(Bloomberg View) — The quest to create a more rational health care system took a dispiriting turn this month, when the federal government abandoned an effort to motivate doctors to use the best available drugs, rather than the costliest ones. What's worrisome is that this could be the start of a more general retreat from payment reform in health care as the White House changes hands.
The effort in question was to change the fee that Medicare now pays doctors for administering drugs in their offices, a fee that amounts to 6 percent of the drug's cost. Under this system, the pricier the medicine, the greater a doctor's financial incentive to use it.
Given that drug spending by Medicare has been rising by 10 percent annually, and now tops $100 billion a year, this reimbursement policy is indefensible. Indeed, it illustrates why the U.S. spends 18 percent of its economic output on health care — more than any other country.
Yet in March, when the Centers for Medicare & Medicaid Services proposed shrinking the fee, doctors and pharmaceutical companies pushed back. Last week CMS capitulated.
The broader cause of payment reform is in jeopardy, too, partly because the present administration has moved slowly on it. When Barack Obama exits the White House, dozens of pilot projects for new payment systems will be left unfinished, and only a handful of those reforms have become mandatory. A bigger concern: Rep. Tom Price, Donald Trump's pick to be secretary of Health and Human Services, and the regulator in charge of CMS, has already demanded that CMS scale back the initiatives.
