Providers Assail Medicare’s Bid to Remove Profit Motive From Outpatient Drugs

Comment period ends as tensions mount

Providers across the United States have expressed misgivings about the Obama administration’s plan to rewire how Medicare pays for outpatient drugs, and the Center for Medicare and Medicaid Services (CMS) is under intense pressure to scrap it, according to an article posted on the Modern Healthcare website. The CMS received more than 1,300 opinions on the plan by the May 9 deadline for public comments.

The controversial changes were proposed through the CMS Innovation Center, which was given broad authority under the Patient Protection and Affordable Care Act to test new payment and delivery models. It would therefore require an act of Congress to kill the proposal if the Obama administration moves forward with it, the article points out. 

The new reimbursement framework, proposed in March, would reduce drug payments from 6.0% to 2.5% on top of a drug’s average sales price, and would substitute a flat payment of $16.80 per drug per day to compensate for the difference. The change is intended to remove the profit motive from administering the most expensive drugs. The program would later add value-based options, including changing payments based on clinical efficacy and setting a standard rate for therapeutically similar drugs.

The Community Oncology Alliance responded that the new plan would push more cancer care into hospital settings, driving up costs. Ophthalmologists and rheumatologists, who also frequently prescribe and administer expensive medications, and receive substantial portions of their revenue from Part B drugs, expressed similar concerns.

The CMS estimated in its proposal that Part B payments to oncologists—$1.2 billion in 2014—would decline by 0.7%, compared with a 1.3% increase in payments across all specialties. In addition, under the proposal, rheumatologists and ophthalmologists are projected to see pay cuts of 1.5% and 1.7%, respectively, which translates to $1.2 billion and $2.4 billion, the CMS estimated.

Republicans on the Senate Finance Committee have called for the CMS to abandon the proposal. The House Energy and Commerce Health Subcommittee plans to hold a hearing on the initiative next week.

Source: Modern Healthcare; May 10, 2016.