Recombinant Erythropoietin Payment Options For Medicare

OTA was asked to evaluate alternative payment policies that Medicare might use to pay for recombinant erythropoietin. The report idenfied nine options and analyzed their implications across several dimensions: quality of care, access to care, costs and efficiency, equity, technological innovation, and administrative feasibility. Extending coverage to self-administration of the biologic would improve access to care, but would raise expenditures of the Medicare program. Setting payment rates to encourage providers to engage in further research would raise Medicare expenditures in the short term and might merely only transfer research costs from the manufacturers to the Medicare and its beneficiaries. Paying providers according to a fee schedule contains moderate incentives encouraging use, with implications for expenditures and the quality of care. These drawbacks can be adressed, however, by judiciously setting the level of payment and by monitoring use. Of the options for paying the product through competitive bidding is likely to result in the lowest price for Medicare and the lowest expenditures for the program and its beneficiaries.

Medicare is an American health insurance programme for the aged and certain disabled persons. Over its nearly 35-year history, it has provided important protections for millions of Americans. However, the programme is facing a number of problems. One concern is that Medicare's financing mechanisms will cease to function in the long run. Many are also concerned that the programmes structure, which in large measure reflects both the health care delivery system as well as political considerations in effect at the time of enactment, has failed to keep pace with the changes in the health care system as a whole. This book examines the major problems that have been plaguing Medicare for years, as well as the possible solutions to them.