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Congress, HHS Add to Controversy Surrounding CMS’ Medicare Part B Proposal

May 04, 2016

The proposal for how drugs will be paid for under the Medicare Part B drug program continues to remain controversial, as stakeholders voice their objections to the suggested reimbursement changes.

The new value-based payment model aims to support clinicians in prescribing the most effective drugs to their patients as well as reward them for positive patient outcomes. New approaches will include the use of incentives aimed at reducing patient cost-sharing to improve access to effective drugs and the elimination of other incentives that make selecting high-performing drugs less likely.

Under the current model, Medicare Part B pays for the average sale price of a drug plus a 6% add-on payment. The new model will test a flat fee payment of $16.80 per drug per day plus a 2.5% add-on payment. The proposed change to the add-on payment is budget neutral.

Many providers, especially oncologists, see this as a reimbursement cut.

“What this does is primarily redistributes income from physicians who buy expensive drugs to [those] who buy inexpensive drugs. That's the net effect of the policy. What it doesn't do is improve competitiveness of drug purchasing or set up some rational framework to bring more value to the system. It is a reallocation,” Dan Mendelson, MPP, CEO, Avalere told MedPage Today. “It is a policy disliked by oncologists, disliked by the pharmaceutical industry. It doesn't have lot of natural constituency aside from pain specialists and others who will benefit from the policy.”

Earlier this week, 242 members of Congress sent a letter to Andy Slavitt, acting administrator of CMS, expressing their concern. “CMS’s proposed Medicare experiment would impose cuts in Phase 1 that will severely harm patient access to needed drugs,” they wrote in the letter. “Under CMS's Medicare drug experiment, numerous physicians would face acquisition costs that exceed the Medicare payment amount for certain drugs.”

While much of the feedback has been negative, the Department of Health and Human Services highlighted the support of the Center for American Progress (CAP).

“We applaud the administration’s decision to propose a prescription drug model to test new ways to pay for prescription drugs. Importantly, the agency has designed a proposal that we hope will not only fix the current financial incentive for doctors to prescribe costlier drugs—even when lower cost, equally effective drugs are available—but will also start to push back on some of the sky-high prices that drug companies charge for their products,” Topher Spiro, Vice President for Health Policy, CAP said in a statement.

In 2017, CMS hopes to test out other value-based purchasing ideas for Part B drugs, which include discounting patient cost-sharing, creating online decision support tools, implementing indications-based pricing, setting a standard payment rate for a group of similar drugs, and linking patient outcomes with price adjustments.

CMS is accepting comments on the proposed rule until May 9.



Frieden J. Controversy continues over Medicare Part B drug plan. MedPage Today. May 3, 2016.

Letter to Andy Slavitt, acting administrator of CMS. United States Congress. Washington DC. May 2, 2016.

STATEMENT: CAP Commends CMS in Taking Steps to Test New Programs to Reduce Medicare Costs [press release]. March 9, 2016.

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