Remember when Sarah Palin was accusing the Obama administration of creating “death panels” in the new healthcare law known as ObamaCare? We’re not there yet but we do see a disturbing trend. The Obama administration is now promoting a new Medicare reimbursement policy that discourages doctors from providing preferred medications in order to save money on drug costs.
It’s just a “test program” right now but the intent of the White House is to overhaul reimbursements under Medicare Part B to lower the approximate $19 billion spent per year to providers. This program is outlined in a proposed rule issued this week by the Centers for Medicare and Medicaid Services (CMS), which runs the program.
Doctors Fighting Back
Pharmaceutical companies are naturally fighting back, but so are many doctors, especially those in cancer treatment centers.
“It is inappropriate for CMS to manipulate choice of treatment for cancer patients using heavy-handed reimbursement techniques,” said Dr. Allen Lichter, chief executive officer of the American Society of Clinical Oncology, a professional organization.
Stephanie Armour of The Wall Street Journal reports about 100 industry and consumer groups are already pressing the administration to withdraw the proposal because they say it would prevent some patients getting medications they need. They sent a letter to the Department of Health and Human Services (HHS) in anticipation of the proposal.
“We urge you to ensure that our nations’ oldest and sickest patients continue to be able to access their most appropriate drugs and services,” according to the letter, which was signed by oncology, HIV, and urology organizations.
Naturally, the insurance industry supported the HHS proposal. A spokeswoman for America’s Health Insurance Plans, Clare Krusing, said, “This pilot program is an important start towards ensuring that patients get the best value for their healthcare dollars.” I doubt she would say the same thing if she were receiving cancer treatment personally. As a patient, you’re more concerned with effectiveness than you are with value.
How the Program Would Work
Today, doctors are reimbursed the average sale price of a drug plus an additional 6% premium to cover overhead and up-front costs of purchasing drugs. Despite the claims of critics that this encourages the use of more expensive medications, I think the opposite is true. I’m less likely to purchase more expensive drugs because I have to cover larger up-front expenses. Six percent does not cover the cost of money and the overhead necessary to place the order, write the checks, store the medications, keep track of inventory, and dispense the medication.
Under the proposed rule, the Obama administration would assign providers to groups based on their service areas. Doctors in certain groups would get the average sales price of the drug. They would also get a 2.5% premium instead of the current 6% premium. They would also get a $16.80 processing fee.
For example, if the average sale price of a drug is $100, the doctor would receive a reimbursement of $100 plus $2.50 plus $16.80 for a total of $119.30 instead of the current $106. But if he uses a $1000 drug he will get $1000 plus $25 plus $16.80 or $1041.80 instead of the current $1060. Although he does get a larger reimbursement for the more expensive drug, he actually gets an incentive to use the cheaper drug because his reimbursement is higher on a percentage basis.
The government should not be in the business of incentivizing doctors to choose less effective medications based on personal financial benefits. If two drugs are equivalent in effectiveness, most doctors would naturally choose the cheaper drug and do so every day. But when more expensive medications can make a difference in the outcome of treatment, doctors should do what’s right for their patients. To try to influence the care of patients in order to save money shows clearly that the government is not looking out for the people.