(CN) - The D.C. Circuit upheld a ruling for a Medicare recipient who accused contractors of illegally capping the amount she could be reimbursed for a prescription drug based on the least expensive alternative.
Federal law "unambiguously forecloses that determination and requires instead that Medicare pay for covered items or services at a statutorily prescribed rate," the federal appeals court ruled.
Ilene Hays uses DuoNeb to treat chronic obstructive pulmonary disease. The drug delivers albuterol sulfate and ipratropium bromide in one dose, a more expensive option than taking the component drugs separately.
Last year, four Medicare contractors decided that it wasn't medically necessary to administer the two drugs in a combined dose and limited reimbursement to the "least costly alternative."
Hays challenged this decision, arguing that only the secretary of Health and Human Services can determine what's reasonable or necessary. And if the secretary deems a drug reasonable or necessary, she added, Medicare must reimburse her based on the formula set by the Medicare Act.
A federal judge in Washington, D.C., agreed with Hays, and the federal appeals court affirmed.
"As written, the statute unambiguously authorizes the Secretary to make only a binary choice: either an item or service is reasonable and necessary, in which case it may be covered at the statutory rate, or it is unreasonable or unnecessary, in which case it may not be covered at all," Judge David S. Tatel wrote.
"Nothing in the statute authorizes the least costly alternative policy."
The ruling means that Medicare must reimburse Hays 106 percent for DuoNeb.
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