WASHINGTON — Vendors should not be allowed to cut off distribution of drugs to patients regardless of their ability to pay under Medicare's new drug acquisition program, the Practicing Physicians Advisory Council recommended.
Scheduled to begin mid-2006, the Medicare competitive acquisition program (CAP) for Part B drugs and biologicals will select vendors through a bidding process to bill Medicare for these types of drugs and collect coinsurance or deductibles from patients.
Currently, physicians must purchase these drugs and biologicals from a distributor or manufacturer and then bill Medicare for reimbursement, which is set at a statutorily mandated payment rate of 106% of the manufacturer's average sales price (or ASP + 6%). Medicare pays 80% of this rate, and the physician collects a 20% copayment from the beneficiary.
Under the CAP, the only thing the physician has to do is purchase the drugs from the preselected vendors.
The program was designed to reduce the administrative burden for physicians by taking them out of the financial loop. However, it also means that physicians won't have as much control over these drugs—and that vendors can elect not to ship a drug if the patient has not met some of the copay obligations.
This system will inevitably work against patients who need therapy but have no money and the physicians who treat them, said Barbara McAneny, M.D., a member of the PPAC and an oncologist, who proposed the recommendation. If the patient is unemployed, “there is no way to make that copay,” she said.
Physicians are required by law to attempt to collect those copayments, “but we know that we're going to end up eating [the cost of the drug] because the patient doesn't have it.” However, the physician is going to continue treating those patients.
The provision that an executive of a vendor corporation can make the decision to cut somebody off 15 days after they've failed to make a payment is unfair, Dr. McAneny said. The vendors “never have to face that person and say, 'I'm sorry, you get to die now.' But when I'm in my practice looking at that person, that's what it will come down to. The person they'll see will be me.”
From a moral and ethical standpoint, the interim final rule leaves physicians with only one option: to opt out of the CAP to avoid abandoning patients, continue to purchase drugs on the ASP + 6% market, receive 86% of the cost of the drug, “and chew up the rest,” she said.
Medicare's reimbursement under ASP can fall short of what the drugs actually cost, given fluctuations in what distributors and manufacturers charge for the drugs.
“I assume the vendors, who tend to be large pharmaceutical manufacturing corporations, would be in a much better position to eat those costs than I would as an individual physician,” Dr. McAneny said.
Amy Bassano, director of the division of ambulatory services at the Centers for Medicare and Medicaid Services (CMS) Center for Medicare Management, noted that Medicare supplier provider agreements do not require services to be provided except in cases of emergency and civil rights. “That's what we're coming up against,” she said. However, there are cases where coinsurance could be waived if there is a demonstrated financial hardship and the vendor made an attempt to collect, she added.
The panel decided that CMS should reevaluate its contention that working with CAP vendors would not increase the administrative burden of physicians.
In other PPAC recommendations:
▸ CMS should work with Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee, to clarify how Congress intended the ASP and CAP to function independently of each other.
▸ CAP vendor prices should not be included in the calculation of the ASP. The inclusion is duplicative and unfair to physicians not participating in the CAP, the PPAC determined.
Given that the CMS has recognized the increased cost of dispensing drugs by pharmacies and has added 2% of the average sales price to cover pharmacy overhead costs under the ASP, the PPAC recommended that the CMS “treat physicians equally” and add 2% for physicians using the ASP + 6% and a dispensing fee for physicians using the CAP.
Physicians under the interim final rule would have only 14 days to submit to Medicare carriers procedural claims, including all necessary codes, for the administration of the drugs. Taking into account the challenges associated with meeting that deadline, the PPAC recommended that the time frame be extended to 30 days.
Also, CAP participation should be determined on an individual basis, and not as a group requirement, the panel recommended.