NATIONAL PATIENT ADVOCATE FOUNDATION

NPAF encouraged the agency to delay adopting the proposed rule until such time as the agency makes public the data used to justify the proposed payment reductions.

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CURRENT STATUS: Congress is continuing its efforts to craft bipartisan legislation to address Medicare reimbursement issues raised in two reports form the General Accounting Office (GAO). In the first report, GAO determined that Medicare reimbursement for covered prescription drugs exceeded actual acquisition cost by approximately $532 million in 2000. Oncologists responded by acknowledging the overpayment for prescription drugs, such as chemotherapy, but also indicated that oncologists are under-paid for practice expenses associated with the administration of prescription drugs. Two subcommittees of the House Committee on Energy and Commerce conducted a hearing on the report and pledged to simultaneously correct both inequities. For additional information, see our website at www.npaf.org. To read the GAO report, see our Legislative Initiatives section.

NPAF hosted a meeting of patient organizations with GAO on October 16, 2001 to discuss the report. During the meeting, NPAF expressed concern that GAO did not complete the Congressional mandate to assess the impact that changes in payment could have on patient access to physician services and quality of care. GAO responded by indicating that it is impossible to gauge the impact, but indicated that ongoing assessments would be required to ensure access to quality care. NPAF requested GAO to provide models based upon their proposals to ensure access to quality care.

The second GAO report, issued on October 31, 2001, determined that, under the current payment methodology, oncology’s actual practice expense payments compared to their own estimated practice expenses are about the same as the average for all physicians. However, GAO also made several recommended changes to the Medicare payment methodology to better reflect such items and services as medical supplies, indirect expenses, and for expenses associated with services without direct physician involvement, such as expenses for oncology nurses, pharmacists and social workers. NPAF continues to emphasize the need to provide adequate reimbursement to ensure patient support through oncology nurses.

NPAF has been asked to participate at two meetings with staff of the House Committee on Energy and Commerce to discuss alternatives to correct the issues of Medicare overpayment for covered prescription drugs and underpayment for physician services. NPAF has provided our principles for reform to the Committee. To view our principles, click here.

Hospital Outpatient Services
BACKGROUND: In 1999, Congress created “pass-through” hospital outpatient payments for drugs to treat cancer, treatments for rare diseases, radiopharmaceuticals, and new medical devices. Pass-through payments are limited by statute to no more than 2.5% of all outpatient prospective payments. If it is estimated that total pass-through payments will exceed this amount, then across-the-board reductions are required to maintain the statutory limit.

CURRENT STATUS: On August 24, 2001, the Centers for Medicare and Medicaid Services issued the proposed Medicare Outpatient Prospective Payment System rule for 2002. In this proposed rule, the agency indicated that a “significant” across-the-board reduction would be required to meet the statutory limit on pass-through payments.

NPAF conducted an analysis of the proposed rule, and on October 24, 2001, we contacted CMS Administrator Tom Scully to express our concerns. In particular, NPAF is concerned that the proposed rule did not provide data outlining the justification for the proposed reduction, the estimated amount of the proposed reduction, or how the reduction would be implemented. We also expressed great concern about the impact of the payment for sole-source drugs (i.e. drugs with no generic alternative), which are frequently used to treat cancer patients. Finally, NPAF expressed concern that other public and private health plans could adopt similar changes, as many of these payers frequently follow Medicare coverage criteria.

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