Recent JCO Report: Change in Medicare Drug Reimbursement Could Result in Significant Income Loss

This finding comes from a review by McKoy, Bennett and colleagues published in the December 2005 Journal of Clinical Oncology. Last year, after settlement of a fraud investigation and related criminal charges, Medicare shifted the basis of its reimbursement to Average Sales Price from Average Wholesale Price (AWP). Authors state that this change is expected to significantly impact outpatient oncology practice. This change is expected to produce an 8% decrease in mean revenue for oncologists and a decrease in physician reimbursement for cancer drugs. The JCO study estimates annual income loss for oncologists.

Medicare officials and some in Congress had long criticized use of AWP as a basis for reimbursement, charging that it resulted in reimbursement above the purchase price. Some have argued that the margin covered the underpayment for the costs of office-based infusion and that reimbursement based on ASP would lead to financial losses.