Federal officials poked a medical hornet’s nest recently with an ambitious attempt to do what many American taxpayers — and patients — demand: tame rising prescription drug costs in Medicare.
Federal officials poked a medical hornet’s nest recently with an ambitious attempt to do what many American taxpayers — and patients — demand: tame rising prescription drug costs in Medicare.
Officials at the Centers for Medicare and Medicaid Services rolled out a proposal to test new ways of reimbursing doctors who administer drugs in their offices and in hospital outpatient departments. These drugs encompass about $19 billion a year in Medicare spending. (This does not include prescription drugs seniors take on their own; that’s a different part of Medicare.)
How would this proposal work? Right now, Medicare pays providers the average price of a drug plus 6 percent to cover their costs. So the higher the price, the more the doctor earns. Patrick Conway, chief medical officer for CMS, calls that a “perverse incentive” that could encourage doctors to select more expensive medications when cheaper ones could be just as effective.
Under the proposal, there would be different pricing tests in different parts of the country. In one test, Medicare would reduce that 6 percent payment to 2.5 percent plus a flat daily fee for some doctors, to see if that alters the drugs they choose to administer; other doctors would see no change. Talk about Mediscare … for doctors taking the cut.
Another phase of tests would peg reimbursements to a drug’s demonstrated effectiveness for different conditions. Or set benchmark prices for a group of similar drugs, steering doctors and patients to choose the lowest priced alternative.
CMS says the five-year trial would push doctors to prescribe the most effective drugs, not necessarily the most expensive.
Not surprisingly, doctors groups and other critics blast this proposal as dangerous government meddling in a doctor’s decision about what to prescribe.
The Pharmaceutical Research and Manufacturers of America, which represents the drug industry, says the proposal could cut patient access to treatments and “create uncertainties that could discourage investment in future treatment advances.”
Curbing drug costs has been a Medicare Holy Grail for years.
But most Americans don’t favor allowing government regulators to decide which drugs patients should receive and which are too expensive. That smacks of rationing.
Under this proposal, doctors in the test group would still get paid for the drugs they administer, including a 2.5 percent bump for overhead costs. They just wouldn’t get the 6 percent to which they’re accustomed. So, yes, some doctors who prescribe expensive meds might see their bottom lines wilt a little. We don’t blame them for howling.
But if the cheaper medicine is just as good as the expensive one, then nudging doctors in that direction will save patients — and taxpayers — money.
If the proposal is finalized — public comments are due by May 9 — the changes probably wouldn’t begin until later this year; the other phase of tests would follow, likely starting in 2017.
An incoming administration, Democratic or Republican, might have other, better ideas to accomplish this mission. But we see value in testing these ideas.
We’ll know by 2022 if these tests save money and improve health. Medicare officials will have to monitor them closely. If evidence emerges that the changes are damaging patients’ health, the feds should pull the plug fast.
— Chicago Tribune