Life Science Compliance Update

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December 20, 2016

CMS Scraps Part B Demo


On Thursday, December 15, 2016, the Centers for Medicare & Medicaid Services decided not to go forward with the agency’s controversial Part B payment proposal, noting that “there was a great deal of support from some,” but there were “a number of stakeholders” who “expressed strong concerns about the model.” The spokesman continued, “While CMS was working to address these concerns, the complexity of the issues and the limited time available led to the decision not to finalize the rule at this time. We appreciate the robust dialogue with our stakeholders on this important topic and value the feedback on this proposal and other CMMI [Center for Medicare & Medicaid Innovation] models.”

Medicare Part B pays for drugs that are administered in a physician's office or hospital outpatient department. Currently, Medicare pays the physician the drug's average sales price (ASP) plus a 6% add-on payment. But CMS officials argued that because of that payment structure, physicians may be incentivized to choose a higher-priced drug.

The proposed demonstration project, outlined in a proposed rule, would have reduced the add-on payment to 2.5%, but also added a flat fee of $16.80 per drug per day. The flat fee would be updated at the beginning of each year. According to CMS, “the proposal was intended to test whether alternative drug payment structures would improve the quality of patient care and the value of Medicare drug spending.”

Positive Feedback

The decision saw mostly positive feedback from industry and medical professionals.

Sharad Lakhanpal, MBBS, MD, president of the American College of Rheumatology applauded the decision, “We thank CMS for listening to the rheumatology community’s concerns about the negative and disproportionate impact this proposal would have on our Medicare patients living with rheumatic diseases by not moving forward with this [project]. This positive outcome will help ensure Medicare beneficiaries living with rheumatic diseases are able to continue receiving the therapies they need to manage their chronic conditions and avoid pain and disability.”

Ted Okon, executive director of the Community Oncology Alliance, released a statement, saying, “Cancer patients and their providers across the country can breathe a sigh of relief now that the Part B experiment on cancer care is finally dead. It was encouraging to have such strong support from Congress to end this proposed model that was, at best, an overreach by CMS, created with no stakeholder input.”

The American Medical Association (AMA) also expressed pleasure with the decision, with AMA president Andrew Gurman, MD, releasing a statement, “This is a model for how Washington should – but often doesn’t – work. When CMMI made the recommendation to make changes to Medicare Part B, CMMI and CMS officials welcomed feedback. The AMA and others explained how the proposal would hurt patient care. CMMI then re-evaluated its original proposal, resulting in the announcement that CMS would not go forward with these changes. We are grateful that CMS came to the right decision after listening to stakeholders.”

Dr. Gurman also added, “The Innovation Center can be a valuable tool in developing innovative health care payment and service delivery models. We look forward to continue working with it as Washington grapples with ways to implement MACRA [the Medicare Access and CHIP Reauthorization Act] and to reform healthcare payment systems.

Negative Feedback

Not everyone was happy with the CMS decision, however, including the Medicare Rights Center. “Some inside the beltway will call this a victory,” said Joe Baker, president of the Medicare Rights Center. “But let’s be 100% clear – people with Medicare are not the winners here. Our helpline counselors will continue taking calls from distraught seniors and people with disabilities who simply cannot afford soaring prescription drug prices. The new Administration, Congress, and many decision-makers in Washington would do well to live a day in the lives of these callers.”

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