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Executive Summary

MEDICARE BLOOD CLOTTING FACTOR ADDITIONAL PAYMENTS EXTENDED through Sept. 30, 1994 for beneficiaries with hemophilia who are administered blood clotting factor during a hospital stay. First proposed in the House, the extension was included in the conference version of the Omnibus Budget Reconciliation Act of 1993 that was signed into law Aug. 10. Under current law, the costs of inpatient administration of blood clotting factor to Medicare beneficiaries with hemophilia are not reimbursed as part of the DRG payment; instead they are separately reimbursed. Under OBRA '89 additional payments were applied to clotting factor furnished from June 19, 1990 to Dec. 19, 1991. The Medicare payment for clotting factors is particularly important given the recent approvals of the recombinant factor VIII products, which are being marketed at a premium to previous products. The hemophilia pass-through extension provision of this year's budget bill is effective as if it had been included in OBRA '89, and it extends additional payments to clotting factor furnished through Sept. 30, 1994. Hospitals which are affected by the provision are instructed to identify to their "fiscal intermediary" those discharges occurring prior to enactment of the law for which additional payments would apply. OBRA '93 also amends Medicare's drug reimbursement policy in three other areas: oral cancer drugs, immunosuppressive drug therapy and erythropoietin. The budget bill extends Medicare coverage effective Jan. 1, 1994 to include oral cancer drugs if they are the same chemical entity as anti-cancer drugs that are covered by Medicare when administered intravenously. Currently, Medicare coverage of outpatient prescription drugs is limited to those drugs that are not to be self-administered (with exceptions for immunosuppressive drugs and erythropoietin). The bill also provides for coverage of off-label uses of anti- cancer drugs, as proposed by the House Ways & Means Committee. However, the conference version of the bill makes some amendments to the House measure. The committee's provision called for Medicare to cover drugs or biologicals used in an anti-cancer chemotherapeutic regimen for a medically accepted indication, limited to FDA-approved drugs but not necessarily limited to the approved uses. Based on guidance from the HHS secretary, carriers would have determined that the use is medically accepted by taking into account "the inclusion of such drugs in one of the three specified major medical compendia" or "supportive clinical research regarding the off-label use of such drugs that appears in peer-reviewed medical literature." The HHS secretary would specify the medical journals that would be appropriate to consider. The conference agreement amends the House provision to provide that "coverage would be extended to other uses of anti-cancer drugs if such use is supported by one or more citations in one of three specified medical compendia and other authoritative compendia identified by the [HHS] secretary, unless the secretary has determined that the use is not medically appropriate or the use is identified as not indicated in one or more such compendia." The conference agreement also drops the House provision that would have required the secretary to study the costs of patient care for beneficiaries enrolled in clinicals trials of new cancer therapies and make recommendations on Medicare coverage of such beneficiaries. Medicare coverage of immunosuppressive drug therapy for beneficiaries who have received organ transplants will be extended from one to three years under the budget bill, but the conference agreement delays the phase-in schedule that was approved by the House. Under the new law, coverage will be extended to an 18-month period following the date of the transplant procedure effective Jan. 1, 1995; to a 24-month period effective Jan. 1, 1996; to a 30-month period effective Jan. 1, 1997; and to a 36-month period effective Jan. 1, 1998. Medicare payments to dialysis centers for EPO for beneficiaries with end-stage renal disease will be reduced by $1 per 1,000 units under the budget bill, effective for services furnished on or after Jan. 1, 1994. The current maximum payment to facilities is $11 per 1,000 units. The provision will not alter payment for EPO administered in physicians' offices. The conference agreement added an amendment to the provision that came out of the House and Senate which will permit all dialysis patients to self-administer EPO and qualify for reimbursement.

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