OIG: Medicare May End Up Overpaying for ESRD Drugs

Janice Simmons, for HealthLeaders Media , September 16, 2010

Rep. Pete Stark (D-CA), chairman of the House Ways and Means Health Subcommittee, said in a statement that the U.S. must find the right payment levels that "preserve Medicare beneficiaries' access to quality care."

"Dialysis drug costs have dropped while the index the government will use to increase prices over time has risen," he said. "If these trends continue, the government will be overpaying for dialysis drugs. We must continue to carefully track drug cost and utilization trends for dialysis treatment."

The OIG recommended that the Centers for Medicare and Medicaid Services (CMS) develop a more "accurate method for estimating changes in the prices of ESRD drugs." However, CMS has responded that the "downward trajectory of average acquisition costs" shown in OIG's analysis was influenced by changes in CMS's payment mechanism for separately billable ESRD drugs, particularly for epoetin alfa.

While the historical average acquisition cost data presented in the OIG report may not necessarily "be predictive of future trends in the costs of separately billable drugs," the OIG said, it remained "concerned that Medicare could end up paying too much for these drugs" once the bundled rate is implemented—costing Medicare potentially hundreds of millions of dollars a year."

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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