The Congressional Budget Office (CBO) released a report on October 4, 2016, estimating that a bill in the U.S. House of Representatives to block the implementation of CMS’s proposed payment model for Part B drugs would cost the federal government $395 million over ten years. The bill, introduced on April 29, 2016 would prevent CMS from implementing a demonstration project for a new two-phase Medicare payment model. The model aims to explore whether alternative drug payment structures will reduce Medicare costs while preserving or increasing quality of care.
CMS’s Proposed Rule intends to test different payment models for Medicare Part B drugs used for in-office treatments. Currently, drugs administered in-office are paid based on the Average Sales Price (ASP) plus a six-percent add-on. Because of the six-percent addition, expensive drugs receive a higher add-on payment than less expensive therapies. Contending that the current payment model may improperly incentivize providers to use expensive drugs in unnecessary situations, CMS proposed to test whether an alternative payment model would increase quality of care while decreasing federal spending. In the first phase, the Proposed Rule’s reimbursement calculus would keep the current ASP, reduce the add-on to 2.5 percent, and add a $16.80 flat fee. The second phase would include value-based purchasing strategies to further reduce Part B drug costs.
Many members of Congress and industry representatives reject the Proposed Rule, accusing the agency of improperly influencing provider decision-making and limiting patient access to necessary therapies.
In its report, the CBO states that the projected cost savings in the Proposed Rule is “subject to considerable uncertainty,” because the projections are dependent on providers choosing alternative therapies that have the potential for savings, but “developing and implementing those replacements would take time.” CMS believes that the current ASP methodology does not take into account the effectiveness of the drug and does not compare the cost of clinically comparable drugs that may be less expensive. Noting that the statute does not provide any reason for the additional six-percent add-on, CMS asserts the proposed payment model would “strengthen the financial incentive for physicians to choose higher value drugs.”
The Proposed Rule is available here. The Congressional Budget Office Cost Estimate is available here. H.R. 5122 is available here. BIO Comment to the Proposed Rule is available here. FAH Comment to the Proposed Rule is available here.
