The Clinton administration decided to cut Medicare drug prices by 17 percent or more after a Justice Department investigation showed that the Medicare and Medicaid were overpaying for about 50 drugs, including calcitriol and iron dextran injection. (web link is no longer available)

Dialysis providers say they need the higher reimbursements for these drugs to cover handling and administration costs and because the Medicare composite rate for dialysis treatments no longer adequately reimburses them for providing services to patients.

Ironically, dialysis providers finally saw a 1.2% increase this year in the Medicare composite rate for dialysis treatments, the first in nine years, after such an increase was deemed necessary for quality ESRD patient care. This small increase has been more than erased by a recent EPO price increase and providers may now see even further reductions in their revenues if these reimbursement cuts go through.

A remedy for this situation may surface in legislation currently being debated in Congress over Medicare prescription drug coverage. See this list of recent news stories about Medicare drug coverage from Yahoo.

In a separate story, the Office of the Inspector General (OIG) has just released a report (pdf file) that compares the Medicare reimbursement rate for five drugs used in dialysis centers with the prices that US Veterans Hospitals pay for the same drugs. These drugs are calcitriol, iron dextran, levocarnitine, urokinase, and hepatitis B vaccine.

The report recommends that HCFA/Medicare re-examine its drug reimbursement methodologies with the goal of cutting reimbursements. The report states that savings between 5% and 38% are possible.