CMS Should Pull Drug Pay Model, Lawmakers Told

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By Mindy Yochelson

March 18 — Hundreds of regional and national medical groups are asking Congress to prevail upon the Medicare agency to permanently withdraw a proposed rule that would test alternative approaches to paying for drugs, such as chemotherapy, that are administered in a physician's office.

Congress should ensure that the “nation’s oldest and sickest patients continue to be able to access their most appropriate drugs and services,” according to the March 17 letter to Republican and Democratic congressional leaders from 316 organizations.

Proposed by the Centers for Medicare & Medicaid Services earlier this month (CMS-1670-P; RIN: 0938-AS85), the model would test six approaches for Part B drugs . In 2015, Medicare Part B spent $20 billion on outpatient drugs administered by physicians and hospital outpatient departments.

Targeted Methods First

“We believe these types of initiatives should be initially implemented in a targeted, patient-centered and transparent way that accounts for the unique needs of Medicare beneficiaries,” the letter said. “We are very deeply concerned, therefore, that CMS’ proposed Part B Model would be applied on a nationwide basis—to all states except Maryland, due to its all-payer model—and would include the ‘majority' of Part B drugs.”

Among the signatories were the Alliance of Specialty Medicine, Alzheimer's and Dementia Alliance of Wisconsin, American Academy of Allergy Asthma and Immunology, American College of Rheumatology, American Gastroenterological Association, National Alliance on Mental Illness, and Healthcare Leadership Council.

Bad Timing

In a separate statement, the American Society of Clinical Oncology said that Congress should enact legislation directing the CMS to forgo implementation of the plan.

The group said it's particularly problematic “to place additional strain on the oncology infrastructure at a time when significant administrative burdens are likely to arise” due to implementation of the Medicare Access and CHIP Reauthorization Act that will install a new Medicare physician payment system.

However, the Alliance of Community Health Plans, which represents about two dozen health plans, commended the agency for “a thoughtful set of proposals” to address the high cost of drugs though a “multi-pronged approach that addresses reimbursement, pricing, benefit design and evidence-based decision tools.”

Asked about the strong level of opposition, ACHP President and CEO Ceci Connolly told Bloomberg BNA that “it's important to not let the perfect be the enemy of the good.”

It's also important to have “constructive dialogue on this very complex issue,” she said, and it's “a bit disappointing we don’t see more coming to the table with ideas to get lifesaving therapies to patients at an affordable price.”

Comments Due in May

The CMS is accepting comments on the proposed rule through May 9.

The CMS would test the alternatives through a comparison of a control group of physicians and outpatient departments that would be reimbursed under the current 106 percent of the average sales price (in other words, ASP plus 6 percent), versus a study group reimbursed at 102.5 percent of ASP plus a $16.80 flat payment per drug.

This would begin no earlier than 60 days after the final rule.

In the second phase, no earlier than January 2017, the CMS would test value-based purchasing arrangements, such as varying the payment for a drug based on its clinical effectiveness for different conditions.

Inaccurate Assumption

In the proposed rule, the CMS expressed concern that the current 106 percent of ASP payment “may encourage the use of more expensive drugs because the 6 percent add-on generates more revenue for more expensive drugs,” the groups' letter said.

“This assumption fails to take into account the fact that providers’ prescribing decisions depend on a variety of factors, including clinical characteristics and the complex needs of the Medicare population,” the groups said. “Most importantly, there is no evidence indicating that the payment changes contemplated by the model will improve quality of care, and may adversely impact those patients that lose access to their most appropriate treatments.”

To contact the reporter on this story: Mindy Yochelson in Washington at

To contact the editor responsible for this story: Janey Cohen at

For More Information

The March 17 letter to lawmakers is at The proposed Medicare rule, published March 11, is at