PRACTICE RESOURCES > Regulation/AUA Positions, Letters, and Talking Points > American Urological Association Comments CMS Forum on Competitive Bidding for Drugs

American Urological Association Comments CMS Forum on Competitive Bidding for Drugs

Tuesday, April 20, 2004

Physicians who choose to participate in Medicare's competitive acquisition program for drugs will continue to bill for the drug administration services, but will not purchase drugs and bill them to Medicare. Therefore, the physician's administrative responsibilities and costs under this program should only be ones that are accounted for within the practice expense portion of the drug administration service for which the physician is receiving payment. The bidding vendor should be responsible for all other administrative costs involved with inventory tracking, maintaining administration logs, and billing for and collecting patient cost sharing amounts.

Competitive bidding carries a substantial administrative burden for Centers for Medicare & Medicaid Services (CMS), as it creates new responsibilities to oversee the bidding process, bid awards and many other functions. Also, competitive bidding could remove the physician from the equation altogether, which brings a whole new set of questions and practical considerations. This system requires a bidding entity to acquire drugs in bulk from the manufacturer and then supply them to the physician upon receipt of a prescription. We are concerned that CMS is widening its inability to control the integrity of drugs in this scenario. There are already cases on record where a pharmacist and physicians have diluted drugs to increase the per-dose profit margin. Awarding a drug acquisition contract to the lowest bidder could provide exactly the same dangerous incentive. Therefore, it is vital that CMS allocate adequate resources and personnel to oversee these new functions.

Also, it is unclear how Medicare would handle manufacturer recalls and if the bidding entity would be administratively prepared to assure that all doses of recalled drugs are retrieved and destroyed. There is also a concern that the financial reward may not be sufficient to assure proper storage requirements such as refrigeration, and other environmental conditions that avoid deterioration of drugs until delivered to a physician's office. In the case of a drug reaction, how is the determination of who is at fault to be made? Will the bidding entities be required to indemnify physicians from adverse consequences caused by improperly stored drugs?

Finally, the AUA strongly recommends that the incentives for recommending patients' drug treatments remain based on the individual patient and the physician's professional judgment and not on any economic forces that could be at odds with the physician's recommendation. Reduced cost to the Medicare program will not occur in the long run if the drugs provided are not in the patient's best interest.

Other comments regarding competitive acquisition systems:

The AUA is very concerned that urologists will choose not to participate in this program because of the potential to assume unreimbursed responsibility on several fronts, forcing them to refer their urological cancer patients to outpatient or other facilities.

Our answers to the specific questions included in the meeting notice follow:

  1. Which drugs (or categories of drugs) are best suited to competitive bidding and which drugs (or categories of drugs) should be excluded?

    The AUA believes that CMS should work with stakeholders (including manufacturer and provider organizations to determine if there are criteria that should be developed in order to make such exclusions.
  2. How should appropriate geographic regions be established?

    Medicare localities used for purposes of establishing geographic practice cost indices (GPCI) are one possibility, as GPCI factors already affect the pricing of health services in these regions.
  3. What standards should be used to evaluate a drug vendor's quality, service, and solvency?

    Quality of the drugs and biologicals that will be stocked by these companies is and should remain under the jurisdiction of the Food and Drug Administration. The issue of service and solvency will need to be a top priority in order to ensure that the needed drugs and biologicals are available where and when they are needed. The AUA urges CMS to consider this a priority so that the new drug competitive bidding program does not suffer from the lack of attention that other Medicare contracted services has fallen under.
  4. What standards should be used to evaluate the integrity of a drug vendor's distribution system?
  5. What should be included in a drug vendor code of conduct?

    Medicare and OIG should provide compliance guidance for drug vendors similar to that provided for pharmaceutical manufacturers, physicians and hospitals.
  6. How and when should price adjustments occur if a contractor's reasonable net acquisition cost changes?

    Semi-annually. Adjusting more often reduces the incentive for a contractor to spend the time and effort necessary to negotiate good deals with a manufacturer.
  7. How can Medicare verify that a drug delivered to a physician under the competitive bidding program has been administered to the beneficiary?

    The physician will still charge an administration code to Medicare. Medicare will need to address its billing requirements that currently mandate the inclusion of the appropriate drug code when these medications are no longer purchased by a physician so that such administration services are not denied. The tracking of drug delivery will be an added physician administrative burden that will likely not be taken into account.
  8. What is the most appropriate process for restocking physician inventories for drugs used to treat beneficiaries in emergency situations?

    It is very unclear what is meant by an emergency situation. Would this entail covering for manufacturing shortages or for more near term issues such as delivery or other transit problems? It seems very unlikely that a physician would maintain an inventory of drugs for which he/she will not be paid. Drug vendors could supply the physician's office with additional doses to be used in emergencies that the physician would account for by lot number to the vendor when used.
  9. How will drug vendors obtain patient billing information from physician's offices?

    While the law states that collection of amounts of any deductible and coinsurance for drugs should be the responsibility of the contractors, the law also requires CMS to establish a process by which physicians submit information to contractors for purposes of collecting these payments. This should not be expected of the physician's office. One suggestion is that the drug vendors supply pre-paid mailer forms to every physician that utilizes a drug supplied by competitive bidders.

    These forms would be given to the patient to fill out. The vendors are getting paid for the drugs, so they should incur ALL the costs of collections, not passing the costs of collection back to the physician. If the vendor chooses to BUY the data from the physician, then they must sign a Business Associate agreement with the physician in accordance with HIPAA rules to obtain the billing data.


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