Medicare Compliance & Reimbursement

Plus:  MedPAC's hospital PPS update recommendations receive backlash from AHA

Low-cost generic statins, which providers use to treat high cholesterol and heart disease, could play a key role in minimizing Part D program costs and maximizing consumer savings. A significant shift from higher-cost statins to lower-cost generics over the next two years could cut statin spending in half, producing $8.2 billion in savings for taxpayers, insurers and Medicare benes, according to a Jan. 11 Consumers Union study.

"For the Medicare drug benefit to continue without breaking the federal budget, it will be critical that medicines are prescribed based on their effectiveness and track record, not on advertising campaigns," says Gail Shearer, Consumer Reports Best Buy Drugs project director. "Lower-cost cholesterol drugs are just as effective and safe, and the savings from switching to them could be dramatic."

The statin drug class topped overall 2004 prescription drug sales, with atorvastatin (Lipitor) and simvastatin (Zocor) ranking in as the two best-selling drugs in the country. Two new statins could become available as soon as this summer when Zocor and Pravachol go generic.

Prescriptions for brand-name statins such as Altoprev, Pravachol, Lescol and Zocor declined somewhat from November 2004 to October 2005, but statin prescriptions are on the rise overall at 11.6 million prescriptions per month--up 2.6 percent, the study reports. An increase in prescriptions for lower-cost generic statins could suggest a growing level of cost-awareness among providers and carriers--prescriptions for the cheapest statin, generic lovastatin, increased 15.2 percent during the same period. While prices for most statins--notably Lipitor and Pravachol--rose beyond inflationary benchmarks, generic lovastatin was the only statin to show a price decline, averaging 5.2 percent.

To view the study, visit www.consumersunion.org/StatinAnalysisFINAL.pdf.

Hospital PPS, Outpatient Dialysis Payment Recommendations Fall Below Expectations

To offset hospital losses on Medicare benes, hospital inpatient and outpatient reimbursements should receive a payment hike in 2007, recommends the Medicare Payment Advisory Commission--but productivity gains could prevent them from receiving the full market basket update. The hospital prospective payment system would instead receive 0.45 percentage points less than the full market basket update based on MedPAC's recommendations, resulting in a net 3.55-percent increase for inpatient care.

"MedPAC's recommendation for less than a full market basket update is very troubling and threatens hospitals' ability to continue to provide vital health care services," responds American Hospital Association executive vice president Rick Pollack. "This poor decision ignores data detailing the pressures facing hospitals and fails to take into consideration the very serious impact any reduction in payment would have on hospitals and the patients we serve."

Composite rate payments for outpatient dialysis facilities face a similar cutback--MedPAC recommends a 3.1-percent market basket increase minus 0.45 percent to account for productivity gains. In addition, the Department of Health and Human Services should eliminate payment disparities to hospital-based and freestanding dialysis facilities, consolidating the composite rate and add-on adjustment for dialysis medications into a single payment, MedPAC says.

MedPAC also voted to recommend a 2.8-percent net increase for physicians after productivity adjustments, and no increase for home health agencies, inpatient rehabilitation facilities, long-term care hospitals and skilled nursing facilities in fiscal year 2007. "We are disappointed that MedPAC recommended no inflation adjustment for SNFs in 2007, especially since the Commission reported last month that profit margins at non-profit SNFs are nearly zero," says American Association of Homes and Services for the Aging president Larry Minnix. "This recommendation only amplifies the need for our country to take a comprehensive look at how to overhaul long-term care financing to meet the needs of our aging population."

Part D Plan Reduces Employers' Retiree Rx Costs

Dropping employer-sponsored retiree drug plans could be a lucrative move, according to a recent Actuarial & Health Care Solutions study. By dropping their current drug plans and paying retirees' Medicare D premiums, companies have the potential to save more than 80 percent for a typical plan in 2006, the study claims.

Businesses that opt for alternative coverage options can still expect significant cost savings over time, the study shows. Integrating their current plans with a Part D plan can reduce costs 31 to 49 percent, research shows. Companies that continue to offer their own drug plans but accept a government subsidy stand to save nearly 30 percent, plus special tax benefits.