Cause of anesthetic drug shortages

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I'm an anesthesiologist with an interest in the latest drug shortages. One of my colleagues believes that these shortages are due to changes in the Medicare pays for various injectable drugs. Currently, physicians (usually oncologists) bill for the medications they administer to their patients, but they cannot bill above 6% of the average sales of price if they are billing Medicare. This of course has incentivized them to administer more expensive drugs so that they can pocket more money. The unintended consequence is that, by this logic, there is less demand because of an artificial price control, therefore the cheaper, usually generic drugs are not as available. This is either due to manufacturers exiting the market, or that they are just not making enough. This kind of makes sense for physician administered drugs in an outpatient setting, but I don't know if that would apply to perioperative medications.When hospitals bill insurance companies or Medicare, do they itemize the medications used for each patient? My colleagues belief is that the shortages we are experiencing with propofol, midazolam, and fentanyl are a result of the Medicare payment rules. It would seem to me that the medications are purchased by Group Purchasing Organizations, who then sell them to hospitals, who then bill for anesthetic services but do not bill for specific drugs. Can anyone help me out with this?

Originally Posted by Korba

I'm an anesthesiologist with an interest in the latest drug shortages. One of my colleagues believes that these shortages are due to changes in the Medicare pays for various injectable drugs. Currently, physicians (usually oncologists) bill for the medications they administer to their patients, but they cannot bill above 6% of the average sales of price if they are billing Medicare. This of course has incentivized them to administer more expensive drugs so that they can pocket more money. The unintended consequence is that, by this logic, there is less demand because of an artificial price control, therefore the cheaper, usually generic drugs are not as available. This is either due to manufacturers exiting the market, or that they are just not making enough. This kind of makes sense for physician administered drugs in an outpatient setting, but I don't know if that would apply to perioperative medications.When hospitals bill insurance companies or Medicare, do they itemize the medications used for each patient? My colleagues belief is that the shortages we are experiencing with propofol, midazolam, and fentanyl are a result of the Medicare payment rules. It would seem to me that the medications are purchased by Group Purchasing Organizations, who then sell them to hospitals, who then bill for anesthetic services but do not bill for specific drugs. Can anyone help me out with this?

Your colleagues are wrong. The Medicare payment rules have nothing to do with it. The Department of Health and Human Services rejected proposals to change the reimbursement formula because they recognized that hospital group purchasing organizations (GPOs) were responsible for the drug shortages. For more detail, see this 1/4/12 white paper, "Connecting the Dots: How Anticompetitive Contracting Practices, Kickbacks, and Self-dealing by Hospital Group Purchasing Organizations (GPOs) Caused the U. S. Drug Shortage," by Patricia Earl and Phillip L. Zweig. It's available at www.canadadrugshortage.com and www.puncturemovie.com, which also contains extensive documentation on GPO abuses. This material includes four Senate Antitrust Subcommittee hearings, federal and state investigations, media exposes, antitrust lawsuits, a 2009 book, "Group Purchasing Organizations: An Undisclosed Scandal in the U. S. Healthcare Industry," even a Hollywood movie.

Originally Posted by katherine11

Hi....
In my openion,Reports of anesthetic shortages — the drugs that put you out and/or control pain — have medical institutions nationwide rationing their stocks and finding other drugs to manage the shortage. Still, these methods can come with side effects for patients and can even be uncomfortable for doctors to use due to their unfamiliarity.

Curious how this is your opinion: Link. Unless you're Liz Klimas.