Hospital outpatient departments and cancer doctors would be hit hard by a proposed rule to change how Medicare reimburses certain drugs, a new analysis finds.
That is because hospitals and certain specialists, such as cancer doctors, would receive smaller reimbursements for drugs that cost more than $480 per day, according to an analysis from the research firm Avalere Health. The firm said cancer doctors and hospital outpatient settings will be hit the hardest by the proposed rule.
In addition, because Medicare beneficiaries without supplemental insurance coverage are responsible for 20 percent of the payment, their out-of-pocket costs will increase for drugs costing less than $480 per day, Avalere said.
The findings come as Republicans and patient advocates are fighting the Obama administration over a proposal to change payments under Medicare Part B, which pays for doctor-administered drugs such as chemotherapy cancer treatments.
The administration argues the current system incentivizes doctors and hospitals to prescribe pricey treatments instead of more efficient and cheaper treatments. For instance, under the current system a doctor gets an extra 6 percent of the average sales price of a drug for more expensive products.
The administration is concerned doctors are prescribing more expensive products to get the extra percentage and has proposed instead an additional payment of 2.5 percent and a $16 fee.
Avalere examined what the proposal would mean if implemented, and factored in a 2 percent cut to physician payments as a result of budget sequestration.
The analysis found that drugs that cost providers more than $480 per day would result in lower reimbursement under the new model. Meanwhile, products "costing less than $480 would receive higher payments than what occurs today," it said.
The changes will affect certain specialists to a greater degree.
For instance, specialists who use more expensive drugs would get a decrease in Medicare payments. Specialists who would be affected by the lower payments would be rheumatologists and cancer doctors.
By contrast, family doctors stand to benefit from the change.
Hospital outpatient departments, which administer several treatments reimbursed under Part B, are going to be hit the hardest, Avalere said.
Several GOP lawmakers oppose the proposed rule, which still needs to be finalized.
Rep. Tom Price, R-Ga., said the rule "limiting the level of treatments providers may offer despite what a patient's health conditions demand." Price is chairman of the House Budget Committee.
Patient advocates have said they are worried that the rule could hinder access to treatments, an assertion the administration has flatly rejected.
The administration did get some help from the biggest senior lobby in Washington.
AARP endorsed the proposed change, saying that spending on Medicare Part B drugs grew to $22 billion last year, double the amount from 2007.
"This spending escalation is simply unsustainable," said Nancy LeaMond, chief advocacy and engagement officer at AARP.