Medicare Compliance & Reimbursement

A new world is at hand for Medicare drug payments.

Responding to what the feds worry are billion-dollar abuses of the Medicare program, the Centers for Medicare & Medicaid Services has joined Congress in attempting to overhaul the controversial "average wholesale price" system that sets Medicare payments for outpatient drugs.

CMS has not, however, decided on a final solution. Instead, it offered four possible approaches in an Aug. 20 Federal Register notice, and invited comments on the alternatives from the health care community.

In a nutshell, the alternatives are as follows:

1. Medicare would pay the same amount for covered drugs that private insurers pay.

2. Medicare would discount the AWP by 10 to 20 percent in 2004, then continue decreasing payments until they're reasonable. This option is similar to a proposal in the Senate's Medicare reform bill.

3. Medicare would monitor markets to establish reasonable drug prices.

4. Medicare would establish competitive bidding for covered drugs, and require drugmakers to report their average sales prices. This option parallels the House of Representatives' approach in its Medicare bill.

To see the rule, go to http://www.access.gpo.gov/su_docs/fedreg/a030820c.html.