Medicare: Radiopharmaceutical Purchase Prices for CMS		 
Consideration in Hospital Outpatient Rate-Setting (14-JUL-05,	 
GAO-05-733R).							 
                                                                 
Medicare pays hospitals for drugs and other pharmaceutical	 
products that beneficiaries receive as part of their treatment in
hospital outpatient departments. Specifically, the Centers for	 
Medicare & Medicaid Services (CMS) in the Department of Health	 
and Human Services (HHS) uses an outpatient prospective payment  
system (OPPS) to pay hospitals fixed, predetermined rates for	 
services. These services include pharmaceutical products--drugs, 
biologicals, and radiopharmaceuticals--given to beneficiaries in 
outpatient settings. When OPPS was first developed as directed by
the Balanced Budget Act of 1997, the rates for hospital 	 
outpatient services and drugs and radiopharmaceuticals were based
on hospitals' 1996 median costs. However, these rates prompted	 
concerns that payments to hospitals would not reflect the cost of
newly introduced pharmaceutical products used to treat, for	 
example, cancer, rare blood disorders, and other serious	 
conditions. In turn, congressional concerns were raised that	 
beneficiaries might lose access to some of these products if	 
hospitals avoided providing them because of a perceived shortfall
in payments. In response to these concerns, the Medicare,	 
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999	 
authorized pass-through payments, which are a way to augment, on 
a temporary basis, the OPPS payments for newly introduced	 
pharmaceutical products first used after 1996. The Medicare	 
Prescription Drug, Improvement, and Modernization Act of 2003	 
(MMA) modified this payment method for some of these		 
pharmaceutical products. As part of the modification, the MMA	 
defined a new payment category--specified covered outpatient	 
drugs (SCOD)--which includes many of these newly introduced	 
pharmaceutical products. The MMA defined a SCOD as a drug or	 
radiopharmaceutical used in hospital outpatient departments,	 
covered by Medicare, and for which CMS has established a separate
ambulatory payment classification (APC) group. The MMA		 
established a methodology for CMS to follow in setting payment	 
rates for SCODs in 2004 and 2005. CMS defines SCODs by their	 
Healthcare Common Procedure Coding System (HCPCS) codes, which	 
CMS assigns to products, supplies, and services for billing	 
purposes. The MMA also directed us to collect data on hospitals' 
acquisition costs of SCODs and to provide information based on	 
these data to the Secretary of Health and Human Services for his 
consideration in setting 2006 Medicare payment rates. The MMA	 
directed us to collect these data by surveying a large sample of 
hospitals.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-733R					        
    ACCNO:   A30137						        
  TITLE:     Medicare: Radiopharmaceutical Purchase Prices for CMS    
Consideration in Hospital Outpatient Rate-Setting		 
     DATE:   07/14/2005 
  SUBJECT:   Cost analysis					 
	     Data collection					 
	     Drugs						 
	     Hospitals						 
	     Medical services rates				 
	     Medicare						 
	     Patient care services				 
	     Payments						 
	     Pharmaceutical industry				 
	     Prices and pricing 				 
	     Procurement					 
	     Surveys						 
	     Outpatient care services				 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-05-733R

     

     * Ordering Information-6.pdf
          * Order by Mail or Phone
*** End of document. ***