Medicare Part B Proposal Raises Patient Access Concerns

March 15, 2016

by Amanda Conschafter, blog editor

The Centers for Medicare and Medicaid Services’ newly proposed rule may reinvent how medications are paid for under Part B, which covers infused or injected medications administered in a clinic or hospital setting. The demonstration project is intended to reduce prescription drug costs for the Medicare program. But some physicians and advocates worry that it could unintentionally reduce seniors’ access to necessary medications for rheumatoid arthritis, cancer, macular degeneration and other conditions.

Current Part B Payment Design

CMS currently pays for the average list price of an infused or injected drug plus a six percent payment to cover receiving, storing, tracking and preparing the medication for the patient.   (Infused or injected drugs may be sensitive to storage needs, requiring refrigeration, or carry a short shelf life.) Critics argue that tying reimbursement to the cost of the drug may incentivize physicians to use higher-cost treatments.

Proposed Part B Payment Designs

To reduce any financial incentive and overall Part B costs, CMS’ Center for Medicare and Medicaid Innovation’s demonstration project would test new payment designs. In Phase 1, which could take effect as early as fall of 2016, Medicare Part B would reduce reimbursement to cover the average list price plus 2.5 percent of the drug’s cost and a $16.85 flat payment.

Starting in 2017, Phase 2 would introduce additional variables, testing payment concepts such as:

  1. Indication-based pricing, which links payment to a given drug’s effectiveness at treating a specific condition.
  2. Reference pricing, which sets a standard payment among therapeutically similar drugs.
  3. Outcome-based pricing, which links reimbursement to a patient’s success with a drug.
  4. Reduced or eliminated cost-sharing, which tests how patients respond to having cost barriers reduced or removed.

Potential Access Challenges

The proposed demonstration has sparked considerable outcry from physicians, policymakers and patient advocates. Allen Lichter, MD, the CEO of the American Society of Clinical Oncology accused CMS of “manipulat[ing] choice of treatment for cancer patients using heavy-handed reimbursement techniques.” Meanwhile, Republican leadership of the Senate Committee on Finance complained that CMS’ actions reflected “clear disregard for the people and stakeholders who will be impacted the most.” And more than 100 patient advocacy organizations, including the Alliance for Patient Access, authored a joint letter to CMS asking that the agency “permanently withdraw” the initiative from consideration and instead ensure that “our nation’s oldest and sickest patients continue to be able to access their most appropriate drugs and services.”

By reducing payment for complex Part B drugs, which include sophisticated biologic medicines, CMS may cause reimbursement to fall below some clinics’ actual costs to handle and administer the drugs. As a result, fewer practices may be able to offer these therapies. Patient access could thus be affected in two ways: by fewer drug choices being available in the clinic setting and by fewer clinics offering Part B drugs.

The program could go into effect after CMS’ 60-day comment period and extend for a total of five years.

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