Medicare Compliance & Reimbursement

PWC estimates of MMA savings could hurt physician pay.

Oncology providers may have to dig even deeper than they might have expected to cover some of their pharmaceutical bills, according to a report on the Medicare Modernization Act of 2003's effects on future changes in drug rates.

The good news overall is that PriceWaterhouse-Cooper's updated figures project that MMA mandates will save Medicare $4.1 billion from 2004 to 2008, and a total of $15.7 billion from 2004 to 2013, according to a report it released on Sept. 20. In April, PWC predicted $4 billion in savings from 2004 to 2008, and a total of $13 billion recouped from 2004 to 2013.

Both figures in "Estimate of Savings to the Medicare Program for Payment Changes for Covered Outpatient Drugs and Biologicals," which projected the amount of savings Medicare anticipated from Part B pay-rate changes under the MMA, are a far cry from the Congressional Budget Office's original prediction of $4.2 billion in total savings for the 10-year period, however.

Recent events required PWC to refigure some of the numbers, according to a statement. PWC based the update on "recent ASP information from the Centers for Medicare and Medicaid Services, estimates of Part B spending under the MMA and other changes in assumptions based on more recent information," the report said.

In the update, PWC made numerical adjustments in three vital categories:

• PWC recast its most recent estimate for federal Part B oncology drug spending, increasing the amount from $3.6 billion to $5.0 billion.

• PWC also changed the growth rate for oncology drugs, "from 10 percent in our April estimate to 14.5 percent [now], based on higher drug spending and utilization estimates from CMS," the company said.

• PWC adjusted drug payment reduction estimates caused by the ASP-plus-6-percent pricing system from 31 percent to 30 percent, as "recent information
from CMS suggests," the report noted. PWC's numbers indicate that oncology drug reimbursement rates will suffer heavily in the name of federal savings. The MMA's plan to cut Part B spending will have a huge effect in the oncology field because its drugs account for almost 70 percent of total Part B spending. In 2005 alone, Medicare will spend an estimated $7.3 billion on oncology drugs and related services, PWC said.