Medicare Compliance & Reimbursement

OIG report claims Medicare is paying higher rates, losing millions.

Payments for widely used pharmaceuticals could thin out if the HHS Office of Inspector General gets its way.

In a trio of reports released Feb. 2 by the OIG on the pricing of Lupron, ipratropium bromide and albuterol, the agency once again ups the ante on its already longstanding concern over skyrocketing pharmaceutical costs. It wants the Centers for Medicare & Medicaid Services to set "appropriate" payment rates for the drugs after 2004.

In 2002, the OIG says Medicare paid $677 million for the cancer drug Lupron - 8 percent of all drug reimbursements for that year. According to OIG data, Medicare could have saved $40 million if carriers in all jurisdictions had implemented a less costly alternative policy. One dose of a cheaper clinical equivalent, Zoladex, costs $446.49 - 27 percent less than the $611 for Lupron, the agency says in "Medicare Reimburse-ment for Lupron" (OEI-03-03-00250).

Medicare also pays more for albuterol and ipratropium bromide than other payors, the OIG says. If Medicare had reimbursed at the Medicaid federal upper limit amount in 2002 for albuterol, the program would have saved $263 million; for ipratropium bromide, savings would have amounted to another $386 million.

In "Update: Excessive Reimbursement for Ipratropium Bromide" (OEI-03-03-00520) and "Update: Excessive Reimbursement for Albuterol" (OEI-03-03-00510), the OIG argues that while pharmacies and other suppliers continue to enjoy falling prices on these drugs, the Medicare payment rate remains unchanged.

CMS agreed in part, but said its role in overseeing local medical review policies stopped short of influencing the "application of guidelines in any specific circumstance."

To see the reports, go to http://oig.hhs.gov/w-new.html.

Lesson Learned:  Suppliers may see Medicare reimbursement rates of popular drugs fall next year if the OIG and CMS come to terms on pricing discrepancies.