House Subcommittee Hearing Considers New Pricing Program for Rx Drugs Administered Under Medicare Part B

Government officials and analysts who spoke at a House Ways and Means Health Subcommittee hearing on Thursday said they are generally satisfied with the new Medicare Part B payment system for cancer, dialysis and other drugs, but subcommittee Chair Nancy Johnson (R-Conn.) expressed concern that the changes have hurt access to care for cancer patients, CQ HealthBeat reports. Under the previous system, Medicare Part B reimbursed doctors for such drugs based on the average wholesale price reported by pharmaceutical companies. Critics said that under the system, doctors paid lower market prices for the drugs and then kept the difference. In an effort to address the issue, lawmakers included in the 2003 Medicare law two changes to the system. Under one change, reimbursement would be based on average sales prices, or ASP. The other change was the creation on Jan. 1 of an optional competitive acquisition program for physicians (Kaiser Daily Health Policy Report, 2/28/05). Johnson called the subcommittee hearing to review the new ASP system, saying that there is "anecdotal evidence" that oncologists are closing "satellite" cancer clinics in some areas because of the lower payments, restricting access to drugs. She also said it is unclear whether payments to doctors are adequate to ensure good care.

Testimony
However, in his testimony, Herb Kuhn, director of the Center for Medicare Management at CMS, said that Medicare payments to doctors for the administration of drugs under Part B drug are 117% higher today that they were in 2003 and that government studies have shown that oncologists are not having difficulty obtaining drugs under the new system. Mark Miller, executive director of the Medicare Payment Advisory Commission, said that the ASP system is lowering Medicare expenditures for Part B drugs, adding that a MedPAC study finds that, "in general, beneficiary access to chemotherapy services remained good" and that "Physicians provided more chemotherapy services to Medicare beneficiaries in 2005 than in 2004." However, he said that "beneficiaries without supplemental insurance may face high out-of-pocket spending, particularly if they need new single-source drugs." Frederick Schnell, a doctor who testified on behalf of the Community of Oncology Alliance, said that the new Medicare plan is sharply cutting physicians' reimbursement rates, noting that a recent Congressional Budget Office study estimates that Medicare payments for cancer care will be cut by $13.8 billion between 2004 and 2013. Johnson said she will continue to address ASP issues and will work with CMS to weigh the success of policy changes (Reichard, CQ HealthBeat, 7/13).