NATIONAL PATIENT ADVOCATE FOUNDATION

NPAF has expressed our concerns that patient access to new and innovative therapies that were scheduled for coverage beginning in 2002 is being delayed during this review period.

MEDICARE HOSPITAL OUTPATIENT REIMBURSEMENT

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.

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 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. NPAF also expressed great concern about the impact of the proposed payment for sole-source drugs (i.e. drugs with no generic alternative), which are frequently used to treat cancer patients. 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. NPAF also provided the agency with a patient data analysis report outlining the many challenges Medicare beneficiaries are having accessing new therapies.

CURRENT STATUS: On December 17, 2001, the Centers for Medicare and Medicaid announced a delay in the implementation of the proposed hospital outpatient payment reductions for 2002. The agency acknowledged that, after an internal review, there were flaws in the data used to calculate the 2002 hospital outpatient payment rates. The agency indicated that a new payment rate would be issued in March, 2002.

NPAF has expressed our concerns that patient access to new and innovative therapies that were scheduled for coverage beginning in 2002 is being delayed during this review period. It is our understanding these products were assigned a billing code, but hospitals are now being advised not to submit claims for these products until the final rule is published. These products include new therapies to treat leukemia, prostate cancer and other diseases that disproportionately impact the Medicare patient population. NPAF has communicated these concerns to the Centers for Medicare and Medicaid Services. However, attorneys for the agency have concluded that there is no mechanism for payment for these new therapies until a new payment rule has been published. NPAF will work with Congressional leaders to determine what actions can be taken by the legislative branch of the federal government to establish an interim payment methodology for these life-saving therapies.•