FOR INFORMATION CONTACT:
Lori Gardner, Senior Director
Communications & Marketing
301.984.9496 ext. 226
For Immediate Release: September 16, 2005
Association of Community Cancer Centers’ Survey Reveals Need for Medicare Payment Adjustment to Adequately Capture Pharmacy Service Costs
Proposed Medicare payment rate to hospitals for pharmacy handling costs is woefully inadequate
ROCKVILLE, Md.—A survey of hospital oncology pharmacists by the Association of Community Cancers (ACCC) reveals that pharmacy handling and overhead costs may account for approximately 30 percent of total drug costs. In stark contrast, the Centers for Medicare and Medicaid Services (CMS) is proposing to pay hospitals only 2 percent to cover these costs in 2006.
ACCC's survey findings are similar to those included in the June 2005 Medicare Payment Advisory Commission (MedPAC) report which suggests pharmacy service overhead costs make up 26 to 28 percent of total pharmacy costs. MedPAC is an independent advisory council that reports to Congress.
"To reach a reasonable compromise, ACCC is proposing that CMS implement a pharmacy service and handling add-on of at least 8 percent of average sales price (ASP)," said Deborah Walter, ACCC Senior Director of Policy and Government Affairs. "Based upon our extensive data analysis, increasing the add-on percentage from 2 percent to 8 percent would protect beneficiary access to drug therapy in the hospital setting while increasing projected total Medicare payments to hospitals by less than 1 percent (0.33 percent)."
ACCC appreciates the difficulty that CMS has in setting pharmacy service payment rates that would fully capture the overhead costs for preparing drugs within a budget neutral system. However, ACCC’s survey and the MedPAC report clearly suggest that more than a 2 percent add-on adjustment is warranted.
"I am deeply concerned that the effect of this proposed reimbursement policy—coupled with CMS’s proposal to reduce payments by 50 percent to hospitals for select multiple diagnostic imaging procedures and cut reimbursement for administering drug therapies—could slowly dismantle multidisciplinary cancer care, which is certainly not CMS’s intent,” said Jeanne Musgrove, member of ACCC’s Governmental Affairs Committee. “Hospitals cannot continue to sustain these hits. It is critical to establish reimbursement rates that ensure hospitals are appropriately reimbursed for the services they provide," she added. Musgrove is cancer services director at Piedmont Medical Center in Rock Hill, South Carolina.