Backroom Deal For Hospitals

You learn something new every day. Recently, “the federal agency that runs Medicare said it would sharply lower what Medicare pays for certain drugs that certain hospitals buy and administer to patients through the subsidy program“. Initially, this seemed unfair to hospitals but then the article explained further:

  • Hospitals eligible for the program buy drugs from pharmaceutical companies at a steep discount, and are currently reimbursed by Medicare at a rate that is 6% above what the average national sale price for that drug is. Hospitals keep the difference, which they use to finance operations or expand services to patients, the AHA has said.
  • But critics of the program say the significant margin on the drugs incentivizes hospitals to overuse certain drugs or choose high-priced options. A Government Accountability Office report in 2015 found substantially higher drug spending per Medicare beneficiary at hospitals that received the subsidies.
  • The White House said the new rule would lower drug spending next year by Medicare and its enrollees by $1.6 billion. It said Medicare beneficiaries would see about $320 million of those savings because the amounts they pay out of pocket for drugs are based on the amounts Medicare pays.
  • The CMS said some hospitals would be exempt from the cuts in 2018, including children’s hospitals, some rural hospitals and some cancer hospitals.

Obviously, these hospitals had a sweet backroom deal and were raking it in.  You would think they had some great soundbite why this program should continue.  Well, here it is:

  • The Chicago-based AHA, the Association of American Medical Colleges and America’s Essential Hospitals responded swiftly with a promise of legal action. The groups believe the Centers for Medicare and Medicaid Services, or CMS, “overstepped its statutory authority with this policy,” Bruce Siegel, president and chief executive of America’s Essential Hospitals, said in a statement.
  • Hospital groups also plan to lobby Congress to halt the new rules, Tom Nickels, executive vice president of the AHA said, calling the new rule “ill-advised and unfortunate.”

Yeah, that was it.  Overstepped authority.  Ill-advised.  Unfortunate.  in other words….nothing.  They just want the money. Welcome to our crony filled system.

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Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  1 comment for “Backroom Deal For Hospitals

  1. RSW
    November 13, 2017 at 10:19 am

    “which they use to finance operations or expand services to patients”

    Translation: salary hikes for administrators.

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