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COA Declares Early Victory in CMS Part B Payment Battle

Tony Hagen @oncobiz
Published: Wednesday, Nov 23, 2016

The change of administrations in Washington, DC may undermine the future of a proposal to revise Medicare Part B drug compensation, a plan that has been widely criticized in the oncological community because of the potential reduction in profit margins it entails.

This week, the Community Oncology Alliance (COA) was cheering the passage of an important date for action that has not yet occurred: the release of the “final rule” for the Part B Drug Payment Model. According to the original plan, the proposed drug model could not be put into effect until 60 days after the release of the final rule. Had the rule been released last week, the Obama administration would still be in office in time to implement the program. Now, in 60 days’ time, the Trump administration will be in charge, and there is little support among Republicans for the payment model.

There was no immediate word from CMS on the status of the plan, which would involve a combination of lower margins on drugs and also a flat-fee system that many physicians, particularly in the oncology sector, had characterized as inadequate. In response to a request for comment, a CMS spokesman said Wednesday afternoon his office would attempt to put together an update.

“It is clear that the pressure we put on Congress played a big part in driving the delay and ultimately death of the Part B experiment,” COA said in a release this week. The group, which represents hundreds of independent oncology practices across the country, said that despite the passage of the deadline for implementation during the Obama administration, the group wasn’t going to drop its guard. “The Part B experiment could still be released, but that is why COA is leaving nothing to chance and spent last week in DC talking to members and staff about using the Congressional Review Act to stop the rule, if released.”

The group said it had launched a massive blitz to stop the Part B Drug Payment Model, including initiating “70,000 calls, emails, and letters to Congress” in opposition to the plan.

A main point of contention was the proposal by CMS to lower the average sales price (ASP) plus 6% formula for drug payments to ASP plus 2.5%. The formula applies to drugs that are dispensed through a physician’s office or a hospital outpatient department. COA and ASCO responded that there are already discounts applied to the 6% formula as well as other factors that compromise payment margins, and that the true adjusted margin allowed for drug dispensing practices is far lower. The 2.5% rate plus the proposed flat fee per drug, they said, would put them “underwater” for a lot of drugs they currently dispense.

For its part, CMS has stated, “We propose to establish the amount of the flat fee to ensure total estimated payments under this model are budget neutral to aggregate Part B spending,” meaning that it was not seeking merely to lower the total amount it spends on drugs but to ensure that physicians make prescription choices based on the efficacy of drugs rather than the amount of return they can get from using the most costly drugs.

Various other programs designed to lower the cost of drugs to CMS were slated to be implemented during the program. These programs, which CMS said have been used with success in the private sector already, were to make up the second phase of the model. The first phase involving the payment adjustment could have begun as soon as 2016, except that now that isn’t going to be possible. The second phase would start as early as 2017.

Among the trial programs to be used is reference pricing, which involves uniform pricing for drugs that are similar; and indication-based pricing, or paying different prices for a particular drug based on how well it works for different disease types.

The Part B Drug Payment Model was to be implemented in various markets on a broad scale in much the same fashion as a trial would be conducted to assess drug performance in comparison with standard-of-care. For this reason, COA and other physicians dubbed it “The Experiment.”

Whereas this payment reform attempt has been heavily criticized, there may still be support on both sides of the aisle for some type of payment adjustment for Part B drugs going forward, as Congress has broadly recognized the need to bring Medicare and Medicaid spending under control, and largely for that reason, the Medicare Access and CHIP Reauthorization Act was brought into existence last year to challenge physicians with risk-based payment incentives and other provisions to improve the quality of care, reduce waste, and lower the total amount of spending. Support for that was strongly bipartisan.


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