Paul Waldman proposes a simple, straightforward change to Medicare payment rules that would save significant money by removing at least one fucked up incentive to prescribe overly expensive medication:
Avastin costs $50 a dose, while Lucentis costs $2,000 a dose. And Medicare pays doctors a six percent fee on top of the cost of whatever drug they’re prescribing. So if you’re an ophthalmologist who has a patient with macular degeneration and you prescribe Avastin for them, you get $3. If you prescribe Lucentis, you get $120. Dr. Melgen billed Medicare for $11.8 million in Lucentis alone….
get rid of that six percent fee and just give doctors a flat fee for writing prescriptions. Make it $5, or $10, or any number that makes sense. There’s no reason in the world that the fee should be tied to the price of the drug; all that does is give doctors an incentive to prescribe the most expensive medication they can.
This would be straightforward and remove the incentive for providers to overprescribe because they get a cut. Most private insurers that pay for drugs that are administered during the course of an appointment already pay fee schedule instead of percentage fees.
It is a simple, straightforward incentive correction that will save money and lead to more appropriate course of action for patients. And it won’t pass as it takes money out of the pockets of the one of the most trusted professions and organized lobbies in the country.
However, PPACA’s Indepedent Payment Advisory Board could have a role in reducing this practice. IPAB, for those who need a refresher, is a board appointed by the President and confirmed by the Senate that has the responsibility for cost control in Medicare if Medicare spending per beneficiary exceeds either the average of CPI-U and CPI-U medical components between 2015 and 2019 or the general rate of growth in the economy after 2019.
IPAB can’t ration, and it can not change Medicare beneficiary benefit designs. It can only make changes to provider payment structures. Low hanging fruit like the percentage based on-site prescription fees would probably be the first round of easy cuts. IPAB can get away with it because it is politically isolated from Congress. However, IPAB probably won’t have a chance to go to work as right now Medicare per capita spending growth is at or under target (in and of itself, a good thing, but a problem to eliminating really stupid waste).