New Medicare rule drops urology payments by 13%

October 1, 2004

Washington--Even though the new Medicare physician fee schedule rule increases physician payments by 1.5% overall for Medicare services, urologists are facing a 13% reduction, according to AUA officials.

Washington-Even though the new Medicare physician fee schedule rule increases physician payments by 1.5% overall for Medicare services, urologists are facing a 13% reduction, according to AUA officials.

"We've heard from many urologists who are very concerned, frustrated, and uncertain about the Medicare drug payment changes," said Robin Hudson, AUA manager of regulatory affairs. "Whether it is not knowing what to tell patients or how to budget; wondering how to be able to afford to treat bladder cancer patients since the costs for certain drugs are already higher than the Medicare reimbursement; or knowing when the complete list of 2005 drug payments will be released so they have time to plan, it is a trying time to be a urologist."

Costs not covered A huge problem, according to AUA health policy chair William F. Gee, MD, is that the new regulation in many cases will mean that physicians will not cover their costs for cancer drugs, and patients who cannot make up the difference will not receive their medication.

"I have grave concerns about the impact the drug-payment changes will have on urology payments, particularly cancer patients," Dr. Gee said.

According to the proposed rule published on Aug. 5, urologists receive 37% of their total Medicare revenue from drugs, and their Medicare drug revenue will decrease by 36% between 2004 and 2005.

"Such a short transition time for these massive payment reductions has the potential to greatly disrupt or hinder treatment for urology patients who currently receive drug therapy in the office for prostate cancer, bladder cancer, interstitial cystitis, and other urological diseases," he said.

In an interview with Urology Times, Dr. Gee noted that when the new fee schedule practice expense changes were implemented, there was a 4-year transition period-from 1998 to 2002-for the cuts to be phased-in.

"This is just happening all of a sudden," Dr. Gee said, pointing out that virtually all physician practices are small businesses, and that it is tough to absorb significant reductions in one fell swoop.

Cuts in place "It is difficult to adapt so quickly to such large payment cuts," he said, "and I may have to make drastic changes in my practice when payments are based on average sales price in 2005." AUA noted, in talking points prepared for members, that some physicians may have to close satellite offices, lay off employees, discontinue or limit the types of treatment offered to Medicare patients, or send patients to the hospital for drug administration-where they will pay a higher co-pay.

Those talking points noted that the reductions are on top of cuts that already went into place last January, giving physicians little time to restructure their businesses in order to respond.

"I will not be able to continue to provide drugs to patients in my office if the payments are lower than my cost of buying and administering a drug," Dr. Gee said. "This is especially true for Medicare patients who do not have Medigap policies. With a 6% markup, I cannot afford to order stock and cover the bad debt associated with it for patients that do have supplemental Medicare coverage."

Dr. Gee practices in Lexington, KY. He pointed out that many of his patients are low-income people from Appalachia who simply cannot afford Medigap coverage and do not have the money to pay for expensive drugs.

"We're not going to write off the difference, though, so those patients won't get those drugs," he said.