CMS Denies There's a Delay in Medicare Drug Demo

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Mindy Yochelson

May 24 — The latest HHS regulatory agenda gives the Medicare agency a few years to work on a controversial rule on Medicare payments for drugs administered in a physician's office, but the agency and stakeholders say there are no plans to delay the final rule.

“We have not announced a change in timing and we continue to review comments,” Aaron Albright, director of the Media Relations Group at the Centers for Medicare & Medicaid Services, told Bloomberg BNA May 24.

The agenda notice said that final action for the Part B Drug Payment Model (CMS-1670-F; RIN:0938-AS85) would be in March 2019, three years after the proposal was published. The comment period closed May 9.

On May 18, the federal government posted its spring regulatory agenda online at

Model Under Fire

The model, a two-phase test comparing reimbursement levels and value-based purchasing options, has been sharply criticized, for the most part, by members of Congress and the medical community.

The first phase would involve changing the current methods of reimbursing claims, at the average sales price plus 6 percent, to reimbursement at ASP plus 2.5 percent with a flat fee of $16.80. The second phase would add on value-based purchasing strategies, such as indication-based pricing, reference pricing and clinical decision support tools, to reduce costs for Part B drugs.

Among the criticisms are that it would diminish Medicare providers’ ability to obtain Part B therapies, and in turn, threaten patient access to needed medicines. Some say practices would be unable to keep operating.

In addition, test and control groups would randomize patients based on where they are treated, yet there would be no “informed consent” and patients could not opt out.

Timeline in Proposal

When the proposed rule was issued, the CMS said plans are for the first phase of the proposal, designed to test different physician and patient incentives to encourage prescribing the most effective drugs, to be implemented in the second half of 2016. The second phase of the five-year model would be introduced early in 2017 (46 HCDR, 3/9/16).

The notation of “final action” on the regulation notice was indicative of the statutory deadline for issuance of a final rule, not the expected time for finalization, Albright said.

Stakeholder Predictions

Elizabeth Carpenter, a senior vice president at Avalere Health, a consulting company, said that despite the opposition, she believes that the administration will move forward on the model this year, particularly because of the significant focus on high drug prices.

The high cost of infusion and other Part B drugs has raised concerns for years.

Ted Okon, executive director of the Community Oncology Alliance, told Bloomberg BNA May 24 that, although his group wants the proposal withdrawn, he has no reason to believe that the agency's proposed timeline has changed.

The 2019 date in the notice is merely a regulatory procedural matter, he said.

The rule has been the subject of hundreds of comments, mostly negative, and a House subcommittee hearing (96 HCDR, 5/18/16).

Before Leaving Office

Okon said that the Obama administration likely wants to see the rule finalized before the president leaves office. In such a case, the first phase would have to be finalized by the summer to have implementation in the fall.

Depending on the final publication, the Okon's alliance will consider legal action based on the belief that the CMS exceeded its authority to make changes that would result in beneficiaries receiving a diminished benefit, he said.

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

To contact the editor responsible for this story: Kendra Casey Plank at

For More Information

The spring 2016 regulatory agenda for Department of Health and Human Services rules is at

Request Health Care on Bloomberg Law