inheritable reasonableness
When I was in the HME ( Home Medical Equipment) business… early 80’s to mid-late 90’s.. the real go-go years for HME.. back then referred to as DME ( Durable Medical Equipment). I started just as the DRG’s were being implemented in the hospitals and home nursing services were really gaining ground.. people were being discharged from the hospitals “quicker and sicker”. Needless to say, the gross dollars being expended by Medicare/Medicaid was growing exponentially. We all know what the bureaucrats do when expenditures grow at such a rate – other than their own budgets and staff size – they find ways to curtail those expenditures.
Inheritable reasonableness can take a couple of different paths… if the bureaucrats can’t find at least a small number of vendors that are selling a product or service at a price lower than what is allowable.. they will either do some math and figure out that the vendors are just making too much money on a single or group of products are services and deem that it is inheritable unreasonable for the Feds to pay more than $$ for that product or service…
OR..
They go back to our friends at the VA.. who bid out products/services and GUARANTEE both service area and volume of business to those placing and/or winning a bid… and the bureaucrats conclude that they should not pay more than the VA.. although Medicare/Medicaid provides no guarantee of volume… they just believe that it is reasonable for them to lower the allowable.
This came back to mind, when I saw a post on another blog about a grocery store chain now giving away Lipitor and all those $4 Rx programs. As we move toward a single payor system.. if you don’t believe that is where we are headed… you need to read more between the lines of what is being done and said…
Assuming that a single payor system does evolve… it is not unrealistic for the “single payer” to invoke inheritable reasonableness and determine that those antibiotics, prenatal vitamins, HTN meds, cholesterol meds should be provided at NO CHARGE.. not just by the stupid retailers that have decided to go down this path.. but EVERYONE that is a prescription vendor.
And once this train leaves the station, there is no reverse.. In fact, after Medicare exercise inheritable reasonableness as far as they could, they started demonstration projects BIDDING for certain products/services.. where it is winner takes all within a geographic region.
Right now, they are going down this path with diabetic blood glucose meter and supplies. As this is now evolving, it appears that because of reimbursement levels that are being bid, reimbursement will be about 30% of the acquisition cost of most pharmacies and the only test strips that will be available will be via mail order using Chinese make test strips. Does anyone see a long term health problem here for diabetics?
The latest “kick in the butt” by the feds to those who have/are participating in these bidding projects… Imagine sharpening your pencil … putting out your best price to get the bid.. and NOW.. sequester kicks in and the Feds DINGS your BID PRICES with a 2% reduction. No doubt, the bid contract prohibits the vendor from pulling out from providing the product – short of the company going bankruptcy.
Filed under: General Problems
The test strip cut is going to be a spectacular fail. The amount of paperwork involved in billing Medicare for these is not worth the 2-3 dollar profit coming up in July. The only strips that will be used are the cheapest of the cheap that are already used by mail order. I have had more than one patient get wildly inaccurate results from some of these. I foresee many people just referring people to mail order just like Medicare wants. I think this is going to cause many more dollars in hospitalization due to inaccurate readings, difficulty in obtaining supplies and lack of education necessary. Save a penny , spend a dollar and what have you.
There is always someone willing to pick up the scraps that are handed out. Just look at the PBM contracts. As soon as Walgreens finally tried to make a stand, CVS and RiteAid were proud to say they will take that shitty contract.
As Congress tries to reduce Medicare spending, I fully expect, what you are saying, to come true. It would not surprise me to see reimbursement on Medicare Part D and Medicaid be so pitiful that barely any money can be made filling those rx’s.
I don’t know what the chains make on diabetic strips billed to Medicare. I do know that it takes an inordinate amount of time to process one of those prescriptions. One big problem is physicians don’t know how to write a rx correctly for them. My guess is that very little money is made on strips. These mail order places use brands of strips and meters that we have never seen. They must get them cheap enough that they can make money.