The comment period closed this week on the Obama administration's bold proposal to rewire how Medicare pays for outpatient drugs, and the CMS is under intense pressure to scrap it.
Providers across the board, not just those projected to receive the deepest cuts under the proposal, have misgivings about the initiative. That's because it's hard to truly know its implications until the second phase of the plan kicks in, said Thomas Barker, a partner and co-chair of the healthcare practice at Foley Hoag.
“There is skepticism about CMS' projections because it's too soon to see how this will shake out,” said Barker, former acting general counsel at HHS.
The CMS received more than 1,300 comments on the plan by the May 9 deadline.
It's possible that the CMS could decide to junk the proposal in its entirety, given the scope and intensity of the negative comments it has received. But the changes were proposed through CMS Innovation Center, which was given broad authority under the 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.
Not everyone is against the Part B proposal however. America's Health Insurance Plans, which has been tangling with the pharmaceutical industry about drug costs, noted in its comment letter to the CMS that Part B payments for drugs have increased at an average annual rate of 8.6% since 2007, and total spending for drugs in the Part B program doubled between 2007 and 2015, growing from $11 billion to $22 billion.
“By recognizing that pharmaceutical costs are rising at unsustainable rates in Medicare Part B and proposing solutions, CMS is shining a light on a fundamental concern about the affordability of prescription drugs for beneficiaries and taxpayers,” AHIP wrote in its comment letter. Insurer Aetna expressed similar support.
Election year politics make it hard to read what would happen if lawmakers did vote to stop the initiative, and that uncertainty provoked immediate and visceral opposition from many specialists, including oncologists, who would clearly be hit hardest by the proposal.
The reimbursement framework proposed in March would reduce drug payments from 6% to 2.5% on top of a drug's average sales price, and 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 effectiveness and setting a standard rate for therapeutically similar drugs.
Oncologists responded quickly and vehemently that the initiative would compel doctors to choose cheaper drugs, even when they think a more expensive one is more appropriate. The Community Oncology Alliance said it would push more cancer care into hospital settings, driving up costs.
The CMS estimated in the 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.
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.
“Many rheumatologists have already been forced to stop administering biologic therapies to Medicare patients … because the current Part B payment structure does not cover the cost of obtaining and providing these complex therapies to patients,” Dr. Prahlad Reddy, a Nevada rheumatologist wrote in a comment letter. “An additional payment cut would drive even more Medicare patients into less safe and more expensive settings—such as the patient's home or the hospital—to receive needed therapies, if they can access them at all.”
Ophthalmologists argued that the proposal could force them to rely on cheaper drugs that have not been approved by the Food and Drug Administration.
“There is no way that a retina practice could use FDA-approved treatments and remain financially viable,” wrote Dr. John Denny, a retina specialist in North Carolina. “A government policy that effectively forces physicians to use medications that are not approved by the FDA would be unprecedented.”
Rheumatologists and ophthalmologists are projected to see pay cuts under the proposal of 1.5% and 1.7% respectively, which translates to $1.2 billion and $2.4 billion, the CMS projected.
Republicans on the Senate Finance Committee last month called for the CMS to abandon the proposal. The House Energy and Commerce Health Subcommittee reportedly is planning to hold a hearing next week on the initiative.
