New Part B Drug Proposal Deemed Dead in the Water

November 30, 2016

A controversial federal proposal to change how Medicare reimburses clinicians for drugs they administer appears dead in the water now that Republican Donald Trump is moving into the White House next January.

Oncologists, ophthalmologists, and rheumatologists who stood to receive smaller payments from Medicare apparently have dodged a bullet. The losers are family physicians and cardiologists, who look to forgo a revenue boost.

The Medicare Part B program pays physicians the average sales price (ASP) of the drugs they buy and administer plus a 6% markup for handling and storage. Suspecting that the 6% markup incentivized physicians to administer more expensive drugs when less expensive ones would suffice, the Centers for Medicare & Medicaid Services (CMS) in March proposed a new reimbursement formula. Medicare would pay the ASP, a markup of only 2.5%, and a flat fee of $16.80 per drug per day, regardless of its price.

The proposal formula wouldn't increase or decrease total spending on Part B drugs. However, it would redistribute Medicare dollars, reducing payments to specialists such as oncologists who administer more expensive drugs, and increasing them for family physicians, internists, cardiologists, and other clinicians who administer relatively inexpensive ones (think injectable steroids and antibiotics).

The proposal hit a brick wall of opposition, consisting of specialty societies such as the American Society of Clinical Oncologists, the American Academy of Ophthalmology (AAO), and House Republicans, who all warned that reduced payments would dissuade many physicians from administering Part B drugs, hurting patient access to treatment in the process. Even some House Democrats sounded alarms about the potential impact on patient care.

CMS originally intended to release the final version of the regulations before year's end. The agency had hoped to test the new reimbursement framework in select geographic areas in late 2016 and broaden its experiment in 2017 by introducing drug pricing strategies used in the private sector. The proposed regulations stipulated that CMS could implement them no sooner than 60 days after the final version appeared.

After Donald Trump was elected president on November 8, Sen. Charles Schumer (D-NY) and House Minority Leader Nancy Pelosi (D-Calif) asked CMS to refrain from issuing a final version of the regulations. No such document has surfaced yet, and a CMS spokesperson told Medscape Medical News that he had no update on the fate of the regulations.

Given the 60-day lag time, the final regulations would have needed to come out no later than Nov 21 to make it possible for the Obama administration to implement them. Going forward, any final version issued by CMS wouldn't take effect until after President-elect Trump is sworn into office on January 20. Trump could decide to quash the regs.

All this regulatory and political rigmarole prompted a group called the Community Oncology Alliance (COA) to announce last week that it is "extremely optimistic that the Medicare Part B experience on cancer care is dead." The COA describes itself on its website as a nonprofit organization advocating for community oncology practices and their patients.

Ophthalmologists Are Rejoicing, Too

Another group dancing on the apparent grave of the CMS proposal is the AAO.

"It's very good news that they [CMS] missed the November 21 deadline," said Cathy Cohen, the AAO's vice president of governmental affairs, in an interview with Medscape Medical News. "Anything that CMS puts out now wouldn't go into effect until after Trump takes office. His administration would have the power to pull back the rule."

The AAO doesn't oppose the idea of removing any financial incentive for physicians to administer more expensive rather than less expensive Part B drugs, said Cohen. The CMS proposal, though, was counterproductive and ill-informed.

"The Obama administration didn't take the time to engage us on solving the problem," said Cohen. "Many of our members would have been paid below cost, and that's just not right. It would limit their ability to provide services.

"That's why we opposed it."

Follow Robert Lowes on Twitter @LowesRobert

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