Medicare Waste on Infusion Drugs

medicare infusion drugsTaxpayers are losing money because of Medicare waste on infusion drugs.

Because Congress locked some drug costs at 2003 prices, Medicare has wasted $334 million dollars over the last six years by failing to buy medication at the best possible discount, according to a new investigation that reinforces just how prevalent waste and abuse are inside the government’s main health program for senior citizens.

Investigators at the Health and Human Services Department Office of Inspector General said that Medicare waste on Plan B by purchasing drugs at an outdated average wholesale price, or AWP,  as opposed to the manufacturing price the government is supposed to receive.

“Our findings—like those of OIG’s previous studies in this area—demonstrate that AWPs are unrelated to the prices of drugs in the marketplace and that the reliance on an AWP-based payment methodology has led to Medicare waste that cost the program hundreds of millions of dollars,” the inspector general said.

The culprit is infusion drugs in durable medical equipment – basically drugs meant to be used in home medical equipment like IV’s, catheters or infusion pumps.  But the drugs haven’t been purchased at the optimal sales price, investigators said.  Instead, Medicare officials have been following 2003 pricing guidelines set by Congress.

“Basing payments for DME infusion drugs on AWPs set almost a decade ago raises concerns about whether Medicare payment levels are appropriate,” the IG said.

For creating a scenario that kept taxpayers from getting the best prices — and failing to fix it for years — the Centers for Medicare and Medicaid Services, or CMS, and Congress jointly win this week’s Golden Hammer, a distinction awarded by the Washington Guardian to an egregious example of waste, fraud and abuse in government.

Through an update to the Social Security Act, lawmakers said that “in the case of infusion drugs furnished through an item of durable medical equipment,” prices “on or after January 1, 2004,” will be set at “95 percent of the average wholesale price for such drug in effect on October 1, 2003,” the law reads.

The inspector general said CMS needs to petition for a change in the law that would set prices to current levels, or to include infusion drugs in an already successful competitive bidding process.  Marilyn Tavenner, CMS acting administrator, agreed and said the agency is looking at both options.

Medicare has come under fire before for the exact same issue.  In fact, in January the Washington Guardian reported on Medicare’s overpayments with prescription medication.

For the six years covered by the latest review, investigators estimated the government had been paying between 54 percent and 122 percent more for the drugs than was necessary.  By using the wholesale price, investigators said CMS failed to get “any price concessions, such as volume discounts, ‘prompt pay’ discounts, cash discounts, free goods contingent on purchase requirements, chargebacks and rebates other than those obtained through the Medicaid drug rebate program.”

The IG also said that because medicine was being purchased at 2003 prices, the government might have been getting some drugs cheaper than current costs.  But investigators said it was a small amount, and is already calculated in the $334 million estimation.

And investigators were able to identify the largest single Medicare waste problem: a drug called milrinone lactate, which is used to treat heart failure.  Medicare Plan B was paying a price for the drugs more than 18 times greater than the actual cost, the inspector general said.

Of the $125 million Medicare spent in 2011 for 21 different infusion drugs, that particular drug accounted for 62 percent of the costs, according to the IG’s report.

Washington Guardian

Medicare Patients Have Higher Costs for Cancer Medication

Medicare patients will have higher out of pocket costs for cancer medication forcing seniors to skip treatment.

Facing a life-and-death struggle with kidney cancer, Rita Moore took her prescription for a new kind of chemotherapy pill to her local drugstore.

She was stunned when the pharmacist told her the cost for a month’s supply would be $2,400, well beyond her income.

Medicare drug plans that cover Medicare patients  like Moore are allowed to charge steep copayments for the latest cancer medications, whose cost can run to tens of thousands of dollars a year. About 1 in 6 beneficiaries aren’t filling their prescriptions, according to recent research that has put numbers on a worrisome trend.

Officials at Medicare say they’re not sure what happens to those patients — whether they get less expensive older drugs that sometimes work as well, or they just give up. Traditionally, chemotherapy has been administered intravenously at a clinic or doctor’s office. Pills, a relatively new option, are thought to represent the future of cancer care.

Moore, 65, was operated on in February for an advanced form of kidney cancer. She said both her cancer and kidney specialists agreed that a drug called Sutent probably offered the only chance to keep the disease in check. It’s a capsule taken at home.

But she was unprepared for what happened when she went to fill her prescription.

“I cried,” said Moore, who lives in a small town in central California. “What can you do when the only thing out there that can maybe give you some quality of life is unaffordable? I was devastated. I didn’t know what to do.”

Private insurance companies that deliver the Medicare prescription benefit say the problem is that drug makers charge too much for the medications, some of which were developed from taxpayer-funded research. The pharmaceutical industry faults insurers, saying copayments on drugs are higher than cost-sharing for other medical services, such as hospital care.

Others blame the design of the Medicare prescription benefit itself, because it allows insurers to put expensive drugs on a so-called “specialty tier” with copayments equivalent to 25 percent or more of the cost of the medication.

Drugs for multiple sclerosis, rheumatoid arthritis and hepatitis C also wind up on specialty tiers, along with the new anti-cancer pills. Medicare supplemental insurance — Medigap — doesn’t cover those copayments.

“This is a benefit design issue,” said Dan Mendelson, president of Avalere Health, a research firm that collaborated in a recent medical journal study on the consequences of high copayments for the new cancer drugs.

Cost-sharing should only be used to deter wasteful treatment, he explained. “It is hard to make the argument that someone who has been prescribed an oral cancer medication doesn’t need the drug,” added Mendelson.

The study last month in the Journal of Oncology Practice found that nearly 16 percent of Medicare beneficiaries did not fill an initial prescription for pills to treat cancer, a significantly higher proportion than the 9 percent of people with private insurance who did not follow through.

Forty-six percent of Medicare beneficiaries faced copayments of more than $500, as compared to only 11 percent of patients with private insurance. Among people of all ages, 1 in 4 who faced a copayment over $500 did not fill their prescriptions. Cancer is more prevalent among older people.

“Obviously, we’re leaving a lot of Medicare patients off the bus, standing at the curb, if they can’t afford the medications,” said Dr. Lowell Schnipper, who chairs the American Society of Clinical Oncology’s task force on the cost of cancer care. It advises doctors to discuss costs with patients up front, to avoid surprises.

Medicare officials say there are currently no plans to rework the design of the prescription benefit.

But “nobody is more concerned about access than we are,” said Dr. Jeff Kelman, Medicare’s chief medical officer.

For many seniors, Kelman suggested, the situation is not as bleak as what Moore encountered. For example, the prescription plan is designed so beneficiaries who are poor or near poverty face only token copays. For the rest, President Barack Obama’s health care law gradually closes the coverage gap known as the “doughnut hole.” This year, the new law provides a 50 percent discount on brand name drugs for those in the gap.

(Comment: Closing the doughnut hole will INCREASE Medicare Part D premiums and copays. It will also result in tier shifting for the more expensive drugs and will never eliminate the coinsurance requirement on the most expensive drugs.)

The gap starts after Medicare recipients and their insurance plan have spent $2,840 on medications. After that, seniors are responsible for roughly the next $3,600. Once total spending reaches about $6,440, Medicare’s catastrophic coverage kicks in and beneficiaries pay only a small amount.

Yet the health care law could be struck down by the courts or repealed if Republicans win the White House and Congress next year. Even if the law stands, assistance after seniors end up in the gap doesn’t take away the initial shock at the pharmacy counter.

“The underlying problem is with the basic structure,” said Joe Baker, president of the Medicare Rights Center, a New-York based advocacy group. “Even before you get to the doughnut hole, you’ve got a problem.”

One solution would involve requiring drug plans to lower copayments for cancer pills. But the trade-off is likely to be an increase in premiums for all beneficiaries.

Rita Moore had to try to find her own way out of the dilemma. She lives in Corcoran, Calif., and still works as resident manager of an apartment building for seniors.

Moore decided to apply to Pfizer’s prescription assistance program for Medicare patients who can’t afford Sutent and other drugs the company makes. Pfizer approved a year’s worth of free medication, but it took about two months to collect and review all the medical and financial paperwork.

(Comment: Organizations such as PPARx and Needy Meds will help Medicare beneficiaries find low cost and free medications)

“They were very helpful, but it wasn’t a fast process,” said Moore. In the meantime, she wasn’t being treated. The cancer spread and is now close to her spine and her body’s main artery.

“This is kind of strange,” Moore said. “After you’ve worked all your life, you get something catastrophic and you run into news like your drugs are going to cost $2,400.”