Reactions to the Centers for Medicare and Medicaid Services’ (CMS) proposed Part B drug reimbursement demonstration project have been both swift and predictable. Under the proposal, reimbursement for drugs covered under Part B would be reduced from average sale price (ASP) +6% (pre-sequester) to ASP +2.5% plus a flat fee of $16.80. CMS would also pursue various value-based purchasing tools as part of the pilot. The objective is “to encourage better care, smarter spending, and healthier people by paying providers for what works.”
Not surprisingly, physician groups and the medical societies to which they belong quickly decried the proposal as being potentially dangerous for patients, saying that it would put certain physicians and patients (in the demonstration ZIP codes) at unfair disadvantages to those in the current system.
On March 8, 2016, the Centers for Medicare and Medicaid Services (CMS) proposed to test a new Medicare Part B reimbursement model in a “lottery” of sorts, with the goal of delivering more value-driven care. The current incentives for prescribing a Part B drug allow the provider to make a margin of 6% of the average selling price (ASP) of the therapy. For an oncology drug that is infused weekly and costs $10,000 per month, that means $600 of margin per month for the provider. And the more expensive the drug, the higher the margin amount. (Not surprisingly, cancer drugs made up 42.1% of all Medicare Part B spend in 2014, according to CMS.) Under the new model being piloted by CMS, practices that “win” the lottery will now be reimbursed at ASP plus 2.5% and a flat rate payment of $16.80 per treatment, according to the Department of Health and Human Services. So that same $10,000 drug will now only yield $317.20 to the provider—about half of the $600 that they make today. After sequestration, that amount is reduced even further to $152.12.