A federal court blocked a recent move of the Bush administration to allow Medicare to only pay for the least expensive treatment available without regard to the medical issues. The administration saw instituting this limitation as a way to cut costs to the financially strapped Medicare Program.

The court decided that congress sets the Medicare payment rates and never intended to give broad discretion to government officials that would allow them to alter the rates.

The case, decided on October 16, 2008, involved a dispute over the choice of drugs to treat chronic obstructive pulmonary disease (CPOD). Judge Henry H. Kennedy ruled that the policy of paying only for “the least costly alternative” was not permitted under the Medicare Law. He wrote that the administration”s position would give the Health and Human Services Secretary enormous discretion to determine the amount paid for all services and treatments covered by Medicare without references to the rates set by congress in the legislation.

Historically, Medicare officials have attempted to structure regulations, which would allow them to consider costs in deciding whether to cover a treatment. Big pharm, health advocates and equipment manufactures have fought them claiming that these decisions should be made on clinical effectivene