Washington Editor

WASHINGTON - The Biotechnology Industry Organization (BIO) is calling on Congress to "fix" the reimbursement rule for Medicare patients treated in the hospital outpatient setting.

Updated rules that reduce payments on certain drugs and biologics went into effect Jan. 1 for the hospital outpatient prospective payment system (OPPS). BIO's position has been that the Centers for Medicare and Medicaid Services (CMS) used a fundamentally flawed methodology when calculating the rate of reimbursement. (See BioWorld Today, Jan. 31, 2003, and Nov. 11, 2002.)

As a result, reimbursement rates are being cut by 35 percent in some cases, forcing hospitals to either absorb the cost or to discontinue treatment of Medicare patients with rare and deadly disorders, BIO said in a prepared statement.

At the heart of the issue is BIO's opposition to CMS's "functionally equivalent" standard, which is used to compare two outpatient drug therapies in order to reimburse them at the same rate. BIO said the functionally equivalent standard is contrary to statute and it was announced in the final regulation without any prior notice or opportunity for public comment.

BIO also opposes CMS's decision to eliminate radiopharmaceuticals from pass-through reimbursement eligibility. "Pass-through" drugs are reimbursed at 95 percent of the average wholesale price for a period of two years. (Budget constraints last year forced the reimbursement from 95 percent to 78 percent.)

Finally, BIO seeks to eliminate all orphan products from the OPPS system so they can be more appropriately reimbursed.