Medicare: Comments on CMS Proposed 2006 Rates for Specified Covered Outpatient Drugs and Radiopharmaceuticals Used in Hospitals

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Correspondence issued by the Government Accountability Office with an abstract that begins "On July 25, 2005, the Centers for Medicare & Medicaid Services (CMS) in the Department of Health and Human Services (HHS) published its notice of proposed rulemaking (NPRM) entitled "Medicare Program; Proposed Changes to the Hospital Outpatient Prospective Payment System and Calendar Year 2006 Payment Rates." As part of these changes, CMS is proposing Medicare payment rates for certain hospital outpatient drugs classified for payment purposes as specified covered outpatient drugs (SCOD). The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) defined a SCOD as a ... continued below

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United States. Government Accountability Office. October 31, 2005.

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Correspondence issued by the Government Accountability Office with an abstract that begins "On July 25, 2005, the Centers for Medicare & Medicaid Services (CMS) in the Department of Health and Human Services (HHS) published its notice of proposed rulemaking (NPRM) entitled "Medicare Program; Proposed Changes to the Hospital Outpatient Prospective Payment System and Calendar Year 2006 Payment Rates." As part of these changes, CMS is proposing Medicare payment rates for certain hospital outpatient drugs classified for payment purposes as specified covered outpatient drugs (SCOD). The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) defined a SCOD as a drug or radiopharmaceutical used in hospital outpatient departments, covered by Medicare, and paid for individually rather than as part of a payment group with other services. With regard to SCODs, the MMA directed CMS to set 2006 payment rates equal to hospitals' average acquisition costs--the cost to hospitals of acquiring a product, net of rebates. In several related requirements, the MMA directed us to provide information on SCOD costs and CMS's proposed rates. First, we were required to conduct a survey of hospitals to obtain data on their acquisition costs of SCODs and provide information based on these data to the Secretary of Health and Human Services for his consideration in setting 2006 Medicare payment rates. We provided information from this survey in two reports--one on drugs and biologicals, and another on radiopharmaceuticals. These reports presented systematic information on hospitals' purchase prices of SCODs and limited information on rebates. Second, we were required to evaluate CMS's proposed rates for SCODs and comment on their appropriateness in light of the survey of SCOD prices we conducted. In response to the second requirement, this report assesses the appropriateness of the Medicare payment rates that CMS has proposed for SCODs, taking into account the purchase prices obtained from the MMA-mandated survey we conducted in 2004 and 2005. Specifically, this report focuses on the appropriateness of CMS's proposed 2006 hospital outpatient rates for (1) drug SCODs and (2) radiopharmaceutical SCODs. To conduct this assessment, we examined the information CMS provided in the proposed rule on the data sources and methodology used to set the 2006 rates, analyzed this information in light of our survey of hospitals' purchase prices, and convened an expert panel to review our findings. Consistent with the MMA, we did not study the issue of hospitals' handling costs for SCODs and do not address these costs in this report. We performed our work according to generally accepted government auditing standards from July through October 2005."

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Government Accountability Office Reports

The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for the U.S. Congress investigating how the federal government spends taxpayers' money. Its goal is to increase accountability and improve the performance of the federal government. The Government Accountability Office Reports Collection consists of over 13,000 documents on a variety of topics ranging from fiscal issues to international affairs.

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  • October 31, 2005

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  • June 12, 2014, 7:50 p.m.

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United States. Government Accountability Office. Medicare: Comments on CMS Proposed 2006 Rates for Specified Covered Outpatient Drugs and Radiopharmaceuticals Used in Hospitals, text, October 31, 2005; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc302650/: accessed January 21, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.