WASHINGTON -- The Centers for Medicare & Medicaid Services (CMS) on Tuesday formally withdrew its controversial proposed demonstration project that would have changed the way Medicare pays for drugs under the Part B program.
When the project was first proposed in March 2016, "some commenters signaled their support for the proposed rule," the agency said in a three-page Federal Register notice scheduled for publication on Wednesday. "However, a number of commenters expressed concerns about the proposed model. As we worked to address these concerns, the complexity of the issues related to the proposed model design and the desire to increase stakeholder input led us to the decision to withdraw the March 11, 2016 proposed rule."
"Moving forward, we want to ensure agency flexibility in re-examining these important issues and exploring new options and alternatives with stakeholders as we develop potential payment models that support innovative approaches to improve quality, accessibility, and affordability, reduce Medicare program expenditures, and empower patients and doctors to make decisions about their healthcare," the notice concluded.
Medicare Part B pays for drugs that are administered in a physician's office or hospital outpatient department. Currently, Medicare usually pays the physician the drug's average sales price (ASP) plus a 6% add-on payment. But CMS officials argued that as a result of that payment structure, physicians may be incentivized to choose a higher-priced drug because their reimbursement will be higher.
The proposed demonstration project would have reduced the add-on payment to 2.5%, but also added a flat fee of $16.80 per drug per day. The flat fee would be updated at the beginning of each year.
Backlash against the plan was swift. The proposed payment model "is an inappropriate, dangerous, and perverse mandatory experiment on the cancer care of seniors who are covered by Medicare," wrote Bruce Gould, MD, president of the Community Oncology Alliance, in a letter to federal officials. "This experiment is a misguided government intrusion on the treatment of seniors with cancer and a very dangerous precedent in severing the sacred physician-patient bond."
The negative reaction caused the Obama administration to announce last December that it was holding off on implementing the demonstration project. "After considering comments, CMS will not finalize the Medicare Part B drug payment model during this Administration," a CMS spokesman said in a statement. "We appreciate the robust dialogue with our stakeholders on this important topic and value the feedback on this proposal and other CMMI [Center for Medicare & Medicaid Innovation] models."
The American College of Rheumatology (ACR) expressed relief Tuesday that the proposal was now formally withdrawn. "The ability for our Medicare patients to access biologic therapy infusions -- particularly in rural and underserved areas of the country -- is already tenuous because the current payment structure does not fully cover the cost of procuring and administering these therapies in the outpatient setting," ACR president Sharad Lakhanpal, MBBS, MD, said in a statement.
"If the additional payment cuts from the demonstration project were to go through, many rheumatology providers would be forced to stop administering biologic infusion therapies altogether. This would in turn force patients to seek treatment in less safe and more expensive settings, if they were able to access biologic therapies at all."
"While the ACR has vigorously opposed the Part B demonstration project, we remain supportive of CMS' broader effort to improve healthcare quality, accessibility, and affordability in the Medicare system while reining in excessive drug costs," he added. "In the future, we look forward to working with CMS to develop a payment model that achieves these goals while also ensuring patients can continue to access high-quality rheumatology care and treatments."