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2005 Medicare Payments for Chemotherapy Will Exceed Costs
Medicare payments to oncologists for chemotherapy drugs will exceed costs by 6% in 2005, according to a new report from the Government Accounting Office (GAO). In addition, it found that fees for nearly every category of chemotherapy administration services will increase in 2005 from 2003 levels, some by more than 300%.
Following reports that Medicare payments to physicians for chemotherapy-related drugs far exceeded actual costs, Congress required the Department of Health and Human Services, through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, to change the payment rates for the drugs and their administration. In response to oncologists' claims that overpayments were needed to cover inadequate reimbursement for drug administration services, changes were made to increase these fees. However, there was still concern that, even with these changes, Medicare payments in 2004 and 2005 would not cover physicians' total costs.
In a report prepared for the House Committee on Energy and Commerce, the GAO estimated payments and costs for 16 chemotherapy-related drugs for 2003, 2004, and 2005. These drugs represented 75% of Medicare's payments to oncologists in 2003. Although they found that these payments will decline in 2004 and 2005 relative to 2003, they will exceed physicians' costs for the drugs by 22% in 2004 and 6% in 2005. For example, paclitaxel, which was reimbursed at the rate of $164.08 in 2003, will be reimbursed at the rate of $26.27 in 2005, but this rate is 19% greater than its estimated acquisition cost of $22.47.
For only three of the drugs reviewed—granisetron hydrochloride, pamidronate disodium, and ondansetron hydrochloride—will the payments be less than the estimated costs for 2005, and the Centers for Medicare and Medicaid has agreed to examine the data for these drugs to ensure that the final payment rates accurately reflect the average sales prices for the drugs.
The authors of the GAO report also reviewed estimated payments for all 22 major service codes related to chemotherapy administration and found that payments for 2005 are expected to be 130% greater on average than for 2003. Only one administration code is expected to have a lower fee in 2005 than it did in 2003. The GAO report also estimated that these payments would cover nearly as much or more of physicians' costs than will payments for services in other specialties.
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J Natl Cancer Inst 2005 97: 6-7.
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