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Just days after the Obama administration unveiled an experiment to revamp the Medicare Part B program, more than 300 hundred groups representing physicians, drug makers, and patients are urging the government to withdraw its proposal.

Although some details must still be worked out, the administration wants to encourage greater use of lower-cost, but equally effective treatments. The Part B program covers injectable and infused medications for the elderly. The government also maintains its plan will be budget-neutral, or will not cost additional money.

The move reflects growing concern over the rising cost of medications, a hot-button topic that is straining payer budgets and angering Americans. The administration hopes to lower its drug spending by reducing reimbursement fees for physicians.


But the groups, some of which tried to persuade the administration not to proceed with its plan and complained the process was not transparent, argued that patients will be harmed.

The initiative is “misguided and ill-considered” and will “adversely affect the care and treatment of Medicare patients with complex conditions,” such as cancer, macular degeneration, and rheumatoid arthritis, the groups wrote in a letter today to US Senate and House leaders.


“These vulnerable Medicare patients and the providers who care for them already face significant complexities in their care and treatment options, and they should not face mandatory participation in an initiative that may force them to switch from their most appropriate treatment,” they added.

Under the Part B program, doctors, and hospitals buy a medicine, and the government reimburses the average sales price plus 6 percent. But the experiment, which would run five years starting this fall, would pay physicians the average sales price, as well as another 2.5 percent and a flat fee of $16.80.

A lot of dollars are at stake. Not surprisingly, many physicians are upset and argue that the experiment will unfairly hurt their practices while doing nothing to lower drug costs. And drug makers oppose the effort over concerns that their revenue will take a hit.

Among the organizations that signed the letter are the National Cancer Care Alliance, the Prevent Cancer Foundation, and Rush to Live. Several drug industry trade groups and numerous medical societies also signed on. We should note that some patient groups listed receive industry funding.

But the proposal has won praise from consumer advocates that argue the current reimbursement system provides an incentive for doctors to prescribe more expensive treatments. The math differ depending upon drugs being compared, but physician behavior is expected to change.

“We don’t like to think reimbursement plays a role in prescribing decisions, but there’s research out there that says it does,” said Maura Calsyn, director of health policy at the Center for American Progress. “If you change those incentives, you might change the decisions.”

Not everyone is convinced, however, that the experiment will work. One reason is that the government plans to focus on certain zip codes, but large oncology practices that operate multiple locations may be able to shift some patient to other offices and escape the lower reimbursement rate.

The government has not “accounted for behavioral and treatment changes that could occur,” wrote Adam Fein of Pembroke Consulting, who tracks drug distribution, on his blog. “These marketplace realities will undermine the … ability to draw accurate conclusions” from the experiment.

Whether the opposition will derail or alter the effort remains to be seen. At the time the experiment was announced last week, a 60-day window opened for submitting comments. Already, though, some lawmakers are objecting.

In a brief statement last week, Kevin Brady (R-Texas), who chairs the House Ways and Means Committee; Fred Upton (R-Mich.), who heads the House Energy and Commerce Committee; and Orrin Hatch (R-Utah), the Senate Finance Committee chairman, expressed anger over the proposal.

“This decision was made with a complete lack of transparency and clear disregard for the people and stakeholders who will be impacted the most,” they said. “The model could ultimately result in seniors receiving different standards of care based solely on where they live in the country.”

  • As a senior citizen this is very alarming. My BCBS coverage is dependent on Medicare authorizing coverage for needed services. If the Obama Administration’s experimental proposal goes forward, I could be left with reduced or no coverage for devastating health issues.
    If this proposal goes forward, I will DEFINITELY not vote this November as a vote for a Democrat would be voting against my own best interests, even though I’ve voted a Democratic ticket all of my adult life.

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