Medicare Looks To Cut Drug Costs By Changing How It Pays Doctors

Medicare, News March 15, 2016 0
Medicare Looks To Cut Drug Costs By Changing How It Pays Doctors | Senior Market Advisors

Okay, everybody knows that when it comes to anything that the government pays for, people are going to try to take advantage of it.  Whether it is the old $600 toilet seats from the Pentagon or, closer to home, certain unscrupulous healthcare “professionals” overcharging for reimbursement, we, as citizens and professionals expect accountability for taxpayer dollars.

Now, in the “good old days”, doctors were reimbursed 6% over the cost of the drugs they prescribed or used in office.  Of course, it doesn’t take long to see that the incentive to try lower-cost drugs simply wasn’t there, which made its contribution to the cost spiral.  The good news out of Washington these days is that a new program is being tested to assess new ways to pay doctors that may help control the prices that Medicare pays and that, ultimately, get pushed back on the end user and the taxpayer.

The Centers for Medicare and Medicaid Services (CMS) plans to test a reimbursement formula that would pay the cost of the drug, plus a 2.5 percent surcharge and a flat fee of $16.80.

@CMSGov plans to test a reimbursement formula that would pay the cost of the drug, plus fee.Click To Tweet

Under the current system, a doctor earns just 60 cents for administering a $10 medication. An equivalent drug that cots $1,000, however, would bring in $60. Under the proposed formula, the cheaper drug in this example would generate a payment of $16.93 and the second one $41.80. 


The real savings in this arena is in the treatment of cancer – last year alone, CMS paid nearly 7.8 billion dollars in reimbursement just for cancer medications.  Just as scary – this was only 42 percent of the dollars that CMS paid in reimbursement. 

As you can imagine, some doctors and medical groups aren’t thrilled about the idea, citing the high cost of drugs and treatment in office, which, quite honesty, seems a bit of a white elephant.  In fact, the American Society of Clinical Oncology came right out and said they were opposed to the measure, and along with several other groups, sent a formal letter of complaint to Health and Human Services Secretary Sylvia Burwell opposing the payment changes. 

In 2015, @CMSGov paid nearly $7.8 billion in reimbursement just for cancer medications.Click To Tweet

Now, ultimately, we all know that treatment is the necessary procedure, no matter how much it costs.  The best news is that CMS is making the attempt to limit how the many treatments for cancer and other ailments are passed along to a public that is very leery of any healthcare costs and all too well acquainted with the costs to themselves and their families.  As the year progresses, CMS plans to roll out other test plans to see which ones work the best and allow the quality of care demanded by patients. 

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