Analyzing the True Cost of Delivering Medications

Reimbursement to providers for delivering medications in the dialysis field is a subject of current concern, with some payors limiting payment to an amount equaling the provider's acquisition cost. At the same time, some providers arbitrarily mark up medications by a large factor. For dialysis, as well as for the general medical field, an objective approach is required for both providers and payors to fairly set prices and reimbursement levels. This analysis evaluated all cost elements involved in the delivery of medications and determined that an increase over the acquisition cost is appropriate for pricing and reimbursement. The increase has 2 parts: a fixed cost associated with resources required for a medication irrespective of its cost and a markup on the acquisition price. The conclusion of this analysis is that an increase over acquisition cost in reimbursement of providers for delivering medications is required to fairly compensate them for their actual costs and avoid compelling them to either incur a loss or cost shift by overcharging some payors to compensate for underpayment by others. Planned adjustments in Medicare reimbursement for dialysis may not recognize this reality.