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MEDICARE OUTPATIENT DRUGS: Program Payments Should Better Reflect Market Prices
GENERAL ACCOUNTING OFFICE WASHINGTON DC
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Our September 2001 study on Medicare payments for outpatient drugs shows that Medicare payments and Medicare beneficiary copayments to providers for these drugs are much higher than necessary, given what the providers likely paid to purchase these drugs from manufacturers, wholesalers, or other suppliers. Unlike the market-based fees paid by VA and other federal agencies, Medicares fees are based on AWP, which is a manufacturer-reported amount that generally does not reflect actual transactions between seller and purchaser. Physicians contend that the profits they receive from Medicares payments for outpatient drugs are needed to compensate for inappropriately low Medicare fees for most drug administration services. Similarly, the case argued by some pharmacy suppliers for Medicares high drug payments is that not all of their costs of dispensing the drugs are covered.
APPROVED FOR PUBLIC RELEASE