By TKG’s Isabel Platt
Margot Sanger-Katz recently published a piece in The New York Times’ The Upshot about Medicare’s new experiment to reduce financial incentives for prescribing certain medications. Currently, Medicare reimburses providers 6% of the price of medications they prescribe to their patients, which, if given a choice of two similar drugs, effectively encourages providers to choose the more expensive option for their own personal gain. While providers will generally say that they choose the right medication for their patient’s needs, sometimes two drugs will be equally efficacious and providers will arbitrarily choose the more expensive version.
Reuters recently reported that spending on prescription drugs is estimated to have risen to $457 billion in 2015, with 30% of its increase due to price increases that were greater than inflation. With the cost of drugs representing 16.8% of overall healthcare spending, it is essential for measures to be taken to reduce the amount spent on prescription drugs, through a move towards generic medications, discouraging over-testing and over-treatment, and measures by CMS such as its new experiment to discourage perverse incentives for providers to prescribe more expensive medications.
In Medicare’s experiment, some providers will receive 2.5% of the cost of their prescribed medications, plus a flat fee, while other providers will continue to receive 6% of the drugs they give their patients. While this does not fully remove the incentives for choosing the more expensive medication, the new system narrows the gap between a more expensive drug and a cheaper drug. Medicare hopes that this will encourage providers to choose what they prescribe to their patient exclusively based on what is right for the needs of the patient rather than their own financial gain.
Ultimately, providers should always include their patients in the conversation when determining which medications they receive. Patients should be well informed of their treatment options, including the benefits, risks, side effects, and cost considerations, and feel like they’re engaged in their own care. This, in turn, will activate them to better understand the reasons they are taking certain medications and effectively be more adherent, resulting in better health outcomes.