Medicare Backtracks Further on Average Wholesale Prices

January 1, 2001

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.

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

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

On November 17,Medicare told insurance carriers to forget the earlier memo entirely and to keepreimbursing all office drugs at 95% of the average wholesale price. Medicaremade that turnaround, even though the agency continues to believe averagewholesale prices are "inflated and inaccurate," because it fearedCongress would have reversed the September 8 memo soon after it went into effectat the beginning of 2001, causing confusion. The American Society of ClinicalOncology called the November 17 memorandum "an additional positivestep."