MedPAC To Examine Hospitals’ Handling Costs For Outpatient Drugs
This article was originally published in The Pink Sheet Daily
Executive Summary
Study will examine whether changes are needed to the outpatient prospective payment system. The Medicare Payment Advisory Commission also will investigate how comparative and cost-effectiveness data are used by payers other than Medicare.
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The Medicare Payment Advisory Commission will study whether a reimbursement adjustment is necessary to cover hospital pharmacy department costs associated with handling a select set of drugs and biologics. The analysis is mandated by the Medicare Modernization Act and must be submitted to Congress by July 1. The study stems from a reimbursement change called for in the MMA: beginning in 2006, the Centers for Medicare & Medicaid Services must pay hospitals for certain outpatient products according to their average acquisition costs. The Government Accountability Office is responsible for pinpointing those average acquisition costs, while MedPAC will assess whether the outpatient prospective payment system requires an adjustment to cover hospitals' costs for storing, preparing and disposing of those products. The commission's study will include the drugs and radiopharmaceuticals on which CMS spent the most in 2002, but MedPAC will not consider acquisition or administration costs. The list includes Epogen and Procrit (epoetin alfa), Rituxan (rituximab), Remicade (infliximab), Taxol (paclitaxel), Paraplatin (carboplatin) and Taxotere (docetaxel). MedPAC staff reported during a Jan. 13 meeting in Washington, D.C. that hospitals have very little data that will be useful for their analysis because existing information does not distinguish between Medicare and non-Medicare services. Consequently, researchers will develop their own framework to describe and measure costs, and will conduct case studies at four hospitals to assess the feasibility of collecting cost data using that system. MedPAC staff cautioned that, as a result, their framework will not be widely representative. The commission also said it plans to investigate how comparative and cost-effectiveness data - including information on prescription drugs - are used by other public and private payers. The goal is to relate clinical effectiveness and health outcomes associated with new technologies to the net resource costs associated with their use. MedPAC staff noted that CMS generally uses an evidence-based approach that does not consider clinical or cost information when making national coverage decisions. However, several recent CMS coverage determinations have been linked to collecting clinical data, including coverage for PET scans and several colorectal cancer agents. Most recently, CMS proposed covering Merck's Emend (aprepitant) under Part B (1 (Also see "Merck's Emend To Be Covered Under Part B In Draft CMS Coverage Decision" - Pink Sheet, 7 Jan, 2005.)). - Andrew Dove |