Subscribe to RSS feedDoes Medicare Part B underpay doctors for cancer drugs? New OIG report says No.
Medicare Part B has long paid for drugs that are given in a doctor’s office, such as drug treatments for cancer. Until 2005, the price that Medicare paid to doctors for these drugs was based on figures called “Average Wholesale Prices,” or AWP. In 2003, Congress created a new system for reimbursing doctors for these drugs, based on “Average Sales Prices” (“ASP”). ASP is “the weighted average of all of the sales of the drugs to all purchasers.” In 2005, Medicare began paying doctors 106% of the ASP for a drug given in the doctor’s office.
Why did Congress force Medicare to stop using AWP? It became increasingly clear that AWPs were often artificially inflated by drug companies to increase how much doctors earned by prescribing them, and thus to increase sales of those drugs. Several PAL coalition members are plaintiffs in a massive national class action lawsuit alleging that dozens of drug companies did just that. The case is In re Pharmaceutical Industry Average Wholesale Price Litigation, and is before Judge Patti B. Saris in the U.S. District Court for the District of Massachusetts. More on that case can be found here. Judge Saris recently issued a decision finding that Astra Zeneca, Bristol Myers Squibb and Warrick Pharmaceuticals had in fact illegally inflated and manipulated the AWPs of a number of drugs covered by Medicare Part B.
Industry and physician groups predicted that the amount Medicare would pay them for these drugs would be less than what doctors paid for them in the first place. The Office of the Inspector General (“OIG”) recently issued a Report finding that most physician practices that treat cancer patients generally purchase drugs at costs less than the Medicare reimbursement rates.
Despite the predictions of groups like the Community Oncology Alliance, American Society of Clinical Oncology and American Society of Hematologists, the report found that Medicare’s reimbursement rates were generally adequate for the purchase of cancer drugs. The study found that nine of the twelve physicians offices studied were able to buy most of the fifteen cancer drugs examined at or below the Medicare-established reimbursement rate.
One of the arguments that industry and physicians groups had made against the switch was that the rate that Medicare paid doctors for administering the drugs was not enough, and that any “excess” in the reimbursement for the drug itself helped even this imbalance out. So the report also looked at whether physicians’ offices had in place procedures to track how much it actually cost to administer the drugs. The study found that more than 91% of the physicians offices studied (11 out of 12) could not show how much it cost them to administer these drugs. The study pinned the problem on the fact that federal regulations do not require physician practices to track administrative costs. Without knowing how much it costs to administer such drugs, it’s impossible to determine if Medicare is paying doctors enough (or too little, or too much) for these services.
There’ve been anecdotes since this change about doctors not giving these drugs to patients in their offices because the doctors allegedly lose money when they do so, but rather, sending them to hospitals to have the drugs administered. It generally costs Medicare much more to have this done in hospitals rather than doctors’ offices. But unless doctors can demonstrate that they are not being adequately reimbursed for these procedures, their claims will fall on deaf ears.
In sum, the shift from AWP to ASP so far appears to be bringing Medicare’s payments to physicians for drugs administered in their offices in line with what it actually costs physicians to buy those drugs. Whether or not physicians are being paid enough by Medicare for administering those drugs is still an open question – but physicians need to actually document how much it costs to administer them if they want to argue for increased payments from Medicare, and not merely state they are not being paid enough.
July 11th, 2008 at 3:19 PM
Issues Existing with Medicare and Medicaid (Missouri)
1. Medicaid
In 2005, Missouri experienced the most severe Medicaid cuts since the program began 30 years from then. Already, near 1 million Missourians are uninsured aside from this Medicaid situation. So Blount chops 100,000 dollars from Medicaid this year from those citizens who needed the medical resources the most. In addition, Blount had another 300,000 dollars robbed from Missouri’s Medicaid patients by having their medical benefits greatly reduced. Why? I heard it was to possibly to build more athletic stadiums in the state of Missouri. Furthermore, Blount created a ‘war room’ for corporate lobbyists to dispense gifts during the state’s legislative session for this egotistical psychopath to enjoy those obsequious to him, yet also seems to enjoy the suffering experienced by others, as illustrated with the Medicaid issue, which was the largest cut of any state in the history of the program for those in the most need of resources he cannot conceptualize or care about, as he should. Our administration seems to share similar traits as this man.
Limited income parents suffered the most with this atrocity, as more than 50,000 of them lost medical coverage for their families. And after Blount stated in 2007 that Missouri is now strong, prosperous, and vibrant regarding the state’s budget and the robust economy, he never repaired or acknowledged at all the damage he did to those suffering Missourians in 2005, and never indicated to do what he should have done, which having notable degrees of remorse, regret, and guilt. Remember that most on Medicaid in Missouri are children through what is called the SCHIP Medicaid program. There are also over 100 thousand children uninsured. If SCHIP does not expand as people wish, that number could easily reach 200,000 children.
In the U.S., the total cost of Medicaid is around 300 billion dollars a year. States have their own discretion on how their Medicaid programs are operated, and this is largely unexamined by the other contributor to Medicaid, the federal government, as it should be according to the laws involved with the proper administration of Medicad.
The joy he must experience in seeing or knowing of the suffering of others must continue to elate him, as the Missouri House of Representatives rejected a bill to expand Medicaid coverage greatly needed due to the actions of the governor those years ago recently, simply because he has the ability to do so.
Medicaid is also a necessity for those in need that are residents in the over 500 nursing homes in Missouri. The Nursing Home Inspectors already are accused of ignoring deficiencies in these nursing homes, which may include malnutrition and bed sores of the residents, and the inappropriate use of pharmaceuticals as well. Further unsettling is that such inspections with such reckless disregard normally take place only once a year. The inspectors should be monitored by the GAO because of safety issues in nursing homes that continue and appear unresolved, yet it seems to continue. For example, around 25 percent of Missouri nursing homes were found to have deficiencies recently that were authentic and concerning. The rest of the nation only has a rate of 15 percent. Also, the Nursing homes in the United States are only covered by Medicaid, as typically, nursing homes cost each patient over 5 thousand dollars a month without this much needed support.
Aside from the problems mentioned already with nursing homes, combined by the loneliness and desperation of those who stay at these facilities, the mental disease of dementia is a common disease as we get older and is seen in Nursing homes, and identified with those at these locations, yet are treated inappropriately, if at all, I understand. Basically, dementia is a disease of cognitive and brain dysfunction that usually is not reversible. If it’s the cortical kind of dementia, it is combined with Alzheimer’s disease. If it is the sub cortical kind, look for Parkinson’s disease to be experienced with these patients. Such patients are inappropriately prescribed and given inappropriate if not deadly medications, such as atypical anti-psychotics, which cause high rates of pneumonia and premature death in the elderly population who have dementia.
To complicate Missouri’s health care situation further, and because close to 90 percent of Missouri counties are rural, with most lacking hospitals, there is only one doctor for every 3500 or so residents in such counties in this state. There is something to help called a Certificate of Need, or CON. Issued by regulatory agencies, they authorize healthcare facility creation and expansion as determined by the perceived needs of any community. Only a small number of states seem to have a formal CON process to activate this system, such as the addition of new nursing facility beds. Missouri fortunately is a state that is entitled to this requirement if the providers have a 90 percent occupancy for 4 quarters. Created by the American Health Care Association, the last CON was called a Medicaid payment system clearinghouse. I’m not sure why this was involved with the CON program.
There are around 5 million people in Missouri are and have Medicaid. The state of Missouri pays 20 percent of that bill, with the government paying the rest. While the states manage Medicaid for their state, CMS monitors and regulates the states, but that does not mean that this DHHS division actually does this in a complete and beneficial method for the citizens of Missouri. In 1990, Medicaid came out with the drug rebate program, which helped many. The Missouri Healthnet Division is responsible for making the best of the MO Medicaid funds, with frequent drug utilization reviews to determine the level of access to covered pharmaceuticals, as they manage these funds.
With seniors, government health care programs pay for quite a bit. For example, Long Term Care (LOC) costs Missouri about 2 million dollars a year. About 10 million elderly U.S. residents are in LTC facilities. Only Medicaid pays for this service as well, as mentioned earlier. Homecare is one form of LTC, and preferable to many. The underfunding of Medicare for LTC has increased around 50 percent in less than a decade, which amounts to around 5 billion dollars per year. Missouri is one of the states with the greatest disparity between the actual cost of providing suitable medical care and Medicaid reimbursements. This, of course, is damaging for nursing facility residents who have also had their ‘allowable costs’ progressively lowered as well. The result of this decline means that each individual patient has a daily shortfall of over 20 dollars a day. Missouri ranks about 7 percent in the nation in reference to this type of neglect. Aside from decreased health care quality of the elderly, these people may become very sick and could result in their lifespan shortened due to lack of access of medical attention that may delay the progression of any existing diseases they may have. There are also skilled nursing facility patients, most of who rely on Medicaid to pay for their care and services. The state of Missouri decides what is allowed regarding their care.
To no one’s surprise for the most part, the federal government essentially is disregarding the humane responsibility they have to the citizens in this population in the United States with ensuring they have appropriate health care by allowing such flaws to continue to exist.
The Medicaid for children again is called SCHIP, and was created over 10 years ago. This program is facing funding shortfalls in many states, with Missouri topping the list thanks to the governor. Of course, Bush vetoed a bill for SCHIP expansion and reauthorization recently, and the House was unable to over-ride this veto and some other vetos Blunt has implemented for the benefit of the U.S. citizens. The cost for this SCHIP program for children is around 4 billion dollars a year, and residents are concerned about children not receiving medical attention due to the severe shortages that continue to exist with the state’s Medicaid funds. Some governors, however, appear to be void of such concern, and therefore clearly do not share the concern of their citizens.
2. Medicare
Medicare is primarily health insurance provided by our government for those over 65 years of age, along with other situations, such as those with disabilities. Medicare began the same year Medicaid did, and it was a decent program to implement. About 50 million people in the United States have Medicare, which costs around 300 billion dollars every year. Unfortunately, various market forces have infected Medicare for decades now. However, Medicare has become more confusing for the cardholders over the years. Most recently, a part D was added to assist with paying for prescription drugs. Part A covers hospital stays and f/u stays in skilled nursing facilities for up to 100 days. Part B covers preventative medical care, ancillary services, which include medical treatment received in a health care facility, which includes a doctor’s office, as well as covering for medical equipment, all determined as medically necessary by CMS, who administers not only Medicare components already mentioned, but also Medicaid, SCHIP, CLIA, and HIPPA. CMS also reports to Medicare about the utilization of Medicaid by the state.
Since Medicare is the insurance for this population, doctors and others are somewhat reliant on reimbursement from the program, just as they are with other forms of insurance. A few years ago, the Senate Finance Committee passed a spending cut package that dropped over 10 billion dollars from Medicare and Medicaid over the next five years after the package was activated. This was due to the federal government wanting to cut 35 billion from the federal budget. Yet at the same time, the Senators agreed to boost doctors’ Medicare payments by over 10 billion dollars over 5 years that replaced a scheduled 5 percent or so cut that physician groups understandably were opposed to upon becoming aware of it. Furthermore, Medicare randomly assigned the members to a plan they may be completely unaware about until they are denied healthcare at a clinic, perhaps.
Then there is the issue of Medicare Fraud, which the CMS freely admits knowledge of, yet prosecutions seem rare, yet lucrative to the prosecutors with settlement agreements, which averages about a billion dollars a year from the wrongdoers and the settlements they pay. Also, when CMS spoke on this last year, the DHHS announced a pilot program to catch such people who rob taxpayers by over-billing Medicare in the amount of several billions of dollars every year.
There is an issue of doctors having their Medicare reimbursements cut by the Senate Finance Committee. Doctors are reimbursed by Medicare by a list of codes provided to them by CMS to illustrate to doctors that they have the discretion on what the doctor is allowed to collect from Medicare. Late last year, a closed meeting was held to discuss reversing a scheduled reduction in physician fees exceeding 10 percent that was planned to take place at the start of 2008. A one year moratorium regarding this cut was suggested. Physicians were included with many others scheduled for Medicare reductions. Finally in the summer of 2008, a veto-proof passage of a Medicare reform bill halted any Medicare reductions to physicians until at least 2009. At the same time, a Medicare Improvements for Patients and Providers act was passed- designed ultimately to improve Medicare and ensure the health of those on this program. 90 percent of doctors see Medicare patients. It appears the will of the people was acknowledged with the passage of this act. Because seeing Medicare patients is no longer affordable to doctors because of reimbursement issues with Medicare. And Medicare does have its share of flaws, such as the Medicare Advantage, designed as a solution to the shortfalls of the Medicare program. About 20 percent signed up for Medicare Advantage Medicare that was marketed aggressively to seniors regarding this element of their Medicare, yet was passed by congress and signed by the president. Now, regulations are being considered by the administration to limit their Medicare entitlements in other ways because of their mistake. Medicare Advantage cuts could deprive seniors of needed pharmaceuticals for the restoration of their health or to delay the progression of an existing disease they may have.
Then there are other cuts that are now in effect with Medicare reimbursement reductions, but were intended to begin shortly after the passing of the Balanced Budget act of 1997, which capped medical therapy for Medicare pts. at a maximum reimbursement of 1500 dollars per session for outpatient services that was initially suppose to be activated in 1999. Thanks to three moratoriums that were allowed after 1999 that provided an extension of the caps requirement until 2005, when the caps were mandated, yet were placed with what was called an ‘exceptions processes. This permits certain types of therapy to exceed the cap limit if the Medicare patient meets certain diagnostic and clinical criteria determined by their relevant health care provider. This process was authorized by the Deficit Reduction act of 2005. The process exception existed though a couple of more acts that were passed and activated until June of 2008. And the therapy sessions max out at a little over 1800 dollars a session at this time of implementation of the caps for services with the exceptions process expired at this point as well.
The intention of both Medicare and Medicaid was to assist others in medical need who are unable to obtain such needs due to their condition or their income. A few bad apples, from doctors to government officials, have contaminated the intent of these programs and health care to those who need it the most is being taken away from them, even though they have done nothing wrong.
Yeah, I’d say that our Health Care System a crisis.
“Compassion is the basis of all morality.” — Arthur Schopenhauer
Dan Abshear