Medically Approved

Medicare cost reduction plan draws strong criticism from congress

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Optum Perks Author

By Optum Perks Author

It is rare that both sides in congress come together on any issue, but the Obama administration has put forth a proposal that may be an exception. This time, however, the two parties are united in opposition to, not in favor of, the proposed legislation. According to the Wall Street Journal , "an Obama administration proposal to reduce Medicare’s profit incentives to doctors who administer drugs is drawing such intense congressional criticism that some policy analysts question whether it will survive intact."

Wait a minute. Doctors are getting incentives to prescribe certain drugs? Yes, you read that right. Currently, doctors receive incentives (up to 6% of the cost of a drug) to prescribe certain drugs to their patients. So, if your doctor prescribes you a $20.00 drug, they get $1.20 of that cost. If they prescribe a $500.00 drug they get $30.00 of that cost. The more expensive the drug, the more the 'commission.' With all the patients a doctor can see, the difference between an inexpensive drug and a pricier one can really add up. And here you thought you were getting health care, not buying a car.

This proposal would limit how much doctors are reimbursed for certain drugs under Medicare, including cancer drugs. While we would all like to trust our doctors implicitly, it is easy to see how a shady doctor could easily take advantage of this rule and provide themselves with some nice bonuses. Because of the rising costs of prescription medications, it has been challenging for Medicare to keep their costs down. This proposal would help keep costs in check, but some lawmakers are voicing their opposition.

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Pharmaceutical companies oppose the legislation because it would cut deeply into their profit margins, doctors oppose it because it cuts into their pockets as well. Patient advocacy groups seem split. Some show opposition because they fear that it would limit many patients' access to life saving treatments, while others are all for it, feeling it is long overdue. The tricky part comes with the second phase of the implementation that some fear opens the door to denying access to treatments when they don't have a high enough success rate.

One of the original goals of the Affordable Care Act was to bring down the ever rising cost of healthcare. Whether or not that has been achieved is debatable, but this proposal is an attempt to further that purpose. The proposal, which is simply a 'test run' to help control costs, would reduce the bonuses that providers can receive for prescribing those drugs. For example, a $100.00 drug would cost Medicare $96.50 because the doctor would only be getting $2.50 in 'commission' rather than a $6.00 'commission'. The logic behind this is that then providers might actually prescribe what is best for the patient rather than what is best for their bottom line, and of course it helps save Medicare a pretty nice chunk of change.

So, the Republicans, who are usually trying to cut down the amount spent in programs like Medicare are against it because it will hurt doctors, hospitals, and pharmaceutical companies' profit margins, and these groups are big lobbyists when it comes to the GOP. Democrats haven't come out against it as strongly as those across the aisle, but they have also expressed concerns about the new regulations.

As a country, we will just have to wait and see what happens in the future with this and other pieces of legislation that have the goal of reducing costs. Those without Medicare simply have to do their best to find the lowest costs on prescriptions and hope that rising health care costs will be curbed one way or another.