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IPFS News Link • Healthcare Industry

An Obvious Fix for Medicare Drug Spending

• bloomberg.com

The problem is obvious: In addition to paying doctors for treating Medicare patients, the federal government also pays them 6 percent of the cost of any drug administered in their office. The financial incentive for doctors is to prescribe the most expensive drugs available.

The Centers for Medicare & Medicaid Services has proposed reforming those incentives, in two stages. First, in August, the 6 percent fee would be reduced to 2.5 percent, plus a flat fee. Later, CMS wants to try what it calls value-based pricing strategies, such as paying doctors more for choosing drugs that are shown to be more effective.

Who could object to that? As it turns out, just about everybody. Drugmakers say the current system "works to control costs." (In reality, spending on this part of Medicare grew 17 percent faster than the program as a whole from 2005 to 2014.)  Doctors groups argue the change will limit patients' access to drugs, and that Medicare should instead pressure drugmakers to lower their prices.


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