Medicare drug pricing changes could strain physician offices

Recent changes to Medicare drug pricing policy were intended to lower costs for older adults, a goal that has broad bipartisan support. Seniors should be able to get the treatments they need without facing bills they cannot afford. But according to two lawmakers, the way the policy now works could create unintended consequences that Congress needs to fix quickly.

Rep. Greg Murphy, M.D., and Rep. Adam Gray say a change to how Medicare reimburses certain physician-administered medicines may make it harder for doctors to provide some lifesaving therapies. They argue the problem is especially important for older people with cancer and other complex diseases. Without a targeted fix, they warn, physician offices and community clinics could be pushed out of treatment delivery even as Medicare seeks to reduce drug costs.

The lawmakers introduced bipartisan legislation called the Protecting Patient Access to Cancer and Complex Therapies Act, or H.R. 4299. They say the bill is meant to protect patient access to lifesaving treatments and hold physicians harmless, while also saving the Medicare program $3.3 billion over 10 years. In their view, the measure would preserve the broader goals of Medicare reform without forcing practices to choose between treating patients and taking financial losses.

The issue affects many medicines used to treat cancer, autoimmune diseases, neurological disorders and other serious conditions. These therapies are often administered directly in physicians’ offices or community clinics. The lawmakers note that these drugs can require specialized storage, careful handling and trained medical staff to administer safely. They also say that giving the medications in office settings, instead of hospitals, is not only less expensive but also easier for patients.

Under Medicare Part B, physicians typically buy these drugs themselves and are then reimbursed by Medicare. For years, that reimbursement has been linked to the average sales price plus 6%, a structure intended to reflect the costs of acquiring and administering the medication. According to the lawmakers, that setup was designed to let physicians continue offering treatments in community settings while keeping costs predictable for Medicare.

They say recent changes tied to the new Medicare drug negotiation program disrupt that balance. In their telling, physician practices in every state could end up being reimbursed far less than they pay to acquire the drug. When that happens, a practice may have to absorb a major loss or stop offering the treatment. The lawmakers say that is an impossible choice for many physicians.

They also argue that the impact will not be evenly spread. Large hospital systems may have the ability to absorb or shift costs in ways smaller practices cannot. But many independent physician offices, especially those in rural and underserved communities, do not have that flexibility. The lawmakers point to eastern North Carolina and California’s Central Valley as examples of places where specialty care is already limited and where the consequences could be especially serious.

If practices stop administering certain therapies, patients might have to travel long distances to hospital systems or wait longer for care. The lawmakers say that would undermine the stated purpose of Medicare drug-pricing reform. Instead of improving access, the policy could reduce it for the very patients it is meant to help.

The bill they introduced offers a straightforward solution, they say. It would keep the long-standing reimbursement structure tied to the average sales price so physicians can continue providing treatments in their practices. At the same time, it would preserve patient protections by keeping coinsurance calculations based on the lower negotiated price. In their view, seniors would still benefit from lower drug prices, but physicians would not be placed in a position where offering the treatment is financially unsustainable.

The lawmakers say physicians and patient advocates nationwide have already warned that failing to pass the bill could put community-based care at risk. They also say independent practices are operating under intense financial pressure. They cite the 33% inflation-adjusted cuts to Medicare over the past 20 years, along with rising staffing costs, inflation and administrative burdens they describe as strangulating.

According to Murphy and Gray, policies that unintentionally push practices out of the market could accelerate consolidation into large hospital systems. They say that kind of consolidation can drive up costs for both patients and Medicare. That outcome, they argue, is not what Congress intended when it set out to reduce drug costs for seniors.

Their message is that the broader policy goals can remain intact while unintended disruptions to care are avoided. They say bipartisan cooperation may sometimes be rare in Washington, but ensuring that seniors can access the medicines they need should not be controversial. Passing the bill now, they contend, would allow Medicare reforms to lower costs for seniors without putting access to critical treatments at risk.

Murphy is a congressman from North Carolina’s 3rd Congressional District. He serves as a senior member of the House Ways and Means Committee and co-chair of the House GOP Doctors Caucus. Gray represents California’s 13th Congressional District, which includes Merced County and portions of Madera, Stanislaus, San Joaquin and Fresno counties. He serves on the House Agriculture and Natural Resources Committees and is the whip of the Blue Dog Coalition.

The article presents the lawmakers’ argument that the policy change was created with a good intention but may need an immediate fix. Their central concern is that reducing Medicare’s drug costs should not come at the expense of access to physician-administered therapies. In their view, physicians, especially those working in community settings, need a reimbursement system that lets them continue offering medicines that older patients rely on for serious and complex conditions.