A quick but worthwhile read.
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Don't Tamper With Medicare Reform By Kay R. Daly April 4,
2004
Cancer invades your family, and suddenly you are thrust into
a parallel universe. It is a world saturated with emotional
extremes, daily trips to a battalion of doctors, a complex
schedule of surgeries, chemotherapy, spinal taps, tests and
radiation and an unending mountain of paperwork. Cancer is
draining on a family's emotions, time, energy and most of
all, finances.
When my father was diagnosed with a small tumor in his
salivary gland in February of 2002, it never dawned on us
that he would pass away before the year ended. The labyrinth
of treatments my father endured is well documented in the
Medicare paperwork that we are still receiving and
processing. A set of injections ranging from $500 to several
thousand dollars per shot were jokingly referred to as
"Liquid Gold" by my father.
An entire cabinet in the kitchen was dedicated to
prescriptions of every conceivable variety. It was a
veritable DEA treasure trove of powerful narcotics, steroids
and even herbal remedies from thoughtful friends, concerned
neighbors and hopeful family members.
It was a combination of savings, private insurance and
Medicare that kept financial ruin at bay. Not every senior
is so fortunate.
According to a January, 2000 report from CNN, 63 percent of
those in the U.S. with cancer are over the age of 65.
Medicare, therefore, plays a significant role in cancer
treatment decisions.
In the wake of last year's landmark passage of Medicare
reform, America's seniors are on the verge of reaping
significant benefits from the new law. Drug discount cards
are expected to be implemented in the months ahead in
advance of the new drug benefit set to launch in 2006. In
the area of cancer care, seniors in 2005 are likely to see a
dramatic reduction in their regular co-payments - fixed at
20% of the chemotherapy drug and treatment costs -- as the
government adjusts how it reimburses physicians for the
purchase and delivery of innovative and life-saving cancer
therapies.
But as seniors look forward to those welcome changes, a
movement is quietly burgeoning in Washington to address at
least one special interest's concerns with the cancer care
provisions of the new Medicare law. Recent news accounts and
trade association policy statements indicate that
oncologists may seek to leverage their considerable
political influence to reopen Medicare. But this rhetoric
doesn't reflect the long-standing concerns with a system
that was called "crazy" by a leading influential economist.
This campaign could impose serious financial harm to cancer
patients who have been subjected to the old system's
excessive co-payments. And it contradicts the public policy
concerns that made up the substance of the debate last year
over cancer care.
The drug reimbursement restructuring completed in the
Medicare bill worked to meet two important needs. First,
it generated significant savings that could then be
allocated within other provisions of the Act. In addition,
it addressed the issues raised in scathing reports from
the GAO and the HHS Inspector General that concluded that
the current payment methodology, based on an outdated
system called 'average wholesale price' (AWP) was
dramatically overpaying oncologists for the services they
were providing while overcharging patients with respect to
co-payments. It would seem that it is not enough that
seniors have been overtaxed all of their lives, now they
must be relieved of whatever money they might have left by
overcharging co-payments.
A recent report from the GAO said that "Medicare's method
for establishing drug payments is flawed. Medicare pays 95
percent of the average wholesale price (AWP), which, despite
its name, is neither an average nor a price that wholesalers
charge. Instead, it is a number that manufacturers derive
using their own criteria; there are no requirements or
conventions that AWP reflect the price of any actual sale of
drugs by a manufacturer."
The GAO said that "physicians are able to obtain Medicare-
covered drugs at prices significantly below current Medicare
payments, which are set at 95 percent of AWP. Wholesalers'
and GPO's prices that would be generally available to
physicians were considerably less than AWPs used to
establish the Medicare payment for these drugs."
According to Thomas A. Scully, former CMS administrator,
"numerous studies have indicated that the ...reported
wholesale prices, the data on which Medicare drug payments
are based, are vastly higher than the amounts drug
manufacturers and wholesalers actually charge providers.
That means Medicare beneficiaries, through their premiums
and cost sharing, and U.S. taxpayers, are spending far more
than the "average" price that we believe the law intended
them to pay."
Imagine that! A government program is not operating on
accurate information, but relying upon an entirely flawed
system of overpayment? And we wonder why Medicare is
going broke?
Worse still, the overpayments have the potential to affect
physician prescribing and treatment choices.
Reforming the AWP system was one of Congress' highest
priorities during last year's contentious Medicare debates.
The successfully-negotiated compromise - a transfer from the
AWP scheme to a more reasonable system based on market
prices - reflects sound economic principles and a regard for
all the players involved in delivering and receiving high-
quality cancer therapy to the American people.
President Bush and Congress should be applauded for their
efforts. And it is incumbent upon Congress to resist calls
from anyone to reopen the new law, and instead make sure the
Center for Medicare & Medicaid Services successfully
implements the law according to the congressional mandate.
As America ages, the strain on Medicare will continue to
escalate. According to Intellihealth.com, a person has a
lifetime risk of two in five of developing cancer, meaning
that for every five people in the population, two eventually
will develop cancer. The lifetime risk of dying of cancer is
one in five. While we wait for the ultimate solutions of a
cancer cure and Medical Savings Accounts to bless this
country, this year's Medicare reform legislation is at least
a good start.
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Kay Daly is a radio talk show host for Rightalk and the
president of the Coalition for a Fair Judiciary.
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Note -- The opinions expressed in this column are those of
the author and do not necessarily reflect the opinions,
views, and/or philosophy of GOPUSA.