Earlier today, the Pew Charitable Trusts hosted a panel discussion on potential payment reforms for the Medicare Part B prescription drug payment. The panel featured opening remarks from Dr. Patrick Conway, Acting Principal Deputy Administrator, Deputy Administrator for Innovation and Quality, Chief Medical Officer, at CMS. Following Dr. Conway’s remarks, a panel featuring Dr. Peter Bach, with Memorial Sloan Kettering Cancer Center, Dr. Stephen Grubbs, with the American Society of Clinical Oncology (ASCO), Laurel Todd, with BIO, Dr. Jack Hoadley, with Georgetown University, and Stacy Sanders, with the Medicare Rights Center discussed multiple issues and concerns in depth.
Patrick Conway Emphasizes Flexible Nature of Proposal
On March 8, 2016, CMS released a proposed nationwide demonstration that would alter Medicare payment rates for prescription drugs for approximately half of physicians nationwide, and would also introduce value-based purchasing tools into the program. Speaking about the proposal broadly, Dr. Conway invited stakeholders to submit specific comments, including any supportive data (such as calculations on the impact of payment changes) to CMS by the May 9 comment deadline.
One of the major concerns voiced by stakeholders have been the potential impact of the 102.5% ASP payment levels on patient outcomes and access. Dr. Conway mentioned that CMS has the ability to implement a “sophisticated” monitoring system that would use claims data to look for any potential negative impacts on patient outcomes and access, hinting that it could be based on the current monitoring system for the durable medical equipment (DME) competitive bidding program, which has access to claims data within a few days of filing.
Dr. Conway also emphasized that the proposal was, in theory, designed to be flexible enough that it could be adjusted over time as the agency gathers data on real-world impacts. Stakeholder engagement will also continue to be a priority, though it is unclear how much input the agency gathered during the design of the proposal. To that end, expect that the value-based purchasing portion of the model to be implemented slowly.
Meet the New Criticisms, Same as the Old Criticisms
Fears that changing payment policies may lead to access issues, or lower quality of care are not new, and are certainly not limited to prescription drugs. Similarly, stakeholders have expressed concern that the proposal will have several unintended consequences, including leaving physicians “underwater” for some expensive drugs, and driving referral patterns away from community practice into hospital outpatient settings. However, research into the impacts of previous policy changes, such as the shift away from average wholesale price (AWP) to ASP, generated similar concerns, and they didn’t appear to come to fruition. Further analysis by the Medicare Payment Advisory Commission (MedPAC) found that manufacturers lowered prices in response to the across-the-board reduction in payment required by the sequester.
Panel participants volleyed back and forth on this issue, and unsurprisingly did not reach a conclusion. One complicating factor is that the sequester would essentially lower reimbursement for physicians assigned to the lower payment rate group to less than 101% of ASP, raising a legitimate question of if prior experience (which lowered payment to approximately 104.5% of ASP) would still apply. Dr. Grubbs, with ASCO, stated that some of the organization’s members have estimated that the proposed changes would double the number of drugs in which a practice would be underwater (i.e. payment levels below acquisition costs). Dr. Grubbs noted that infusions in the hospital settings have grown to almost half of all infusions covered under Medicare, but Dr. Bach countered that oncology, as a subspecialty have one of the highest Medicare participation rates. Laurel Todd, with BIO, noted that in the proposal itself, CMS admits that a payment policy of 100% of ASP is not viable, yet when sequestration is added to the reduced payment proposal, the result is essentially that.
Stacy Sanders noted that patient advocacy and Medicare beneficiary stakeholders are welcome to proposals that would reduce cost sharing for Medicare beneficiaries, but are concerned that physicians may shift beneficiaries to “brown bagging,” where a beneficiary is required to pick up a drug at a retail pharmacy (and would therefore be covered under the Part D benefit) to have it administered in an office setting.
Skepticism Surrounds Ability of CMS to Implement Meaningful Value-Based Purchasing Initiatives
As the topic shifted to the second phase of the proposed model, which includes the introduction of value-based purchasing tools, panel members expressed skepticism that CMS would be able to implement meaningful reform. Dr. Grubbs noted that it was interesting that the model doesn’t really address the overall effort of CMS to shift providers to bundled payments overall, and away from fee-for-service, especially since alternative payment models is another high-profile goal of the current administration. Panel participants also noted the difficulties CMS has had with attempting value-based purchasing incentives before: least costly alternative policies that were struck down in court, and an unsuccessful competitive acquisition program. All participants agreed that transparency is the crucial element to implementing the second phase of the model.
What Can CMS Achieve Before January 20, 2017?
The proposed payment reform is understandably a high priority for providers, manufacturers, and patients. It will be interesting to see how much CMS can actually implement prior to the administration change on January 20, 2017. Even if the next administration hails from the same political party, it is not necessarily a given that the policy would continue under new leadership, especially if providers and patients voice concerns loud enough between now and then. CMS has suggested a highly-aggressive implementation timeline, and will be lucky (in my opinion) to get the first phase finalized and implemented before the end of 2016.