Tuesday, June 28, 2016

Pushback on Part B Payment Model Continues, but Battle May Be Futile

Reprinted from SPECIALTY PHARMACY NEWS, a monthly newsletter designed to help health plans, specialty pharmacies, pharma companies, providers and employers contain costs and improve outcomes related to high-cost specialty products.

By Angela Maas, Managing Editor

June 2016 Volume 13 Issue 6

The battle over CMS’s proposed Medicare Part B Drug Payment Model continues, but at least one analyst thinks implementation is likely in the fall.

Phase I of the proposed Part B Drug Payment Model (81 Fed. Reg. 13230, March 11, 2016) would test changing the add-on payment to the average sales price (ASP) of a drug (SPN 3/16, p. 1). Currently these drugs are reimbursed at ASP +6%, but the proposal would change the add-on payment to 2.5%, plus a $16.80 per-drug per-day flat fee payment. This test would begin later this year, no earlier than 60 days after the final rule is published. The second phase of the proposed payment model would begin “on or after” Jan. 1, 2017. It would test one or more value-based purchasing strategies, such as indication-based pricing or reference pricing.

CMS is proposing running the model for five years, with both phases in operation for three years.

In a May 17 note, Evercore ISI analyst Terry Haines maintained that the changes “are 80 per cent likely to be adopted by CMS in July 2016 and implemented in fall 2016 despite rising industry and congressional pressure to delay or stop it.…CMS remains on track to adopt Phase I after public comments were received and has not backed off its timetable, although some small modification is not out of the question,” such as making the geographical scope smaller, extending the time the model will run or both, he said.

“We think CMS is unlikely to significantly change its timetable because the agency wants to get Phase I in place in this presidential administration and CMS believes Congress will not be able to stop it,” wrote Haines. With President Obama certain to veto a bill to stop the changes, assuming it would even pass the Senate, “the year-end government spending bills,” which would come months after the first phase of the model has started, are the most likely way to stop it, said the analyst. “That leaves congressional opponents with a strategy of attaching a Part B stoppage to some other ‘must-pass’ bill that Obama would sign. Before July, when CMS today intends to finalize its Part B Phase I rules, there are no obvious ‘must-pass’ bills, so if CMS keeps to its timetable it can get Phase I in place.”

“Further implementation,” he asserted, “will be up to a new president.” If that is Hillary Clinton (D), she “will keep the Part B changes going forward.” If it’s Donald Trump (R), he could “possibly stop it in its tracks, change it, or undo it,…but he supports government negotiation for Part D so even though his position on Part B is not known his opposition cannot be assumed.”

The analyst note was released the same day as the House Energy and Commerce Committee’s hearing on the model, titled “The Obama Administration’s Medicare Drug Experiment: The Patient and Doctor Perspective.” Most who gave either spoken or written testimony called for CMS to withdraw the model or at the very least make changes to it.

In early June, House Energy and Commerce Committee Member John Shimkus (R-Ill.), House Ways and Means Committee Member and Budget Committee Chairman Tom Price, M.D. (R-Ga.), and House Ways and Means Committee Member Charles Boustany Jr., M.D. (R-La.), spoke out against CMS after the agency responded to a letter they submitted calling for the withdrawal of the model that was co-signed by 239 congressional members. CMS simply thanked the representatives “for sharing your thoughts” on the model, described the model, said the agency had “included your comments as part of the public record” and added that it “will carefully consider the public comments” as it develops a final rule.

In response, the representatives decried CMS’s “lack of a substantive response…to the detailed concerns raised by a bipartisan majority of the House of Representatives,” labelling it “disappointing” and “disrespectful” to patients and their families, who “deserve a thoughtful response from CMS” before the model goes forward. “CMS’s brief and uninformative response is dismissive of the risks posed to our nation’s sickest patients, including those with cancer, rheumatoid arthritis, rare diseases, and neurological disorders who could be adversely impacted by the proposal,” they wrote, calling for Congress to pass legislation, H.R. 5122, that would stop the model from being implemented.

View the congressional letter at http://tinyurl.com/hpw8zvw and CMS’s response at http://tinyurl.com/jysabn7.

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