March 25 (Bloomberg) — Dialysis centers run by DaVita HealthCare Partners Inc., Fresenius Medical Care AG and other companies aren't being paid correctly by the Medicare program because the U.S. is miscalculating drug costs, government auditors said.
A report to be released today by the Health and Human Services Department's Office of Inspector General recommended that the agency that runs Medicare recalculate its payments to dialysis centers "to reflect current trends in drug acquisition costs." Prices paid by dialysis centers for Amgen Inc.'s Epogen, the most expensive drug they use, increased at least 17 percent from 2009 to 2012, according to the report. Prices for other drugs fell, often by more than Medicare estimated.
The dialysis centers have been a focus of federal investigators who have said the medicines are overused and Medicare spends too much for them. In 2011, Medicare began paying dialysis centers a "bundled" payment for all services, including drugs, to discourage misuse of the medicines.
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The payment is adjusted each year based in part on what the drugs are expected to cost. Daniel Levinson, the inspector general, said in the report obtained by Bloomberg News that Medicare's estimates of drug costs are inaccurate. The report didn't say how the payment should be recalculated or whether it should be reduced.
Medicare is the U.S. health program for the elderly and disabled. The Centers for Medicare and Medicaid Services, which runs the program, canceled a proposed 9.4 percent reduction in payments to the dialysis centers in November. It warned that future payment cuts remain possible.
About 414,000 people in the U.S. in 2010 were on dialysis, a procedure in which waste is periodically removed from the blood in patients with malfunctioning kidneys.
DaVita, based in Denver, is the second-biggest dialysis provider in the U.S. Peter Grauer, the chairman of Bloomberg LP, the parent company of Bloomberg News, has served on DaVita's board since 1994. Fresenius, based in Bad Homburg, Germany, is the world's biggest provider of kidney dialysis.
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