CLINICAL NEWS

n March , the Centers for Medicare & Medicaid Services ( CMS ) announced a proposed rule to test new models to improve Medicare Part B physician reimbursements for prescription drugs . 1 According to CMS , the rule will test different physician incentives that would , in theory , encourage the prescription of the most effective drugs and reward positive patient outcomes .

Medicare Part B covers prescription drugs that are administered in a physician ’ s office or hospital outpatient department . Under the current system , physicians are reimbursed at a rate of 106 percent of the average sales price ( ASP ) of a drug – 100 percent of the ASP plus a 6 percent add-on .

The proposed rule would change this payment to 102.5 percent of the ASP plus a flat fee payment of $ 16.80 per drug per day – an amount CMS calculated to be budget neutral in aggregate – to see if this reimbursement rate changes prescribing behavior and leads to improved quality and value .

“ This change in Medicare Part B is being applied in a desperate attempt by Medicare to address the issue of cost without addressing the issue of the cost of pharmaceuticals ,” Joseph Alvarnas , MD , director of value-based analytics at City of Hope in Duarte , California , told ASH Clinical News . “ Unfortunately , it is an instance where the solution does not address the actual problem , but addresses the part of the problem that is easiest to touch upon .”

Enter the Testing Phase

The proposed policy , which will run for five years , mandates participation and will be conducted in two phases . The first phase , beginning in fall 2016 , will randomly assign each of the 7,000 “ primary-care service areas ,” which are clusters of zip codes based on patterns of Medicare Part B primary-care services , into two groups . 2 One group will continue to receive payment under the existing policy ; the other will be reimbursed at the new rate .

In the second phase , which will begin in 2017 , CMS will test several new payment policies that could deviate from the current ASP policy . To evaluate these new tools , the groups tested in phase one will be further sub-divided into four groups : the 106 percent ASP group with or without value-based purchasing tools , and the 102.5 percent ASP plus $ 16.80 group with or without value-based purchasing tools . There are six alternative approaches being proposed :

• Improving incentives for best clinical care

• Discounting or eliminating patient cost-sharing

• Providing feedback on prescribing patterns and online decision support tools

• Indications-based pricing

• Reference pricing

• Risk-sharing agreements based on outcomes

“ The tools that are being proposed under phase two – those designed to ensure that patients are receiving the best , most effective care and outcomes – don ’ t exist yet ,” Dr . Alvarnas said . “ They are proposing the wholesale implementation of a system , and the second part of the deployment is essentially predicated upon magic .”

ASH recently posted an online analysis about this “ radical experiment ,” pointing out that this new system will reimburse for inexpensive drugs that cost less than $ 480 at a higher rate and payment than expensive drugs . 3 See the TABLE for an illustrative example of how this new proposed rule would affect payments . 2

“ Because hematologists are more likely to provide expensive infused drugs than many other specialties , the

overall effect of such a proposal would be a reduction in payments ,” according to the analysis on the ASH website . “ For physicians who prescribe many low-cost drugs , such as primary-care physicians , overall payments would increase .” Dr . Alvarnas is concerned that this model has the potential to subvert good clinical judgment .

“ What we had before was a system of reimbursement that creates economic incentives , such that physicians can reasonably deliver medications that they feel are most appropriate to the patient ,” Dr . Alvarnas said . For example , if a physician has the choice to treat a patient with acute myeloid leukemia with a very old , relatively inexpensive drug or a medication that is very expensive to stock , the system reduces the incentives for giving the more expensive drug , even though it may be preferable in terms of clinical outcomes .

Hematologists Weigh In

“ This is a major policy shift for Medicare ,” the analysis for ASH continued . “ Reducing the payment made for infused drugs is likely to have a significant effect on the viability of hematology practices , particularly those that remain in a private practice environment .”

Dr . Alvarnas faults the new proposed rule for overlooking the work that hematologists and oncologists have been doing in this arena . “ Across the United States there are many creative cancer-care and hematology-care delivery systems that have really innovative physicians ,” Dr . Alvarnas said . “ What CMS has done here is bypass a wealth of expertise and innovation and come up with a global system that turns a blind eye to the potential for a smart solution in this country .”

In an era where hematologists and oncologists must consider biologic , genetic , genomic , and proteomic data in the treatment of very rare diseases , current billing codes also fail to capture the complexity of managing these patients , Dr . Alvarnas added . “ I worry about patients suffering as a result of lack of due diligence before rolling out this system .” ●

TABLE . How the Proposed Medicare Part B Drug Payment Model Will Change Drug Payments

ASP per Drug

Current Add-On Payment Rate ( 6 % ASP )

Proposed Add-On Payment Rate ( 2.5 % ASP + $ 16.80 )

Current Add-On Payment Rate as a Percentage of ASP

Proposed Add-On Payment Rate as a Percentage of ASP

ASP = average sales price Source : CMS Fact Sheet , March 8 , 2016 .

REFERENCES

1 . Centers for Medicare & Medicaid Services . CMS proposes to test new Medicare Part B prescription drug models to improve quality of care and deliver better value for Medicare beneficiaries . Accessed April 11 , 2016 from https :// www . cms . gov / Newsroom / Media ReleaseDatabase / Press-releases / 2016-Press-releases-items / 2016-03-08 . html .

2 . Centers for Medicare & Medicaid Services . Fact Sheet : CMS proposes to test new Medicare Part B prescription drug models to improve quality of care and deliver better value for Medicare beneficiaries . Accessed April 11 , 2016 from https :// www . cms . gov / Newsroom / MediaReleaseDatabase / Fact-sheets / 2016-Fact-sheets-items / 2016-03-08 . html .

3 . American Society of Hematology . Medicare Proposes Radical Experiment in Drug Payment Policy . Accessed April 11 , 2016 from http :// www . hematology . org / Advocacy / Policy-News / 2016 / 5197 . aspx .

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