Medicare to Boost Reimbursement for Outpatient Services 2.3%, But May Reduce ‘Pass-Through Payments’ for New Technologies, HHS Confirms
HHS announced yesterday that Medicare will boost reimbursement rates 2.3% for outpatient services in hospitals next year, but the agency also may reduce payments for "certain drugs and medical devices," the Washington Post reports. Under a proposed rule issued yesterday, the Centers for Medicare and Medicaid Services (formerly HCFA) may impose an "across-the-board reduction" on payments for new medical technologies, which Congress capped at 2.5% of total outpatient reimbursements in a 1999 law that took effect last year (Washington Post, 8/21). CMS has "threatened to cut" extra payments for new technologies by up to 80%. According to the agency, "The information we have collected thus far suggests that a significant reduction could be required for 2002." In "early agency estimates," CMS found that Medicare spent $1 billion more than the $400 million limit that Congress set on extra payments for new medical technologies (Bloomberg News, 8/20). An HHS spokesperson said that the number of new medical devices has "roughly quadrupled" in the past year.
Experts Worry Cuts Could Drive Up Costs
Some medical experts have warned that limiting reimbursements for new medical devices would force hospitals to admit more patients, which would drive up Medicare costs (Washington Post, 8/21). Medicare provides larger reimbursements for inpatient care (Kaiser Daily Health Policy Report, 8/20). In addition, medical device manufacturers, including
Guidant Corp. and Medtronic Inc., have lobbied to stop CMS from "slashing the payments." Bloomberg News reports that reducing reimbursement rates for medical devices may prompt hospitals to "stop using the companies' latest products" to avoid financial losses. The Federal Register will publish the proposed rule, CMS-1159-P, on Aug. 24 (Bloomberg News, 8/20). CMS will open the proposed rule to public comment until Oct. 3 (Washington Post, 8/21). To view the proposed rule on the CMS Web site, go to
http://www.hcfa.gov/regs/cms1159p.htm.
Information Gap?
In an editorial, the
Los Angeles Times warns that a decision to reduce Medicare payments for new medical devices "should be based on better information" than CMS officials have used, adding, "Curbing costs is good, but doing it with a bludgeon is not." The editorial points out that the debate over the issue has "drawn attention to a long-ignored flaw" in the U.S. public health system -- the "lack of any coherent system for assessing what works, what gives the biggest medical benefit for the buck." According to the editorial, "Making quality information public pushes hospitals and doctors to focus on effective treatments and reduce medical errors." The editorial points out that the proposed rule faces "political trouble," concluding, "If the government had better-quality information, it would be able to fend off critics and defend its cuts" (Los Angeles Times, 8/21).
