OPPS Cut Harms Patients, Defies Congressional Intent

Washington, D.C. (November 29, 2001) - The Centers for Medicare and Medicaid Services (formerly HCFA) today published a final rule (CMS 1159-2) slashing by 68.9 percent pro rata pass-through payments for innovative medications used in the outpatient hospital setting. The cuts will be effective for services rendered on or after Jan. 1, 2002.

“When Congress mandated that CMS create a pass-through pool for new technology, the intent was clear: to provide patient access to innovative therapies,” said Sharon Cohen, BIO’s vice president for government relations. “The payment cuts expected in 2002 will make reimbursement for such products below -- and sometimes significantly below -- true hospital acquisition costs. Unless some adjustment is made to offset this cut, Medicare beneficiaries’ access to potentially lifesaving therapies could be severely restricted and, in some cases, completely eliminated.

The total amount available for these payments is currently capped at 2.5 percent of total Medicare outpatient program payments through 2003. “CMS claims that without these severe cuts, spending on the program will break that 2.5 percent barrier in 2002,” said Cohen. “BIO has examined the available data and found no support for that conclusion.”

As a solution to the problem, BIO is advocating that implementation of the final rule be delayed a full year. “In fact, there is precedent for such action since the agency has delayed making pro rata reductions for the past two years because of insufficient data. A full-year delay will give the agency much-needed time to compile the proper outpatient data for innovative drugs and biologics currently in the pass-through pool. Failing a full-year delay, BIO is urging Congress to support other solutions prior to adjournment that will ensure patient access to innovative, life-saving drugs and biologics,” Cohen concluded.

BIO represents more than 1,000 biotechnology companies, academic institutions, state biotechnology centers and related organizations in all 50 U.S. states and 33 other nations. BIO members are involved in the research and development of health-care, agricultural, industrial and environmental biotechnology products.

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