prescription-drugLast month President Obama and the Centers for Medicare and Medicaid Services (CMS – the folks who make Medicare policy) announced a five-year initiative that would test new models for paying for prescription drugs for Medicare recipients. The plans propose to specifically test changes to how Part B pays for drugs.

Hold on a minute (you might be saying) – Part B doesn’t pay for prescription drugs, does it? Well, it does for “certain” drugs, if they are administered in a doctor’s office on an outpatient basis. The most commonly used drugs that fall into this category are chemotherapeutic drugs used to fight cancer.

Many people are less than thrilled with the proposed changes. Ted Okon, director of the Community Cancer Alliance, called it “the most contrived, absurd, experiment on cancer care I’ve ever seen.”

Not exactly love at first sight, it sounds like.

Currently, Part B drug charges are paid by Medicare at 6% over the average sales price (ASP) of the drug. For example, a drug that costs $100 brings in only an additional $6 when it’s used, but a drug with an ASP of $1,000 brings in an additional $60 when it’s used.

The proposed changes are aimed at addressing what is viewed a potentially prejudicial selection of more expensive drugs. Initially, the add-on payment will be reduced to 2.5%, and instead of paying for the ASP of the drug, a flat payment of $16.80 per drug, per day would be substituted.

Critics like Mr. Okon of the Community Cancer Alliance have decried the changes, asserting that making sweeping changes puts patients at risk. The American Society of Clinical Oncology stated that it’s “inappropriate for the CMS to manipulate choice of treatment for cancer patients using heavy-handed reimbursement techniques.”

What do you think? How does it make you feel when the government starts “experimenting” with Medicare rules?

Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage.