4 ms·

Is anyone required to sell to CMS? Why can't they just say we won't sell it to you. Please go through our distributors.

koolba 10y ago
> Is anyone required to sell to CMS? Why can't they just say we won't sell it to you. Please go through our distributors. No but the Medicare/Medicaid market is huge and they tend to pay their share on time and without hassle. Companies put up with the pricing nonsense because they net out on top.
- chimeracoder 10y ago
  >the Medicare/Medicaid market is huge and they tend to pay their share on time and without hassle. Companies put up with the pricing nonsense because they net out on top This is certainly not true for providers (ie, hospitals and doctors). Medicare is notoriously painful with billing and reimbursements. In addition, they don't come out ahead. In fact, Medicare reimburses about 7% less than COGS, which means providers are already losing money per patient before they have to think about covering their overhead. The reason they accept Medicare is because it's very difficult, legally, not to. Despite this, Medicare has gotten so costly for them that many hospitals have recently started talking about finding a proper legal path to dropping Medicare altogether.
  - koolba 10y ago
    > The reason they accept Medicare is because it's very difficult, legally, not to. Source? I'd find it hard to believe that doctor's are forced to accept patients with Medicare or Medicaid.
    - chimeracoder 10y ago
      > I'd find it hard to believe that doctor's are forced to accept patients with Medicare or Medicaid. It's easier in private practice, but private practices are a dying breed - most doctors these days are employed. But hospitals are hard-pressed to do the same. For an example, if you're a hospital and you have an an emergency room, you cannot refuse emergency care for a patient. That emergency care may or may not also result in an admission to the hospital, and that's a decision you can't make preferentially based on the insurance status of a patient (by law). You can refuse to accept Medicare, in which case Medicare won't reimburse you, but that means that you're providing emergency care to 40% of the population for free[0]. So refusing service to Medicare patients means, among other things, not running an emergency room. (Incidentally, some hospitals have done exactly this - either shutting down their emergency rooms entirely, or switching to freestanding ERs, which are (ironically) prohibited by law from accepting Medicare). [0] Technically they bill the patients for this, but from a hospital's perspective, this is "for free" - they don't expect to collect on most bills they issue to self-paying patients for emergency services, which is why they're so quick to negotiate them down if you ask. They know self-paying patients are very unlikely to actually pay the full bill, so they'd rather discount it up-front than write it down.
      - FireBeyond 10y ago
        "they don't expect to collect on most bills they issue to self-paying patients for emergency services, which is why they're so quick to negotiate them down if you ask. They know self-paying patients are very unlikely to actually pay the full bill, so they'd rather discount it up-front than write it down." ... or send it to Collections, charge it off, pick up the check for what might likely have been the negotiated amount anyway, take the difference in a tax write off, and debtor gets chased for the full Chargemaster rate...
refurb 10y ago
CMS (Center for Medicare and Medicaid Services) is not a purchaser, they are just a payer. For example, a pharmacy will fill your Rx, then go to CMS (if you're on Medicaid) to ask them to pay it. Most drug companies use a distributor, but that doesn't impact how they interact with CMS. To answer your question if they are required to "sell" to CMS, the basic answer is yes. In order to sell your drugs to Medicaid and Medicare patients, CMS requires a "Pharmaceutical Pricing Agreement" (PPA) to be signed. One part of that agreement is that you give a significant discount to CMS for certain patients. This is why I chuckle when people say "Medicare can't negotiate drug prices", which is true, but the gov't takes their pound of flesh other ways (Medicaid rebate, 340B rebate, which both have price increase penalties). There are examples of drugs where the manufacturer is required to sell them at "penny pricing". That is, $0.01 per unit of drug. This is usually due to the manufacturer cranking up the price really fast, but in the end they have to give the drug to the gov't for FREE. Do companies have to enter in to a PPA? They don't have to, but since Medicaid and Medicare represent more than half of all patients in the US, you'd be stupid not to. There is one example where a drug company said "no thanks". It was J&J's over the counter division. I assume Medicare and Medicaid was a super small slice for that business so they just pulled out all together. Most companies can't afford to do that.
- chimeracoder 10y ago
  > This is usually due to the manufacturer cranking up the price really fast, but in the end they have to give the drug to the gov't for FREE To add to what you're saying, this same effect also results in inflated prices for patients on private insurance and patients who are uninsured. When Medicare reimburses less than the direct cost of goods and services (which they do, in the aggregate), then providers have to make up the difference elsewhere. That's why you see incredibly inflated bills for basic services. It's because private insurers and uninsured patients are in effect subsidizing Medicare through higher reimbursement rates, which get passed on to patients as higher out-of-pocket bills or higher premiums.
  - snuxoll 10y ago
    You're also missing the frequent abuse of the ER by medicaid members, the number of patients that go to the ER for a cold and waste everyone's time and money is way too high.

> Is anyone required to sell to CMS? Why can't they just say we won't sell it to you. Please go through our distributors. No but the Medicare/Medicaid market is huge and they tend to pay their share on time and without hassle. Companies put up with the pricing nonsense because they net out on top.

chimeracoder 10y ago
>the Medicare/Medicaid market is huge and they tend to pay their share on time and without hassle. Companies put up with the pricing nonsense because they net out on top This is certainly not true for providers (ie, hospitals and doctors). Medicare is notoriously painful with billing and reimbursements. In addition, they don't come out ahead. In fact, Medicare reimburses about 7% less than COGS, which means providers are already losing money per patient before they have to think about covering their overhead. The reason they accept Medicare is because it's very difficult, legally, not to. Despite this, Medicare has gotten so costly for them that many hospitals have recently started talking about finding a proper legal path to dropping Medicare altogether.
- koolba 10y ago
  > The reason they accept Medicare is because it's very difficult, legally, not to. Source? I'd find it hard to believe that doctor's are forced to accept patients with Medicare or Medicaid.
  - chimeracoder 10y ago
    > I'd find it hard to believe that doctor's are forced to accept patients with Medicare or Medicaid. It's easier in private practice, but private practices are a dying breed - most doctors these days are employed. But hospitals are hard-pressed to do the same. For an example, if you're a hospital and you have an an emergency room, you cannot refuse emergency care for a patient. That emergency care may or may not also result in an admission to the hospital, and that's a decision you can't make preferentially based on the insurance status of a patient (by law). You can refuse to accept Medicare, in which case Medicare won't reimburse you, but that means that you're providing emergency care to 40% of the population for free[0]. So refusing service to Medicare patients means, among other things, not running an emergency room. (Incidentally, some hospitals have done exactly this - either shutting down their emergency rooms entirely, or switching to freestanding ERs, which are (ironically) prohibited by law from accepting Medicare). [0] Technically they bill the patients for this, but from a hospital's perspective, this is "for free" - they don't expect to collect on most bills they issue to self-paying patients for emergency services, which is why they're so quick to negotiate them down if you ask. They know self-paying patients are very unlikely to actually pay the full bill, so they'd rather discount it up-front than write it down.
    - FireBeyond 10y ago
      "they don't expect to collect on most bills they issue to self-paying patients for emergency services, which is why they're so quick to negotiate them down if you ask. They know self-paying patients are very unlikely to actually pay the full bill, so they'd rather discount it up-front than write it down." ... or send it to Collections, charge it off, pick up the check for what might likely have been the negotiated amount anyway, take the difference in a tax write off, and debtor gets chased for the full Chargemaster rate...

refurb 10y ago

CMS (Center for Medicare and Medicaid Services) is not a purchaser, they are just a payer. For example, a pharmacy will fill your Rx, then go to CMS (if you're on Medicaid) to ask them to pay it. Most drug companies use a distributor, but that doesn't impact how they interact with CMS. To answer your question if they are required to "sell" to CMS, the basic answer is yes. In order to sell your drugs to Medicaid and Medicare patients, CMS requires a "Pharmaceutical Pricing Agreement" (PPA) to be signed. One part of that agreement is that you give a significant discount to CMS for certain patients. This is why I chuckle when people say "Medicare can't negotiate drug prices", which is true, but the gov't takes their pound of flesh other ways (Medicaid rebate, 340B rebate, which both have price increase penalties). There are examples of drugs where the manufacturer is required to sell them at "penny pricing". That is, $0.01 per unit of drug. This is usually due to the manufacturer cranking up the price really fast, but in the end they have to give the drug to the gov't for FREE. Do companies have to enter in to a PPA? They don't have to, but since Medicaid and Medicare represent more than half of all patients in the US, you'd be stupid not to. There is one example where a drug company said "no thanks". It was J&J's over the counter division. I assume Medicare and Medicaid was a super small slice for that business so they just pulled out all together. Most companies can't afford to do that.

chimeracoder 10y ago
> This is usually due to the manufacturer cranking up the price really fast, but in the end they have to give the drug to the gov't for FREE To add to what you're saying, this same effect also results in inflated prices for patients on private insurance and patients who are uninsured. When Medicare reimburses less than the direct cost of goods and services (which they do, in the aggregate), then providers have to make up the difference elsewhere. That's why you see incredibly inflated bills for basic services. It's because private insurers and uninsured patients are in effect subsidizing Medicare through higher reimbursement rates, which get passed on to patients as higher out-of-pocket bills or higher premiums.
- snuxoll 10y ago
  You're also missing the frequent abuse of the ER by medicaid members, the number of patients that go to the ER for a cold and waste everyone's time and money is way too high.