Lawmakers Express Opposition to Sensible Medicare Reform

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Senate Finance committee members harshly criticized an effort to test new ways to pay for certain drugs in Medicare Part B, showing how difficult it is to reform the federal government’s largest health care program.

This spring, the Center for Medicare and Medicaid Services (CMS) announced a large demonstration project to alter Medicare’s reimbursement costs to physicians administering prescription drugs in their offices. Medicare would reduce doctors’ payments that are tied directly to drug prices.

Previously, Medicare paid physicians 6 percent of a drug’s average sale price, creating an incentive to prescribe more expensive medications even when cheaper and equally effective alternatives are available.

In a hearing on the proposed change, some senators from both parties cast aspersions on the project, calling it ill-conceived and claiming it would harm Medicare beneficiaries. They cited a number of organizations representing health care providers who oppose the project.

In defense of the project, Dr. Patrick Conway, the chief medical officer of CMS, said the current reimbursement system leaves beneficiaries vulnerable to large out-of-pocket costs when they are prescribed unnecessarily expensive medication and creates a disincentive for doctors to administer particularly low-cost drugs because the payments might not be enough to cover costs.

Opposition from the Senate Finance Committee — which oversees CMS — will make the project more difficult to implement. CMS might have to reduce the scope of the pilot despite the project’s origination in ideas from the non-partisan Congressional advisory panel MedPac. Hopefully, Congressional and stakeholder complaints won’t be enough to torpedo a sensible effort to better align incentives in physician care.

External links:
Here’s Why Reforming Medicare Spending Is So Difficult (Fiscal Times)
Lawmakers Forget Incentives Matter on Prescription Drugs (Concord)

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