Friday, March 01, 2013

Medicare Waste - Overpaying for Medication

A recent Inspector General's report finds that Medicare waste for infusion therapy drugs costs the taxpayer an estimated $334 million over the last six years. But yet, Washington doesn't have a spending problem . . .
Congress locked some drug costs at 2003 prices, Medicare has wasted $334 million dollars over the last six years by failing to buy medication at the best possible discount, according to a new investigation that reinforces just how prevalent waste and abuse are inside the government's main health program for senior citizens.
Investigators at the Health and Human Services Department Office of Inspector General said that Medicare waste on Plan B by purchasing drugs at an outdated average wholesale price, or AWP, as opposed to the manufacturing price the government is supposed to receive.
“Our findings—like those of OIG’s previous studies in this area—demonstrate that AWPs are unrelated to the prices of drugs in the marketplace and that the reliance on an AWP-based payment methodology has led to Medicare waste that cost the program hundreds of millions of dollars,” the inspector general said.

CMS claims they save money on some drugs that have risen in cost since 2003, but in the area of infusion therapy, many now have lower costs.
For the six years covered by the latest review, investigators estimated the government had been paying between 54 percent and 122 percent more for the drugs than was necessary.  By using the wholesale price, investigators said CMS failed to get “any price concessions, such as volume discounts, ‘prompt pay’ discounts, cash discounts, free goods contingent on purchase requirements, chargebacks and rebates other than those obtained through the Medicaid drug rebate program.”
The IG also said that because medicine was being purchased at 2003 prices, the government might have been getting some drugs cheaper than current costs.  But investigators said it was a small amount, and is already calculated in the $334 million estimation.
And you thought the federal government only had a problem with $500 toilet seats.
And investigators were able to identify the largest single Medicare waste problem: a drug called milrinone lactate, which is used to treat heart failure.  Medicare Plan B was paying a price for the drugs more than 18 times greater than the actual cost, the inspector general said.
Of the $125 million Medicare spent in 2011 for 21 different infusion drugs, that particular drug accounted for 62 percent of the costs, according to the IG’s report.
So why is the Obama administration making a big deal over a 2% cut due to sequestration?

Rather than pink slipping federal employees, claiming teachers (who are NOT federal employees) will be laid off and releasing illegal immigrants (and trusting they will return when sequestration is over), seems they should be exercising oversight on Medicare waste.

What spending problem?

Is Alfred E. Newman running Washington?
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