The Obama administration launched a drug payment pilot program last month that reduces physician earnings for expensive drug administration and makes generics attractive, according to a report in the Washington Post.
Here are six key notes:
1. Medicare's proposed pilot program removes the incentive for physicians to prescribe expensive drugs for chemotherapy and other injectable drugs. Physicians would receive better reimbursement under the pilot program for half the drugs available, most of which are generics.
2. The more expensive and newer drugs are attached to lower reimbursement than physicians received in the past. The physicians currently receive the sales price of the drug plus 6 percent — with that amount cut to 4.3 percent under the sequester. The proposed pilot will give a flat fee plus 2.5 percent of the price — which is 0.9 percent under the sequester.
3. A research analysis from the Memorial Sloan Kettering Cancer Center shows currently drug companies are able to steadily increase prices to benefit physicians and pharmaceutical companies. A handful of common, high-priced cancer drugs drive income for hospitals and physicians today, according to the report.
4. The report also questions whether the new incentives would lower costs; the physicians' and hospitals' overall earnings would be the same as under current rules if the highest-cost and most-used drugs were excluded.
5. Smaller practices may not be able to negotiate a favorable price on drugs under the proposed pilot when compared with larger health systems.
6. The program is a five-year pilot as proposed and 75 percent of the providers would participate. The comment period is open through May 9.