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Copay or no pay? Docs to get new drug buy options

Ambulatory Surgery Reimbursement Update, January 11, 2005

Although it may be a year away, Medicare-certified physicians should be aware that they will soon have an opportunity to obtain drugs for their office-based procedures in one of two ways.

Beginning in 2006, physicians will have the option to pick regional specialty pharmacy contractors that would provide drugs to their offices for that year, according to section 303 of the Medicare Modernization Act. A rheumatologist or allergist, for example, will have the ability to purchase the drugs or biologicals from the pharmacy supplier. The physician would administer the drugs to patients in their office.

"The kicker here," says Bryan Cote, editor of the HCPro e-zine Medicare Reform Advisor, "is that the specialty pharmacy-not the physician-would be responsible for billing Medicare for the drug acquisition and would also collect the patient co-insurance and deductible." Medicare would then reimburse the physician for their administration. In option two, physicians would continue to collect the copays and bill Medicare for both the administration and for the drug acquisition. Physicians would be reimbursed for the acquisition at the drug's average sales price, which CMS will update quarterly. Medicare officials will pick and approve the contractors to purchase and deliver drugs to physicians. The contractors may change year to year.

Some analysts predict that physicians administering drugs in their offices will jump at the chance to reduce their debt exposure and choose to participate under option one. "Collecting copays was not as important [before Medicare reform] for specialists since the spreads were so good for so long, but that's about to change [which is] why you'll see doctors [letting the specialty contactors] collect the copays," predicts Robert Homchick, a partner in the Seattle health-law practice Davis Wright Tremaine.

Look to future issues of the Ambulatory Surgery Compliance and Reimbursement Insider newsletter for additional coverage of the Medicare Modernization Act.

For weekly impact analysis and news on the Medicare reimbursement impact on providers, subscribe to Medicare Reform Advisor here.

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