Trump scheme for Part B drugs raises red flags


A proposed Trump administration plan for paying for drugs under Medicare Part B has raised red flags for doctors.

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The Centers for Medicare & Medicaid Services announced Oct. 25 that it will test paying for Part B drugs by more closely aligning those payments with international rates.

The so-called International Price Index (IPI) model “would test whether increasing competition for private-sector vendors to negotiate drug prices, and aligning Medicare payments for drugs with prices that are paid in foreign countries, improves beneficiary access and quality of care while reducing expenditures,” according to a government fact sheet.

Under the test, private vendors would “procure drugs, distribute them to physicians and hospitals, and take on the responsibility of billing Medicare. Vendors would aggregate purchasing, seek volume-based discounts, and compete for providers’ business, thereby creating competition where none exists today.”

Health care professionals and hospitals in certain geographic areas would receive their Part B drugs under this program, while the rest of the country would continue under the current buy-and-bill system. Eventually, over the 5-year phase-in period, half of the geographic regions would fall under this IPI model.

CMS officials note that the IPI model “would maintain beneficiaries’ choice of provider and treatments and would have meaningful beneficiary protections such as enhanced monitoring and Medicare Beneficiary Ombudsman supports.”

Initially, only single-source drugs and biologics with available international pricing data would be provided under the IPI model, which could be expanded over time to include drugs available via multiple sources.

Currently, Medicare typically pays average sales price (ASP) plus a 6% add-on for drugs under Part B. Under IPI, if the international price is determined to be lower than the ASP, the CMS would reimburse based on a target price derived from an international price index, with the hope that manufacturers would match the international price. The target price would be phased in over a 5-year period.

The plan also calls for an add-on price similar to the current buy-and-bill system; however, the CMS aims to bring the add-on back to 6% rather than the actual 4.3% under the budget sequestration.

Other add-ons are also under consideration, such as paying a fixed amount per encounter or per month as well as a unique payment based on drug class, physician specialty, or physician practice.

The American Gastroenterological Association also has concerns, noting that the proposed changes in policy are complex and certain details are lacking, which makes it difficult to assess fully the impact of the proposal.

While it’s true that the high cost of biologics, such as those used to treat inflammatory bowel disease, create barriers to patient access, efforts to address costs may create other patient access issues and penalize gastroenterologists for providing high-quality care to some of the most complex patients. The Competitive Acquisition Program previously abandoned created patient access issues. Moreover, utilization management strategies such as step therapy or “fail first” protocols have no place in the Medicare Part B program. Policy makers should be careful to not penalize Medicare patients who depend on timely access to needed therapies.

“The administration’s proposal for an International Pricing Index Model for Part B drugs raises a number of questions, and we need to have a greater understanding of the potential impact of the proposal on patients, physicians, and the health care system,” American Medical Association President Barbara McAneny, MD, said in a statement. “We look forward to working constructively with the Administration as it seeks feedback.”

Comments are due Dec. 24. The CMS plans to issue the proposed rule related to this model in the spring of 2019.


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