The chief advocate for America's medical group administrators says the Obama administration's plans to overhaul Part B drug payments will devastate smaller specialty practices.
Medicare now pays 6% on top of the average sales price of drugs administered by infusion or injection in outpatient settings. That incentivizes providers to choose more expensive medications. The mandatory program beginning in late 2016 would test how prescribing patterns are affected by reducing the bonus to 2.5% and substituting a flat payment of $16.80 per drug per day.
The initiative from the CMS Innovation Center is particularly problematic for small ophthalmology, oncology and rheumatology practices, which prescribe and provide a significant amount of outpatient drugs, said Halee Fischer-Wright, CEO of the Medical Group Management Association.
“It's going to kill our smaller practices,” Fischer-Wright said in an interview with Modern Healthcare on Friday. “The administrative fees do not cover drug costs … we have lots of specialty drugs, and the (2.5%) is not going to cover that.”
Oncologists, who administer some of the most expensive drugs on the market, slammed the changes immediately after the announcement. Ted Okon, executive director of the Community Cancer Alliance, called the pilot “the most contrived, absurd experiment on cancer care I have ever seen."
Fischer-Wright and the MGMA argue that a significant bonus such as 6% is essential for small practices because their volume is lower than larger groups. “What a small practice pays is actually higher than a large organization."
She argued that the Part B plan stems from the false assumption that physicians are using more expensive drugs because of the incentives of the current system. She discounts this idea because insurers create restrictive formularies that don't pay for some expensive drugs.
Before the end of the year, the CMS expects to test a “menu of value-based purchasing options” that originate from strategies used by private health plans, hospitals and pharmacy benefit managers. Not all providers and suppliers will be subject to all of these strategies; instead, different strategies will be allotted to different primary-care service areas in control groups and study groups.