Medicare: Payment for Blood Clotting Factor Exceeds Providers' Acquisition Cost
GAO-03-184
Published: Jan 10, 2003. Publicly Released: Feb 11, 2003.
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Highlights
In 2001, Medicare's outpatient expenditures for blood clotting factor used to treat the estimated 1,100 beneficiaries with hemophilia totaled about $105 million, or more than 2 percent of total Medicare spending on outpatient drugs. Earlier work by GAO indicated that Medicare's payment for certain outpatient drugs is substantially higher than providers' acquisition costs. Concerns have been raised about Medicare's payment for blood clotting factor. GAO was asked to compare provider costs of purchasing clotting factor with Medicare's payment for it and to identify costs to providers associated with delivering clotting factor.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Centers for Medicare & Medicaid Services | The Administrator of the Centers for Medicare and Medicaid Services should establish a Medicare payment for clotting factor delivered on an outpatient basis that is more closely related to providers' acquisition costs. Medicare's payment for clotting factor should reflect actual market transaction prices. |
Closed – Implemented
In accordance with the Medicare Modernization Act, effective January 2005, the Centers for Medicare & Medicaid Services (CMS) implemented the average sales price system for reimbursing most Part B covered drugs, including clotting factor. The average sales price is based on actual manufacturer sales data, which manufacturers report quarterly to CMS and is closely related to acquisition cost. Medicare reimburses these drugs at 106 percent of the average sales price.
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| Centers for Medicare & Medicaid Services | When Medicare's payment for clotting factor more closely reflects acquisition costs, the Administrator of the Centers for Medicare and Medicaid Services should establish a separate payment for providers based on the costs of delivering clotting factor to Medicare beneficiaries. |
Closed – Implemented
In accordance with the Medicare Modernization Act, the Centers for Medicare & Medicaid Services (CMS) established a furnishing fee of $.14 per unit for clotting factor supplied by hemophilia treatment centers, homecare companies, and other suppliers in 2005. The fee level was based on data from an industry cost survey.
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Cost analysisDiseasesDrugsHealth care costsMedical feesMedicareMedicare paymentsProgram beneficiariesPhysiciansPrescription drugs