Medicare Compliance & Reimbursement

Government continues to take closer look at drug costs.

Last year, Medicare's four largest kidney dialysis providers paid between 12 and 68 percent below the program's reimbursement rates for 10 end-stage renal disease drugs, according to a report released May 5 by the HHS Office of Inspector General.
 
In the report, mandated by last year's Medicare Modernization Act, the OIG found that four of the ten drugs had acquisition costs at least 50 percent below reimbursement levels. When weighted by total Medicare reimbursement for each drug, acquisition costs ran an average of 22 percent below reimbursement costs.

Dialysis clinics not owned by the four largest providers didn't do quite as well. These facilities paid an average of 14 percent below reimbursement costs for the 10 drugs, with differences ranging from 5 to 58 percent.

The current reimbursement system for separately billable dialysis drugs relies on largely fictitious "average wholesale prices" for the medications. MMA directs the Centers for Medicare & Medicaid Services to use the OIG's report in moving in 2005 to a  reimbursement system based on the "average sales price" paid by dialysis providers. This payment shift earned the MMA rare Democratic praise from Rep. Pete Stark (CA). In a statement responding to the OIG's report, Stark called ASPs a needed cure for bloated AWP-based reimbursements.