CMS Proposes New Part B Drug Payment Model

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  • March 16, 2016

On February 5th, the Centers for Medicare & Medicaid Services (CMS) posted and then removed a transmittal to Medicare contractors that outlined a new payment model to be tested for Part B drugs. Transmittal 137, Change Request 9501 was to have an effective date of July 1, 2016 and an implementation date of July 5, 2016.

This transmittal instructed Medicare Administrative Contractors (MACs) and other Medicare shared system maintainers, to put in place the necessary system changes to implement the Part B Drug Payment Model which would consist of the testing of different Average Sales Price (ASP) payment limit values in certain defined geographic areas based on ZIP code.

Details of what the changes to ASP would be or exactly how they will be applied were not provided in the transmittal. However, CMS did state that they would also test the impact of targeted pricing changes to payments for individual Part B drugs beyond changes to the ASP-based payment.

CMS hinted at what the other payment models might include when they stated the following, “The ASP methodology does not take into account the effectiveness of a particular drug, or the cost of comparable drugs, when determining the Medicare payment amount.”

The oncology community, including ASCO, ACCC, COA, ONS, ION, and numerous oncology state societies, as well as stakeholders in other specialities concerned about patient access to Part B drugs, signed on to a letter expressing strong concern and asking CMS not to proceed with the Medicare Part B drug payment initiative.

In response, on March 8 CMS published their proposed rule, Medicare Program; Part B Drug Payment Model. The proposed rule includes important details on how CMS plans to test new payment models for Part B drugs and most importantly provides an opportunity for public comments through the rule-making process.

CMS states that their proposed Part B Drug Payment Model will be mandatory and providers will be randomly assigned (based on zip code) to either the control group or an alternative payment model.

The proposed rule includes the following proposed payment models and seeks comments on each of these:

  • A fixed percentage of 2.5% above ASP and a flat fee of $16.80 per drug per day administered.
  • Indications-based pricing. A drug’s price may be adjusted based on the product’s safety and cost-effectiveness for a specific indication as evidenced by published studies and reviews or evidence-based clinical practice guidelines that are competent and reliable.
  • Outcomes-based risk-sharing agreements. CMS may enter into outcomes-based risk-sharing contracts with pharmaceutical manufacturers to link price adjustments for a drug or drugs to clearly defined patient health outcome goals. CMS may base these goals on outcome measures submitted as part of a package of competent and reliable scientific evidence regarding the clinical value of a drug by the manufacturer.
  • Discounting or eliminating patient coinsurance amounts. Beneficiary cost sharing may be reduced for Part B drugs deemed to be high in value. Any reductions in beneficiary cost sharing may not change the overall payment amount.

The fact that CMS has determined to use the rule-making process, thus allowing for public comment, is very important and provides an opportunity for stakeholders concerned with patient access to the most appropriate care to comment on the proposed rule. Comments on the proposed rule must be received no later than 5pm May 9, 2016.

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