Children’s hospitals hit by costly kink in reform

A quirk in the sweeping health care reform law has the potential to cost Children’s Healthcare of Atlanta $500,000 to $600,000 annually.

The Affordable Care Act halted large discounts that children’s hospitals nationally were receiving on so-called ‘’orphan drugs,’’ used to treat rare medical conditions. As the New York Times reported in a Wednesday story, drug companies are telling children’s hospitals that they no longer qualify for those steep discounts.

Children’s Healthcare said Wednesday that it estimates that the impact of the change could amount to up to $600,000 a year.

But help may be on the way. A congressional proposal that aims to delay the looming 25 percent Medicare cut to physicians’ pay would also restore the orphan drug discount for children’s hospitals, said Daniel Thompson, government affairs coordinator for Children’s Healthcare.

One drug in the “orphan” category is Botox, which pediatric hospitals use to reduce muscle spasticity in cerebral palsy patients, and for other neurological disorders, Thompson said. Discounts have also ended for therapeutic drugs such as Avastin and Rituxan to treat children’s cancers, he said.

The discount drug change ‘’was a provision in health care reform that we hadn’t heard about,’’ nor had other children’s hospitals, Thompson said.

The potential loss of the discount is important, Children’s Healthcare said. “We give about $90 million in unreimbursed care annually,’’ Thompson said. “This is yet another financial burden on Children’s as well as other children’s hospitals nationally.’’

But he noted the discount problem could be resolved in a proposed deal, forged by Senate leaders, that would give physicians a one-year reprieve from a 25 percent reduction in fees they get from Medicare. The so-called ‘’doc pay fix’’ will redirect money out of the reform law  to pay for the doctor reimbursement gap. A provision within that doctor payment deal would allow pediatric hospitals to regain the discount on orphan drugs.