New proposed methodology for Part B drugs

CMS recently released a proposed rule to change how it covers certain Medicare Part B drugs. (Medicare Part B drugs are generally those delivered in a health care setting and include Xolair and IVIG, among others). If approved, the rule would decrease the incentive for physicians to choose the more expensive drugs and encourage them to prescribe and administer lower-priced drugs, although the higher cost drugs may be more effective. Currently, the effectiveness of the drugs is not a criterion in the proposed study. CMS has said there will be a study between the two cost proposals, but it is unclear as to what criteria will be used in that study.

More interesting is that CMS will be testing another option –“value-based purchasing tools” for purchasing drugs. Where the first project seeks to address incentives to choose higher cost drugs, under the second proposal, CMS will address how Medicare pays for the drugs being prescribed. According to CMS, this proposal will be similar to drug purchasing tools used by commercial health plans and others to manage drug utilization. CMS hopes this payment model will represent a more efficient and cost-effective way to pay for Medicare drug costs.

At this time, details on how Medicare will pay for drugs under this model are unclear. There is also no clear start date for this option, however, CMS expects to “take several years to fully implement a new drug payment policy.” Some of the value-based purchasing options CMS is considering include:

  •    Providing equal payment for therapeutically similar drug products.
  •    Using value-based pricing for a drug based on clinical effectiveness.
  •    Entering into agreements with manufacturers to link outcomes to payment.
  •    Waiving or reducing the coinsurance of “high-value” drug products.

It will be interesting to see if CMS is able to transfer reimbursement for drugs to a value-based model in the same way they are trying to value clinical care.

Advocacy Issue: 
Billing, Coding & Payments