Oncology Business News®
May 2016
Volume 5
Issue 5

Capitol Hill Fight Against Medicare Rule Change Gathers Steam


Members of Congress on both sides of the aisle have responded to urgings from the oncology sector that they join in the effort to quash a proposal to change the rule on physician pay under Medicare Part B.

Ted Okon

Members of Congress on both sides of the aisle have responded to urgings from the oncology sector that they join in the effort to quash a proposal to change the rule on physician pay under Medicare Part B.

A slew of letters from congressional leaders signed by numerous other members of the House and Senate has been pouring out in advance of the Monday, May 9 deadline for comment on The Centers for Medicare & Medicaid Services’ (CMS) plan for the two-pronged proposal on adjusting payment for drugs administered in physician offices or hospital outpatient departments.

The add-on payment of 6% on top of average sale price (ASP) would be reduced to 2.5%, although a $16.80 daily per drug payment would be added to the total under the CMS plan. ASCO, the Community Oncology Alliance (COA), and other physician groups state that they already make much less than 6%, owing to various factors that include discounts for early payment and sequester reductions. They contend that patients would be harmed, too, because physicians are likely to alter their prescribing patterns in order to avoid financial loss.

For its part, CMS contends that the proposed payment rule would incentivize physicians to make better prescribing decisions because the current system, according to CMS, tends to encourage the use of higher priced drugs.

The add-on percentage change would be the first phase of the program, beginning a few months after the rule change is adopted. The second phase involves a test of various pricing programs that CMS has said have been successfully used by the private sector. Those include eliminating or discounting patient cost-sharing, issuing feedback on physicians’ prescribing patterns, varying drug payments by indication and efficacy, and establishing standard prices for drugs that have therapeutic similarities.

Physician groups and members of Congress are hammering the initiative, with many on the Republican side calling for a complete withdrawal of the ASP rule proposal. Democrats, whose participation in the protest is far more modest, have called for a careful approach to implementation to ensure that no harm is done.

Many physicians are calling the plan an “experiment” that ultimately will turn patients into unwitting guinea pigs. CMS has described the rule change and follow-up pricing strategies as a test that will involve control and study groups. The agency said the payment change ultimately could improve outcomes and liberate physicians from the incentive to prescribe more expensive drugs. CMS pricing models indicate that physicians will be more generously paid than they are now when they use cheaper drugs.

“Physicians often can choose among several drugs to treat a patient, and the current Medicare Part B drug payment methodology can penalize doctors for selecting lower-cost drugs, even when these drugs are as good or better for patients based on the evidence,” CMS said in a summary of the proposed plan.

Although opponents describe the plan as poorly thought-out and done without consultation of stakeholders, CMS said a similar plan was proposed by the independent Medicare Payment Advisor Commission (MedPAC) in its June 2015 report to Congress.

If it’s a test, it should be subject to clinical standards, says Ted Okon, executive director of COA. “This is an experiment. It involves changing clinical decision-making. It involves human subjects, and yet there is not a mechanism for patients to opt out of this. There is no informed consent. There’s no real time monitoring of adverse events,” he said.

Senator Chuck Grassley (R, Iowa) has demanded that the Department of Health and Human Services (HHS), which oversees CMS, actually demonstrate that the payment change meet the standards of a clinical experiment. “If this is research, how do you intend to obtain legally effective informed consent?” Grassley wrote in a letter to HHS. “How does HHS intend to collect and report adverse events?”

All providers and suppliers furnishing and billing for Part B drugs would be required to participate in the program. They would be randomized to control and study groups determined by zip code.

ASCO said in a statement that, according to its preliminary calculations, the plan will cost practices an average of $30,000 to $35,000 per physician. The group has developed an “underwater drug evaluator” spreadsheet that it is circulating among its membership in order to gather data on how the new pricing system is going to affect drug revenues at oncology practices around the country.

ASCO, like other physician groups, contends that CMS has over-generously calculated the percentage add-ons that physicians would receive before and after the rule change. Physicians say early payment discounts and sequester adjustments, among other factors, leave them with substantially lower pay margins. The true current percentage is closer to 4.3%, ASCO said. The proposed add-on rate, adjusted by ASCO, is not 2.5% but 0.86%, ASCO said. Various physician groups argue that certain practices have worse or even negative margins on drugs that will be exacerbated by the proposed change.

Practices that are structured around the delivery of expensive medications would be dramatically affected, said the American Society of Hematology (ASH).

“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,” the group said. ASH calculated the dividing point between progressively higher and lower payments under the CMS plan as a drug price of $480.

“This is a major policy shift for Medicare. 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,” ASH stated. “The new innovative payment policies could prove cumbersome or prevent patients from receiving certain treatments.”

However, “These policies could also reduce costs for patients and steer them towards more appropriate treatment,” ASH said.

A letter that emerged from the Senate Committee on Finance and penned by Senators Ron Wyden (D-Oregon) and Charles E. Schumer (D-New York) asked that CMS implement safeguards to avoid disruptions in care and allow for program monitoring so that timely interventions are possible where needed. The senators also asked that the program be scaled to a level that is “no larger than necessary to allow for meaningful assessment.”

Other letters from Washington representatives were more strongly worded. “In 2014, bipartisan efforts helped prevent CMS from implementing the ill-conceived proposed Part D program changes that would have harmed beneficiaries …. We caution against invoking a similar unilateral effort to make changes to the successful Part D program through a flawed and overreaching read of [CMS’s] authority,” said an April 28 letter to CMS and HHS from Senate Committee on Finance Chairman Orrin G. Hatch (R-Utah) and numerous others.

Okon said as many as 240 congressional Republicans were listed as signatories to an early May letter to HHS “asking CMS for a complete withdrawal” of the Medicare Part B rule proposal.

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