Medicare payments to doctors will rise 1.5% across the board in fiscal 2005 under regulations proposed by the CMS and mandated by the Medicare Prescription Drug, Improvement and Modernization Act. Meanwhile the agency proposes to cut Medicare payments for outpatient oncology drugs administered under a physician's supervision.
The Medicare physician payment increase replaces a 3.7% payment cut that had been projected under previous law. A 5% increase will be given to doctors practicing in areas with low doctor-to-beneficiary ratios.
The CMS proposal also addresses new Medicare benefits, including an initial physical exam and screenings for breast cancer, diabetes and heart disease.
The doctor-payment regulations will be published in the Aug. 5 Federal Register, comments will be accepted through Sept. 24, and the CMS will publish final regulations by Nov.1. The CMS projected that its proposals would save Medicare $530 million and beneficiaries $270 million in fiscal 2005.
CMS Administrator Mark McClellan, M.D., said the government is paying far too much for cancer drugs administered in doctors' offices -- up to 50% more than typical sales prices for some medicines used to treat prostate cancer. The changes, to take place in 2005, would make payments competitive with prices negotiated by other health plans, he said.
Cancer specialists' revenues could decline 2% to 8%, McClellan said.
Drugs dispensed in doctors' offices to treat lung illnesses, for which Medicare pays 90% more than the actual sales price, also would be affected by the proposed changes, he said.
"We're going to get more for our money," McClellan said.
Anticipating reductions, some cancer specialists have talked about cutting back their practices and sending patients to hospitals to get treatment.
"With this magnitude of cut, I don't see how a practice can survive taking care of Medicare patients," said David Johnson, M.D., of Nashville, president of the American Society of Clinical Oncology.
The law called for tying reimbursements for chemotherapy drugs more closely to the price doctors pay, rather than the listed wholesale price. Doctors pay less than that price because drug companies give them substantial discounts.
While doctors acknowledge they have been overpaid for the drugs, they maintain they have been underpaid for their practice expenses -- such as nurses, equipment and treatment rooms -- and complain that the new law does not do enough to address that issue.
Cancer specialists have asked Congress to essentially freeze payments at current levels until various agencies complete studies of the new pricing system. The prospects for a freeze are dim.
Republican leaders say no changes will be made in Medicare law this year.
The Englewood, Colo.-based Medical Group Management Association issued a statement today praising the Medicare physician-payment increase, saying it will "help ensure that physician practices can continue providing high-quality care," according to William Jessee, M.D., the association's president and chief executive officer.
The MGMA warned, however, that the proposed reductions in oncology drugs payments "could have a serious negative impact on provider practices."
Also, the CMS on Monday announced proposed regulations to establish a Medicare drug benefit as required by the Medicare Modernization Act. Under the law, beneficiaries would pay a $250 deductible for prescription medications, after which the government would pay 75% of costs up to $2,250. When the beneficiary has spent $3,600 out-of-pocket, the government would pick up 95% of all subsequent costs. For the purpose of an asset test for additional low-income assistance, the CMS said only liquid assets and real estate holdings would be counted, excluding a beneficiary's home or residential farm.
The agency released preliminary data on average prices for 32 widely used drugs among Medicare beneficiaries. It is seeking comments on the data and will release final drug payment rates later.
The proposed regulations will be published in the Aug. 3 Federal Register, comments will be accepted through Oct. 4, and final regulations are expected in early 2005.
The prescription drug benefit takes effect Jan. 1, 2006.
Joseph Conn contributed to this story.