United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2005-10-31 monographic deposited born digital 21 p. GA 1.13:GAO-06-17R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-06-17R P0b002ee18039da3b f:d0617r DGPO 2010-08-12 2011-03-24 GAOREPORTS-GAO-06-17R machine generated eng fdlp REPORT GAOREPORTS-GAO-06-17R GAO-06-17R Drugs Health care costs Health surveys Hospitals Medical services rates Medicare Pharmaceutical industry Prices and pricing Procurement evaluation Procurement policy Outpatient care Prescription drugs Correspondence A40681 On July 25, 2005, the Centers for Medicare & Medicaid Services (CMS) in the Department of Health and Human Services (HHS) published its notice of proposed rulemaking (NPRM) entitled "Medicare Program; Proposed Changes to the Hospital Outpatient Prospective Payment System and Calendar Year 2006 Payment Rates." As part of these changes, CMS is proposing Medicare payment rates for certain hospital outpatient drugs classified for payment purposes as specified covered outpatient drugs (SCOD). The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) defined a SCOD as a drug or radiopharmaceutical used in hospital outpatient departments, covered by Medicare, and paid for individually rather than as part of a payment group with other services. With regard to SCODs, the MMA directed CMS to set 2006 payment rates equal to hospitals' average acquisition costs--the cost to hospitals of acquiring a product, net of rebates. In several related requirements, the MMA directed us to provide information on SCOD costs and CMS's proposed rates. First, we were required to conduct a survey of hospitals to obtain data on their acquisition costs of SCODs and provide information based on these data to the Secretary of Health and Human Services for his consideration in setting 2006 Medicare payment rates. We provided information from this survey in two reports--one on drugs and biologicals, and another on radiopharmaceuticals. These reports presented systematic information on hospitals' purchase prices of SCODs and limited information on rebates. Second, we were required to evaluate CMS's proposed rates for SCODs and comment on their appropriateness in light of the survey of SCOD prices we conducted. In response to the second requirement, this report assesses the appropriateness of the Medicare payment rates that CMS has proposed for SCODs, taking into account the purchase prices obtained from the MMA-mandated survey we conducted in 2004 and 2005. Specifically, this report focuses on the appropriateness of CMS's proposed 2006 hospital outpatient rates for (1) drug SCODs and (2) radiopharmaceutical SCODs. To conduct this assessment, we examined the information CMS provided in the proposed rule on the data sources and methodology used to set the 2006 rates, analyzed this information in light of our survey of hospitals' purchase prices, and convened an expert panel to review our findings. Consistent with the MMA, we did not study the issue of hospitals' handling costs for SCODs and do not address these costs in this report. We performed our work according to generally accepted government auditing standards from July through October 2005. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-06-17R/html/GAOREPORTS-GAO-06-17R.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-06-17R/pdf/GAOREPORTS-GAO-06-17R.pdf GAO-06-17R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-06-17R Correspondence GAO-06-17R; Medicare: Comments on CMS Proposed 2006 Rates for Specified Covered Outpatient Drugs and Radiopharmaceuticals Used in Hospitals; Drugs Health care costs Health surveys Hospitals Medical services rates Medicare Pharmaceutical industry Prices and pricing Procurement evaluation Procurement policy Outpatient care Prescription drugs Volume 111 Page 251 111 Stat. 251 Volume 113 Page 1501A-321 113 Stat. 1501A-321 Volume 117 Page 2066 Volume 117 Page 2240-41 Volume 117 Page 2307 Volume 117 Page 2307-10 Volume 117 Page 2308-09 Volume 117 Page 2309 117 Stat. 2066 117 Stat. 2240-41 117 Stat. 2307 117 Stat. 2307-10 117 Stat. 2308-09 117 Stat. 2309 Public Law 105-33 Public Law 106-113 Public Law 108-173