CMS Seeking Comment on New Ways to Pay for Medicare Part B Drugs

Prescription drugs administered in a hospital outpatient department or physician’s office are covered by Medicare Part B. The U.S. Centers for Medicare & Medicaid Services (CMS) just released a proposed rule on a “Part B Drug Payment Model as a two-phase model that would test whether alternative drug payment designs will lead to a reduction in Medicare expenditures, while preserving or enhancing the quality of care proved to Medicare beneficiaries.” [See 81 Fed. Reg. 13230, 3/11/16.] The proposed model is envisioned to run for five years. The first phase would reduce, from 6% to 2.5%, the add-on to Average Sales Price (ASP) used to make Part B drug payments. “The second phase would implement value-based purchasing tools similar to those employed by commercial health plans, pharmacy benefit managers, hospitals, and other entities that manage health benefits and drug utilization.” The “value-based purchasing tools” to be tested include “reference pricing, indications-based pricing, outcomes-based risk-sharing agreements, and discounting or eliminating patient coinsurance amount.” After soliciting public comment on each proposal, each specific tool will be applied to specific Part B drugs. Thus, CMS seeks “to test approaches for transitioning from a volume-based payment system into one that encourages or even rewards providers and suppliers who maintain or achieve better patient outcomes while lowering Part B drug expenditures.” CMS is accepting comment on the proposed rule until 5/9/16. For additional information, see the 3/8/16 CMS media release Fact Sheet CMS proposes to test new Medicare Part B prescription drug models to improve quality of care and deliver better value for Medicare beneficiaries.