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Reimbursement Cuts Jeopardize Public Health

June 20, 2013
Just this month physicians who administer lifesaving therapies in their offices are seeing their reimbursements cut due to the sequestration.  That's because while some government spending was exempted from the sequestration, reimbursements under Medicare Part B were not.

And yet, some continue to call for additional cuts to this important program, where some of the sickest patients receive their therapies under the administration of a physician.  Additional cuts to Medicare Part B would have a devastating impact on patients with debilitating diseases such as cancer, rheumatoid arthritis and multiple sclerosis.

In short, cuts to reimbursement can imperil, even exacerbate, the harm to a delivery system already in crisis.

We all know that healthcare spending is a key driver to the federal deficit. By 2045, Medicare and other health spending will equal our projected tax revenue. It's understandable, therefore, that policymakers are looking for budget savings through cuts to Medicare reimbursements to hospitals and doctors and through price controls.

As Washington considers additional Medicare reimbursement cuts, it is critical that policymakers focus on long-term cost savings, rather than short-term fixes. They should adhere to the directive to all medical professionals: first, do no harm. The reimbursement conversation must focus on ensuring that treatments and cures continue to be accessible to patients suffering from grievous illnesses.

Our lawmakers must understand that patients served under Medicare Part B are often the sickest and most vulnerable. Changes that disrupt how their care is delivered would do a great disservice to their ability to fight devastating diseases.

The current reimbursement rate for drugs covered by Medicare Part B consists of the average sales price, plus six percent, known to many as ASP + 6%. This market-driven formula is working – it provides needed medicines to sick patients, covers costs physicians and keeps Medicare costs low. Unlike health care costs that are assigned seemingly arbitrarily, ASP+6% reflects the actual prices paid by physicians.

A product’s acquisition cost is just one aspect of the overall costs incurred by a physician.  Additional costs include shipping fees, storage and inventory management, staff time to negotiate prices and order products, clinical monitoring and patient education costs, to name a few.

Unfortunately, further reducing the ASP+6% rate in an effort to decrease spending will make it more difficult for doctors to service Medicare patients, jeopardizing patient care.

A study by Douglas Holtz-Eakin & Han Zhong found that reducing the rate at which physicians are reimbursed for Medicare Part B drugs from ASP + 6% to ASP + 3% would threaten access to care for Medicare beneficiaries and would not be a sound or sustainable reform policy to support deficit reduction. In terms of payments that balance the needs of Medicare patients with the incentives to serve them, ASP+6% works. Cutting this rate does nothing to help patients.  In fact, patients are the ones who are harmed.

One thing is certain, however, it's vital that Congress consider the long-term needs of sick patients when looking to decrease healthcare spending.  Cutting Medicare Part B reimbursements will hurt vulnerable patients and imperil public health.

Note: This op ed also ran in the June issue of Medical News Today, which can be accessed here

By William P. Bro is president of the Kidney Cancer Association.

The Kidney Cancer Association (KCA) is a charitable organization made up of patients, family members, physicians, researchers, and other health professionals globally. It is the world’s first international charity dedicated specifically to the eradication of death and suffering from renal cancers. It is also by far the largest organization of its kind, with members in more than 100 countries. We fund, promote, and collaborate with the National Cancer Institute (NCI), American Society for Clinical Oncology (ASCO), American Urological Association (AUA), and other institutions on research projects. We educate families and physicians, and serve as an advocate on behalf of patients at the state and federal levels in the United States and globally.