CMS Pay Cut Proposal Draws Fire

Gina Battaglia
Published: Tuesday, Apr 12, 2016
Jennie R. Crews, MD

Jennie R. Crews, MD

A newly proposed drug reimbursement plan from The Centers for Medicare & Medicaid (CMS) has oncology associations up in arms, whereas a well-known patient advocate and oncologist says he sees method in the payment scheme. The proposal to change Medicare Part B payment comes with a number of strategies to experiment with pricing, coinsurance elimination, and risk sharing that would be meted out in geographical samplings to see how well they perform.

The most prominent proposed changes to Medicare Part B drug reimbursement would reduce the add-on physician payment from 6% per drug to 2.5%, although a $16.80 per drug, per day payment would be added to the total.1 The plan is designed to make it less enticing for physicians to earn the highest possible payments simply by prescribing the most expensive drugs. The reduced percentage coupled with the daily fee will in many cases improve payments for lower priced drugs while lowering payments for higher priced ones (Table).

Table: Drug Payment Under Current Policy and Proposed Medicare Part B Drug Payment Model

Table: Drug Payment Under Current Policy
and Proposed Medicare Part B Drug Payment Model


Oncology drugs amount to the highest category of drug spending by Medicare, yet oncology groups contend that there are a number of problems with the newly proposed payment scheme. They said they feel insulted that CMS assumes that they are prescribing drugs according to the most money they can get rather than the best interest of patients. They also said they should have been consulted during the early stages of the planning for this proposed change, and that the 60 day comment period that began March 8 isn’t a fair amount of involvement, considering how the new payment plan may affect their revenues and their practice procedures.

“The focus of this proposal is on cost, not quality,” said Jennie R. Crews, MD, newly installed president of the Association of Community Cancer Centers (ACCC) and medical director at PeaceHealth St. Joseph Cancer Center in Bellingham, Washington. “When choosing an appropriate therapy for patients, the decision algorithm should include efficacy and safety first and then cost.”

On the other side of the argument, Peter J. Bach, MD, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, said that there are many aspects of the approach that CMS wants to take that may result in a stronger focus on patient welfare, at lower cost.

“We can develop more reasonable ways to price drugs if we are going to help patients and avoid bankrupting Medicare and Medicaid,” said Bach. “We need to price drugs based on transparency and evidence that encourages biomedical research and reasonable profits, and in a way that is affordable for patients who need life-saving treatments.”

CMS Chief Medical Officer Patrick Conway, MD, stated that the goal is to align incentives with what’s best for patients and doctors. He said the proposed changes enable doctors to prescribe what they think is best without preoccupying themselves with administrative priorities. He said the proposed changes are designed not to interfere with doctors’ ability to prescribe whatever they think is best for patients. Multiple patient and provider advocate groups, including the ACCC, ASCO, and the Community Oncology Alliance (COA), have weighed in with objections to the payment plan, contending that it may actually increase overall costs by shifting cancer treatment from the community provider to the more expensive outpatient hospital setting.

Lowering Reimbursement Rates to Promote Value in Cancer Care

Crews said that the tremendous increase in prescription drug spending in recent years is to blame for this attempt by CMS to revise physician payments. Spending on drugs in the United States has increased from $356 billion in 2010 to an estimated $457 billion in 2015, according to the US Department of Health and Human Services. Likewise, spending for Medicare Part B prescription drugs, which includes biologics and infusible and injectable drugs administered in an outpatient setting, increased from $9.4 billion in 2005 to $18.5 billion in 2014.

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