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Government Proposing Cuts in Many Medicare Payments
By ROBERT PEAR
ASHINGTON, Sept. 21 - The Bush administration is proposing deep reductions in
Medicare payments for a wide range of drugs and medical devices used to treat
people who are elderly or disabled.
The proposed cuts are part of a new system of paying hospitals for outpatient
services. With advances in medical technology, hospitals report explosive growth
in the number and kinds of procedures that can be performed in outpatient
clinics, without the need for an overnight stay. Outpatient care accounts for
nearly half the revenue at some hospitals.
The cuts would affect many drugs, devices and high-technology procedures,
including cancer drugs and cardiac defibrillators like the one implanted in the
chest of Vice President Dick Cheney to prevent an irregular heartbeat.
Medicare would also pay less for blood products given to people who receive
transfusions but do not need overnight hospitalization. The Medicare payment for
a unit of red blood cells - about a pint - would be cut 39 percent, to $83 next
year, from $137 this year.
Federal health officials said Medicare had been overcharged for many outpatient
services. But patients have joined health care providers in protesting the
proposed cuts, saying that at the new prices hospitals will be unable to provide
treatment to patients who need it.
"We were shocked when we saw the payment rates," said Christopher T. Mancill,
director of reimbursement policy at the American Red Cross.
The payment for inserting a battery-operated pacemaker and defibrillator would
be cut 59 percent, to $12,102, from $29,360.
Doctors and patients' advocates expressed concern that hospitals would stop
providing services on which they consistently lose money. This could make it
more difficult for Medicare patients to obtain life-saving drugs, devices and
treatments.
The government itself, in a preamble to the proposed rules, acknowledges that
many of the proposed payments are "far lower" than the 2002 amounts, and it says
these cuts are "of concern to us because of the potential impact on access to
care." But it contends that the new rates accurately reflect hospital costs.
The Medicare payment for a breast biopsy would be cut 27.5 percent, to $290 from
$400. For injection of cisplatin, a commonly used cancer drug, the payment would
be reduced 43 percent, to $24 from $42.
For Remicade, a drug given intravenously to people with rheumatoid arthritis,
the payment would be cut 39 percent, to $38.50 from $63. For Avonex, an
injectable, genetically engineered drug used by people with multiple sclerosis,
the payment would be reduced 36 percent, to $144 from $225.
Hospitals would get 67 percent less for implanting an infusion pump, used to
deliver medication for severe intractable pain. The payment would be cut to
$1,346 from $4,079.
Dr. Edward L. Braud of Springfield, Ill., president of the Association of
Community Cancer Centers, whose members treat more than half the nation's cancer
patients, said: "Hospitals will not be able to continue providing chemotherapy
at the proposed rates. Patients will have less access to care."
The new rates illustrate the problems the government has in setting payments for
an industry in which goods and services are continually changing because of new
technology.
Thomas A. Ault, an expert on Medicare who worked at the Department of Health and
Human Services from 1984 to 1997, said: "The new outpatient rates are pretty
messed up. The relationship between what Medicare pays and what a service will
cost varies erratically."
After considering public comments on the proposal, the government will issue
final rules setting payment rates, effective Jan. 1.
Medicare received more than 110 million claims last year for hospital outpatient
services, including chest X-rays, breast cancer surgery and emergency room
visits for heart attacks and broken bones.
Under Medicare, a hospital normally receives a fixed amount of money, set in
advance, for each outpatient service. Similar services are grouped together in
more than 500 categories. The government sets a standard payment for each
category and pays the same amount for each service in that group.
Teaching hospitals, which pioneer the use of new technology, said the proposed
cuts would hit them particularly hard. "Our biggest concern is the underpayment
for new technology, especially cancer therapy drugs," said William D. Petasnick,
president of Froedtert Hospital, affiliated with the Medical College of
Wisconsin in Milwaukee.
Mark W. Skinner, a former president of the National Hemophilia Foundation, said
hospitals could not afford to provide proper care at the new rates.
For the blood-clotting factor most widely used by people with hemophilia, the
payment would be cut 54 percent, to 52 cents a unit from $1.12. This would
reduce to $1,300, from $2,800, the payment for a typical infusion provided to a
hemophiliac in a hospital outpatient department.
The formulas used by Medicare to pay doctors, hospitals and other health care
providers are set by statute and regulations and are notoriously complex. The
Bush administration said the new system of paying for hospital outpatient
services was "arguably the most complex and difficult in the history of the
Medicare program."
Federal officials said the outpatient rates for 2003 were the first ones based
on actual data from claims submitted by hospitals under the new payment system.
In the past, the government often relied on data supplied by drug and device
manufacturers. The government said the new numbers were more accurate, but
health care lobbyists disagreed.
Stephen J. Ubl, executive vice president of the Advanced Medical Technology
Association, which represents more than 1,000 companies, said: "Hospitals tend
to underreport the costs of high-tech items, and the government compounds the
problem by reducing charges for all items by a standard percentage. Hospitals
mark up aspirin and bandages more than a $20,000 defibrillator, so when you
apply a uniform reduction, it's biased against high-tech, high-cost items."
http://www.nytimes.com/2002/09/22/politics/22DRUG.html?ex=1033820355&ei=1&en=faf\
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