CMS Issues Proposed Rule to Overhaul Part B Drug Payments

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The Centers for Medicare and Medicaid Services (CMS) has released a new proposed rule to reduce Medicare expenditures by changing the way it makes payments for Part B drugs. The proposal includes two phases. The first involves changing the percent of add-on to the Average Sales Price (ASP) of the drugs from 6% to 2.5% plus a flat fee payment. The second phase would utilize the value-based purchasing tools now used by commercial health plans, pharmacy benefit managers, hospitals and other entities that manage health benefits and drug utilization. The purpose of these proposed changes is to make Medicare spending on drugs more efficient while ensuring quality care for Medicare beneficiaries.

Drugs involved under Part B involve three categories, drugs furnished incident to physician’s services, drugs administered via a covered item of durable medical equipment (DME), and other drugs specified by statute.  Many of these drugs are furnished in the hospital outpatient setting and allow a 6% add-on to the ASP, which CMS indicates may encourage use of higher priced drugs versus inexpensive drugs where the higher cost does not improve outcomes. By changing to a lower percentage add-on  of 2.5% to the ASP plus a flat fee in contrast to the 6% add-on, CMS hopes to discourage use of more expensive drugs where less expensive drugs produce comparable outcomes.

By implementing value-based purchasing tools that are used by commercial and Medicare Part D plans to improve outcomes while managing costs, CMS hopes to see whether these changes could improve utilization and reduce costs. Currently, there are programs involving the Medicare Shared Savings Program, which CMS is seeking comments on due to the possible overlap between such programs. CMS seeks to determine the best approach for handling these issues and whether to exclude Oncology Care Model (OCM) practices and their comparison practices from the Part B Drug Payment Model.

These proposals to the Part D payments could impact patient care and quality.  It is important that those providers that may be impacted by these proposed changes are aware of the issues. Providers need an opportunity to review the proposals and make comments, if appropriate. The proposed rule is set to be published on 3/11/16 in the Federal Register and public comments to CMS will be accepted through 5/9/16. Read more about the proposed rule.

By Denise Bloch

Denise Bloch

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