OMB Reviewing Medicare Demo on Doctor Drug Payments

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By Mindy Yochelson

Feb. 26 — The White House Office of Management and Budget Feb. 25 began review of a proposed rule that is expected to test ways to reimburse providers for drugs administered to Medicare beneficiaries in physicians' offices and hospital outpatient departments but is likely to be opposed by provider groups.

The CMS posted a transmittal on the Part B Drug Model for its contractors that process payments, but it was subsequently removed from the agency website. The document's release was premature, according to the agency .

Methods for Payment

As described in the transmittal telling contractors about system changes, the Centers for Medicare & Medicaid Services would test different approaches for paying for Medicare Part B drugs, including cancer treatments delivered via an infusion.

Medicare pays doctors the average sales price of a Part B drug plus an additional 6 percent for treatments administered in their offices.

The transmittal that was pulled told contractors to set up a system allowing the government to vary by geographic location how much it reimburses doctors for the drugs they administer.

Expensive Products

The current methodology “has been criticized for encouraging the use of more expensive products,” the transmittal said. It fails to account for the effectiveness of a particular drug, or the cost of comparable drugs, when determining reimbursement, it said.

However, Ted Okon, executive director of the Community Oncology Alliance, told Bloomberg BNA that the demonstration would be “a dangerous experiment that CMS wants to conduct on Medicare seniors fighting cancer.”

He said the “CMS is going to use a financial stick to force oncologists to use the drugs the government believes should be prescribed.” COA “will fight it with everything we have.”

Aaron Albright, director of the CMS's Media Relations Group, told Bloomberg BNA that the agency has been examining possible methods to “improve quality of care and increase access to affordable prescription drugs.”

Financial Implications

Leah Ralph, director of health policy for the Association of Community Cancer Centers, told Bloomberg BNA that, if the proposal under OMB review “looks anything like the program described in the transmittal, we have very real concerns about the financial and operational impact this program would have on community oncology programs.”

She said “community oncology has seen several major changes to reimbursement” recently and centers are “having a hard time meeting the margins.”

Ralph said that, “if the details of the program prove to only put more financial pressure on providers, this is a nonstarter.”

Input in Process

The ACCC also is concerned about a “lack of stakeholder input in this process” and that the CMS may only allow a short comment period on the proposed regulation.

Albright said the agency expects to release more details soon.

Okon said he expects the OMB will finish review of the proposal the week of Feb. 29.

The OMB review of the Part B Drug Model (CMS-1670-P; RIN: 0938-AS85) was posted on the website.

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

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

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