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Medicare Backtracks Further on Average Wholesale Prices

Medicare Backtracks Further on Average Wholesale Prices

Medicare payment for chemotherapy administration has been a controversial issue beyond accurate practice expense RVUs; a more inflammatory side of the story involves the cuts in payments to oncologists for drugs they purchase and then administer in their office. 

There has been a positive development here. On November 17, Medicare sent a program memorandum to insurance carriers telling them to throw out a previous September 8 memorandum, which had instructed carriers to start reimbursing physicians for office drugs at lower prices set by the US Department of Justice. Some oncology and hemophilia drugs were excluded from that edict; they were to be paid for, as in the past, based on average wholesale prices, which are higher. Nonetheless, there were still some cancer drugs included in the September 8 memo that would have been reimbursed at the lower Department of Justice prices. 

On November 17, Medicare told insurance carriers to forget the earlier memo entirely and to keep reimbursing all office drugs at 95% of the average wholesale price. Medicare made that turnaround, even though the agency continues to believe average wholesale prices are "inflated and inaccurate," because it feared Congress would have reversed the September 8 memo soon after it went into effect at the beginning of 2001, causing confusion. The American Society of Clinical Oncology called the November 17 memorandum "an additional positive step."

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