12:00 AM
Nov 04, 2002
 |  BioCentury  |  Politics, Policy & Law

The pending reimbursement mess

A final rule published last week by the Center for Medicare and Medicaid Services (CMS) will create disincentives for hospitals to provide novel but expensive therapies on an outpatient basis, including such biotech drugs as Aranesp, Rituxan, Herceptin, and Cerezyme.

Biotech and pharma companies and hospitals are running out of time to enlist the aid of Congress, hoping that lawmakers will pressure CMS to change the rule before it takes effect on Jan. 1. But with so few days remaining in the current Congress - the so-called lame duck session following Tuesday's elections - lawmakers may be paralyzed by the burgeoning pile of high priority issues.

The new rule lays out the formulas the government will use to reimburse hospitals for drugs and devices under the Outpatient Prospective Payment System (OPPS), which was mandated by the Balanced Budget Act of 1997. It is part of a highly complex transition from an older payment system, under which hospitals were reimbursed for drugs based on their actual costs.

Under OPPS, CMS group services that are deemed to be similar clinically and in terms of resource use into "ambulatory payment classifications." It then reimburses hospitals based on standard APC rates that are adjusted...

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