MedPAC's Latest Part B Proposals Would Raise the Cost of Care

Ben Jones
Published: Sunday, Aug 06, 2017
Ben Jones

Ben Jones
In April, the Medicare Payment Advisory Commission (MedPAC) voted to approve several proposals aimed at decreasing Medicare spending for Part B physician-administered drugs—proposals that were formally submitted to Congress in June. MedPAC projected that the proposed policies would have a first-year savings of up to 0 million, increasing to billion over 5 years.1 Unfortunately, MedPAC’s recommendations are centered around the creation of a Drug Value Program that combines 2 previously abandoned programs and could quickly backfire, accelerating the shift in cancer care from cost-efficient physicians’ offices to more-expensive hospital settings, fueling dramatic increases in Part B expenditures.

Proposals Blend Concepts From 2 Highly Scrutinized Programs

MedPAC’s recommendations are nothing new. They incorporate aspects of CMS’ controversial Part B drug-payment demo program (designed to eliminate the financial incentive to choose higher-cost drugs) with CMS’ Competitive Acquisition Program (which involved obtaining drugs from lowest-cost suppliers). The demo program never got off the ground and was tabled last year because of fierce opposition, while the Competitive Acquisition Program failed miserably over a decade ago.

MedPAC’s proposals also bring back price negotiation, a failed concept CMS tested in 2006 with the Competitive Acquisition Program (CAP). Under CAP, physicians obtained drugs for Medicare patients from CMS-approved vendors who negotiated with manufacturers. Because of low enrollment, the program died in 2008. Although CMS claims that the issues that prevented CAP from succeeding have been resolved, the transition to negotiated prices would still be very difficult for cancer practices that carry all the risk associated with providing these expensive drugs to patients. Cancer drugs are toxic, requiring special inventory management and safe handling by specially trained personnel—all of which is supposed to be covered by the current ASP plus 6%. The 6% markup is also intended to insulate providers against market conditions—having to purchase a drug at above-average cost, for example.

Other Forces Affecting Reimbursement

In addition to market fluidity, other pressures also are having an impact on drug reimbursement, making financially vulnerable practices even more fragile. The 2% sequestration cut implemented in 2013 essentially reduced ASP plus 6% to ASP plus 4.3%, a significant reduction in the add-on fee needed for handling these toxic pharmaceuticals.
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