Medicare Physician-Administered Drugs: Do Providers Choose Treatment Based on Payment Amount?

The Medicare Part B program reimburses providers for physician-administered (via infusion or injection) drugs and biologics given in the office setting. This program, which sets payment rates based on the average sales price (ASP) negotiated for the drugs in the market, has been criticized as creating a financial incentive for physicians to prescribe more expensive drugs rather than less expensive alternatives.

This criticism is based on assumptions that many physician-administered drugs that treat the same condition offer similar efficacy and side effect profiles, and that the physician prescribing in these instances is guided by financial incentives rather than the clinical needs of the patient. Many physicians counter that medicines are not often interchangeable, and their prescribing is guided by best available evidence on the safety and effectiveness of medicines and the needs and values of the individual patient. The challenge to that belief is that it is an assumption, rather than reliance on data to demonstrate that providers are prescribing based on revenue.

Our editors tested the hypothesis that prescribers of physician-administered drugs disproportionately prescribe therapies with higher reimbursement rates to financially benefit from larger add-on payments. Our report found no strong, positive correlation between drug payment and utilization and suggests that physician prescribing is not driven by payment-per-drug administration.