Controversal Obama Administration Proposal To Save Us Money On Drugs!

The Obama administration keep making healthcare efforts to save us money. A new controversial pilot proposal has been created to reform the way doctors are able to earn money from administering injection drugs.

The Center for Medicare and Medicaid Innovation of CMS’s analysis concerns a practice nicknamed “buy and bill”. Hospitals and doctors “buy” the drugs beforehand, which are needed for later treatments of patients with cancer and other serious conditions.

Only after a patient is treated with the drug, a “bill” is generated. Part of the bill is given to the patient, and the other part is made out to the patient’s insurer, such as the Medicare program.

The bill is summed up by two parts; one is the reimbursement, which is based on the average price of the drug. The other part is a percentage based mark-up, and this profit is the focus of CMS’ pilot.

The law sets the profit to a maxímum of 6 percent, which can amount to hundreds of dollars per treatment in profits. The proposal offers a substantially lower flat profit in the amount of $16.80 per treatment.

The result will make profits associated with the administration of inexpensive drugs rise, while those with more expensive drugs fall. A breakeven point will be a treatment costing $480.

But there are some concerns regarding the pilot. The Community Oncology Alliance regards it as a paycut from Medicare to doctors overall. CMS argues the payments will just be distributed differently, and more importantly, the pilot explicitly does not alter coverage of drugs. However, lobbies for drug companies still fear the pilot will limit beneficiary choice of treatments. But large influential organizations like AARP6 and the Medicare Rights Center support the program, because they recognize the point of reducing the incentive for doctors and hospitals to use the most expensive treatments. As Washington Post states the pros and cons of the proposal:

“To proponents, that’s a bold attempt to move toward high-value treatments. Opponents, many of whom benefit financially under the current system, say it’s a dangerous experiment with American health.”

The Medicare program has been proposed as a five-year pilot, and a comment period on the proposed pilot is open through May 9, while still under the Obama administration.


Featured image from WikiMedia by Bill Branson. Permission to use under Wikipedia’s public domain.