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

When it comes to anything that the government pays for, people are going to try to take advantage of it.  Whether it’s the old $600 toilet seats from the Pentagon or certain unscrupulous healthcare “professionals” overcharging for reimbursement, we expect accountability for taxpayer dollars.

In the “good old days”, doctors were reimbursed 6% over the cost of the drugs they prescribed or used in the office. The incentive to try lower-cost drugs simply wasn’t there, which made its contribution to the cost spiral. 

Time For A Change

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

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 cancer treatments.  Last year alone, CMS paid nearly 7.8 billion dollars in reimbursement just for cancer medications. This was only 42% of the dollars that CMS paid in reimbursement. 

Will It Help?

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

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No matter the cost, treatments are necessary. 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.