A proposed Trump administration plan for paying for drugs under Medicare Part B has raised red flags for doctors.
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The Centers for Medicare & Medicaid Services announced Oct. 25 that it will test paying for Part B drugs by more closely aligning those payments with international rates.
The so-called International Price Index (IPI) model “would test whether increasing competition for private-sector vendors to negotiate drug prices, and aligning Medicare payments for drugs with prices that are paid in foreign countries, improves beneficiary access and quality of care while reducing expenditures,” according to a government fact sheet.
Under the test, private vendors would “procure drugs, distribute them to physicians and hospitals, and take on the responsibility of billing Medicare. Vendors would aggregate purchasing, seek volume-based discounts, and compete for providers’ business, thereby creating competition where none exists today.”
Health care professionals and hospitals in certain geographic areas would receive their Part B drugs under this program, while the rest of the country would continue under the current buy-and-bill system. Eventually, over the 5-year phase-in period, half of the geographic regions would fall under this IPI model.
CMS officials note that the IPI model “would maintain beneficiaries’ choice of provider and treatments and would have meaningful beneficiary protections such as enhanced monitoring and Medicare Beneficiary Ombudsman supports.”
Initially, only single-source drugs and biologics with available international pricing data would be provided under the IPI model, which could be expanded over time to include drugs available via multiple sources.
Currently, Medicare typically pays average sales price (ASP) plus a 6% add-on for drugs under Part B. Under IPI, if the international price is determined to be lower than the ASP, the CMS would reimburse based on a target price derived from an international price index, with the hope that manufacturers would match the international price. The target price would be phased in over a 5-year period.
The plan also calls for an add-on price similar to the current buy-and-bill system; however, the CMS aims to bring the add-on back to 6% rather than the actual 4.3% under the budget sequestration.
Other add-ons are also under consideration, such as paying a fixed amount per encounter or per month as well as a unique payment based on drug class, physician specialty, or physician practice.
Early takes on the proposal were met with skepticism.
The Community Oncology Alliance (COA) said in a statement that it is “concerned that the IPI will either repeat past reform mistakes [such as the Competitive Acquisition Program] or introduce the same cancer treatment access challenges experienced by cancer patients today with pharmacy benefit managers and other middlemen under Medicare Part D.”
“What the administration is proposing is incredibly complex and extremely difficult to comprehend how it would be implemented in the real-world of medical practice,” said Ted Okon, executive director of the COA. “It is also disturbing that the administration is trying to end-run the Congress by forcing a mandatory CMS Innovation Center demonstration that will effectively change Medicare reimbursement, as the sequester cut to Part B drug reimbursement has already done.”
The American College of Rheumatology was more measured in its reaction, noting that any change in policy needs to be thoughtful in its process to ensure that patient care is not adversely affected.
“Efforts to address high costs can sometimes create significant access issues for patients while penalizing doctors for providing quality care,” ACR officials said in a statement. “These proposals include those restructuring reimbursement for Medicare Part B drugs through either flat fee payments or a competitive acquisition program, or allowing utilization management such as step therapy or ‘fail first’ protocols in the Medicare Part B program. It is imperative that policy makers stay focused on the players who control drug prices and not penalize Medicare patients who depend on timely access to needed therapies.”
The American Medical Association raised some concerns as well.
“The administration’s proposal for an International Pricing Index Model for Part B drugs raises a number of questions, and we need to have a greater understanding of the potential impact of the proposal on patients, physicians, and the health care system,” AMA President Barbara McAneny, MD, said in a statement. “We look forward to working constructively with the Administration as it seeks feedback.”
The advanced notice of proposed rulemaking was posted to the Federal Register website on Oct. 25 and is scheduled to be formally published in the publication on Oct. 30. Comments are due Dec. 24. The CMS plans to issue the proposed rule related to this model in the spring of 2019.