Recombinant erythropoietin and Medicare payment

The biologic recombinant human erythropoietin provides a recent case study of the great influence federal policies, especially Medicare payment, exert over the use and cost of medical technologies. By covering most dialysis patients, Medicare has been the predominant payer for recombinant erythropoietin, which corrects anemia associated with chronic renal disease. Medicare's leverage seems to have produced a low US price for the product. Paying a fixed rate per treatment with the biologic agent gave dialysis facilities a financial incentive to use low doses, but Medicare did not routinely monitor patients' responses. By August 1990, average and modal doses were low, and fewer than 45% of patients who had been treated for 6 months or more had ever attained the target hematocrit. Medicare should recognize the financial incentives of its payment policies and routinely evaluate the quality of care for beneficiaries.