Lower Medicare HOPPS Payments Reversed

WASHINGTON—The Health Care Financing Administration (HCFA) has scrapped plans to significantly reduce payments in 2001 for therapies and technologies covered by Medicare under its Hospital Outpatient Prospective Payment System (HOPPS).

The reversal came after appeals by members of the House and Senate and a letter writing campaign directed at Congress and the White House led by the Association of Community Cancer Centers (ACCC). Almost all hospital-based cancer programs fall under the HOPPS payment plan, more commonly known as ambulatory payment classifications.

As a result of HCFA’s decision, payments for cancer drugs and biologics will remain at 5% below the average wholesale price (AWP). In an "alert" to members urging them to contact their elected officials, ACCC had warned that the agency planned to cut Medicare payments to 75% or less of AWP. "HCFA’s own data say that break-even for hospital outpatient departments is AWP minus 5%," the ACCC said.

In a statement announcing HCFA’s change of plans, the ACCC said that, without the change, the impact on Medicare beneficiaries with cancer would have been dramatic.

"Nearly 30% of all Medicare beneficiaries, including some of the most complex and difficult cases, are seen in the cancer center setting," the ACCC said. "It has been estimated that reimbursement for cancer drugs would have been cut by more than 25% under the original proposal. If this were the case, cancer programs would have faced severe losses on each Medicare patient they treat."

The reversal ensures that payments will remain at 95% of AWP, but only for 1 year, unless Congress works out new legislation. Rep. William M. Thomas (R-Calif), who opposed the reduced payment formula, has promised to explore the issue with HCFA officials and in legislative sessions during 2001.

The amount of any reduction in Medicare HOPPS payments will become known in the spring when HCFA publishes its proposed rules for 2002.