President Barack Obama’s deputies are planning to impose a nationwide test of different strategies for paying Medicare providers, which is intended to push providers to prescribe lower-cost drugs and to cut overall Medicare costs.
Experts, however, say the pending Medicare rule will essentially amount to another Medicare funding cut that will likely discourage doctors from treating many Medicare patients.
The rule will affect all Medicare Part B providers and nearly all Medicare drugs, explains Heritage Foundation healthcare policy fellow Robert Moffit at The Daily Signal.
“The ‘test program’ would be a nationwide project, imposing major payment changes that would run for several years,” Moffit notes. “It would, in effect, create an administratively imposed Medicare payment for an entire class of medical professionals, mostly physicians and hospitals.”
In 2015, drug costs in Medicare Part B were $22 billion and had jumped on average 8.6 percent since 2007. Also, Medicare doctors and hospitals that administer drugs — many of which are injections, rather than pills — are compensated for the average sales price of a drug, plus an additional 6 percent.
In the first phase of the test change, Medicare Part B’s drug payment would move to a flat fee of $16.80 per day, per person, and would cut the additional payment from 6 percent to about 2.5 percent.
The Obama administration’s proposed rule “amounts to another significant Medicare payment cut, on top of the hundreds of billions of dollars in Medicare payment cuts already authorized by the Affordable Care Act, as well as the 2 percent Medicare cut authorized by the Budget Control Act,” Moffit said.
The rule is particularly alarming for cancer patients and for patients in rural areas who depend on local providers to administer their cancer drugs, he said.
“[I]t will threaten access to patient care in Medicare Part B, particularly for already beleaguered cancer patients, just as Obamacare’s projected payment cuts will certainly ‘jeopardize’ access to patient care in Medicare Part A, as Medicare’s own Office of the Actuary has repeatedly warned,” he asserts.
“This program has selected zip codes from Primary Care Service Areas,” says anesthesiologist Marilyn M. Singleton. “It is unclear where these areas are located. Patients will have no choice as to whether they are included in a test area,” she told Breitbart News.
“Most of the drugs involved are cancer treatments and ophthalmologic treatment to prevent blindness,” said Singleton, a member of the Association of American Physicians and Surgeons. “These are areas where none of us want to cut corners.”
Additionally, the rule could provide another incentive for doctors to drop Medicare patients.
Medicare payments to providers are already lower than private payments, so the new rule will be especially damaging to small-practice doctors who have attempted to avoid joining the multi-doctor practices which have become more common under Obamacare.
Small cancer-focused practices already plummeted from 64 percent in 2014 to 41 percent in 2015 of cancer-treating doctor’s offices, reports the American Cancer Society.
Moffit warns:
While the proposed rule could encourage doctors to use more effective but less expensive drugs, it could also encourage doctors to use less expensive but also less effective drugs.
In any case, payment reductions will hurt smaller practices the most, encouraging patients to seek hospital-based therapy.
A shift of patients from less expensive physicians’ offices to more expensive hospital outpatient providers would be another classic “unintended” consequence, hurting patients and taxpayers alike.
Singleton explains how the Obama administration rule would further destroy individualized medicine:
CMS will offer physicians “evidence-based” tools to change their prescribing patterns. The stated goal is to “pay for what works for patients.” But the first rule of medical practice is to treat each patient as an individual. “One-size-fits-all” soon morphs into “one-size-fits-none.”
Moreover, if a patient believes their Medi-Gap policy will cover a drug the physician (but not Medicare) chooses, they may discover that the policy will only cover drugs authorized by Medicare.
If outlying smaller physicians’ offices stop administering such drugs, the patient will then go to the hospital where the drug is more expensive, thus saving no money for the government and increasing the inconvenience for the patient.
“In short, beneficiaries get less choice and potentially lower quality,” she says.
According to the Federation of American Hospitals (FAH), the Medicare regulatory change may lead to “negative consequences” for older Americans on Medicare:
In summary, the FAH has very serious concerns regarding this proposed Part B Drug Demo. While this proposal is intended to address concerns about high drug prices, its broad scope and design is unlikely to lead to the intended results and may, in fact, have unintended negative consequences on Medicare beneficiaries as well as posing particular challenges to hospitals…
In addition, FAH warns the proposed rule represents another overreach by the Obama administration, one that essentially comes down to “picking winners and losers in the hospital community”:
We find nothing in the law or legislative history that supports such a delegation of authority, and in fact the limited legislative history on this provision indicates the exact opposite. Notably, nowhere does the law expressly state that CMS can make models mandatory.
The House Energy and Commerce Committee is considering legislation to block the proposed rule. During a subcommittee hearing on May 17, cancer specialist Dr. Debra Patt testified:
The “Part B Drug Payment Model,” which is aimed at reducing Medicare drug spending is ill-conceived and, most importantly, lacks a patient-centered focus. I am disappointed that CMS has masked their efforts to control rising drug costs by suggesting physicians are not providing their patients with the most appropriate, highest quality medical care but instead prescribe more expensive drugs for “profit.” CMS is absolutely incorrect in its assumptions that reducing reimbursements for Part B drugs will both lower Medicare costs and drug prices. In fact, looking at the oncology landscape documents that the reimbursement cuts proposed by CMS in Phase 1 of the “Part B Drug Payment Model” will actually increase Medicare costs and further fuel drug prices—the exact opposite of what CMS intends.
“More fundamentally, CMS’ proposal is an experiment on the care of seniors with cancer and other diseases that will hinder their access to life-saving/prolonging new treatment advances, such as the new immunotherapy that has former President Carter’s cancer in remission,” Patt asserted.