Skip to main content
U.S. flag

An official website of the United States government

Here’s how you know

Dot gov

The .gov means it’s official.

Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.

The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

CMS.gov Centers for Medicare & Medicaid Services CMS.gov Centers for Medicare & Medicaid Services opens in new window
CMS.gov Centers for Medicare & Medicaid Services
Centers for Medicare & Medicaid Services

Main header

  • About Us
  • Newsroom
  • Data & Research
Newsroom

Newsroom_Navigation

  • Press Kit
  • Data
  • Contact
  • Blog
  • Podcast

 

 

 

Press release

CMS PROPOSES NEW RULES TO PAY APPROPRIATELY FOR MEDICARE-COVERED DRUGS

Aug 15, 2003
  • Medicare Parts A & B
  • Medicare Part C
  • Medicare Part D
  • Prescription drugs
  • Billing & payments

Share

opens in new window opens in new window opens in new window
CMS PROPOSES NEW RULES TO PAY APPROPRIATELY FOR MEDICARE-COVERED DRUGS

The Centers for Medicare & Medicaid Services today proposed new rules that would improve the way that Medicare pays for covered drugs and is asking for public input on the best way to achieve that goal. While Medicare, by law, generally does not cover most outpatient prescription drugs, the program does cover certain drugs, including many cancer drugs and others that cannot be self-administered or that are administered through durable medical equipment.

"We want to make certain that Medicare pays appropriately for the drugs it covers and the costs that doctors incur when administering those drugs," CMS Administrator Tom Scully said. "This is an important step toward making sure that Medicare beneficiaries get the drugs and care they need at a fair, appropriate cost to the beneficiaries themselves as well as the Medicare program."

Medicare currently pays physicians 95 percent of the average wholesale price (AWP) for covered drugs. The average wholesale price is set in an industry guide allowing manufacturers to effectively be reimbursed at any price they like. Medicare currently pays physicians based on this inflated average wholesale price even though the physicians actually acquire the drugs for much less.

"Many doctors tell us they use these overpayments to supplement their office expenses. We want to make sure that we pay them higher rates for treating their patients rather than allow this unbalanced payment system to continue. We ought to pay them the right amount for drugs and services, and this proposed rule will start the process to get us there." Scully said.

CMS is asking for public comments on four approaches that could be used to change how Medicare currently pays for drugs:

  1. Medicare would pay the same amounts for covered drugs that private insurers pay;
  2. Medicare would apply a discount of 10 to 20 percent from the inflated average wholesale price in 2004 and then establish more reasonable payment updates in future years;
  3. Medicare would use existing sources of market-based prices and would develop additional sources to monitor market changes over time, such as drug price catalogs; or
  4. Medicare would establish a competitive bidding process for drugs and would also require drug companies to report their average sales prices.

CMS is also proposing to significantly increase payments under the Medicare physician fee schedule for administering cancer drugs. These payments would be based on practice expense survey data submitted by the American Society of Clinical Oncology (ASCO). In addition, CMS would increase payments for the administration of multiple chemotherapy agents to a patient on the same day.

"We believe that this proposed rule is good for Medicare patients and for physicians. By paying doctors and providers accurately for administering Medicare covered drugs, we are confident that patients will continue to get the care they need, and eventually physicians will be better served by correcting the system and again providing rational financial incentives as they deliver that care to the patients."

The proposed rule will be published in the August 20 Federal Register. The comment period will end October 14, and a final rule will be published later this year. A copy of the proposed rule will be available at www.cms.hhs.gov.

  • Previous
  • Next

Related Releases

  • CMS Solicits Public Comment for a New Demonstration to Offer Inpatient Rehabilitation Providers Flexibilities and Reduce Medicare Fraud
    Dec 14, 2020
  • FACT SHEET: Most Favored Nation Model for Medicare Part B Drugs and Biologicals Interim Final Rule with Comment Period
    Nov 20, 2020
  • Trump Administration Announces Prescription Drug Payment Model to Put American Patients First
    Nov 20, 2020
  • Trump Administration Announces Medicare Fee-For-Service Estimated Improper Payments Decline by $15 Billion Since 2016
    Nov 16, 2020
  • 2020 Estimated Improper Payment Rates for Centers for Medicare & Medicaid Services (CMS) Programs
    Nov 16, 2020

Contact us

CMS News and Media Group
Catherine Howden, Director
Brian Leshak, Deputy Director
Jason Tross, Deputy Director

Media Inquiries Form
202-690-6145

Get email updates

Sign up to get the latest information about your choice of CMS topics in your inbox. Also, you can decide how often you want to get updates.

CMS & HHS WEBSITES

  • Medicare.govopens in new window
  • Medicaid.govopens in new window
  • InsureKidsNow.govopens in new window
  • HealthCare.govopens in new window
  • HHS.govopens in new window

HELPFUL LINKS

  • Acronyms
  • Archive
  • Contacts
  • Glossary
  • Privacy policy
  • Privacy settings

RSS FEEDS

  • Newsroom
  • Blog
  • Podcast
U.S. Department of Health & Human Servicesopens in new window Centers for Medicare & Medicaid Servicesopens in new window

A federal government website managed and paid for by the U.S. Centers for Medicare & Medicaid Services.

7500 Security Boulevard, Baltimore, MD 21244

opens in new window opens in new window opens in new window

TOOLS

  • Web policiesopens in new window
  • Plain languageopens in new window
  • No Fear Actopens in new window
  • Freedom of Information Actopens in new window
  • Inspector Generalopens in new window