adequacy of this tracking procedure or the sufficiency of the administrative reimbursement for the practice.