Medicare Compliance & Reimbursement

In one of its first steps towards turning the sprawling Medicare legislation signed by President Bush on Dec. 8 into on-the-ground reality, the Centers for Medicare & Medicaid Services is transforming the way Medicare pays for injectible drugs and other already-covered medications.

Currently, Medicare reimburses physicians for these drugs at the lesser of what a physician charges the program or 95 percent of the "average wholesale price." The new rule, published in the Jan. 6 Federal Register, sets the 2004 payment for most covered drugs at 85 percent of the April 1, 2003, AWP, although Medicare will continue to reimburse at 95 percent of AWP for certain drugs and will reimburse as low as 80 percent of AWP for certain other drugs that the program has been overpaying for by particularly egregious margins.

On the flip side, the rule, which has a comment period running through March 8, increases "practice expense" payments for the administration of the drugs. Oncologists and other physicians have complained that high drug reimbursements were needed to subsidize low practice expense payments.