May 17, 2016
5 min read

Congressional subcommittee debates Medicare Part B demonstration project

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The U.S. House Energy Subcommittee on Health today held a hearing to offer doctor and patient perspectives on planned changes to the Medicare Part B drug reimbursement model.

The proposed changes — put forth by the Centers for Medicare and Medicaid Services (CMS) — would affect the ways in which doctors are reimbursed for the drugs they prescribe to patients covered by Medicare. Currently, Medicare reimburses the average sales price of the drug, plus an additional 6% of cost.

Debra Patt

Debra Patt

Under the new regulations, doctors would be reimbursed average sales price plus 2.5%, with an additional flat fee of $16.80 per drug per day.

The proposed changes are to be studied in a two-pronged fashion, with testing set to begin later this year. Medical practices will be randomly assigned to adopt the changes based on their zip code.

Several medical societies — including ASCO, ASH, the Community Oncology Alliance and the American College of Surgeons — have issued statements urging CMS to withdraw these proposed changes to drug reimbursements.

Opponents claim that the manner in which the proposal is set to be studied places patients and physicians at an unfair disadvantage, and that the medical care of older adults relying on Medicare may be adversely affected.

“This proposal represents the biggest change to Medicare drug reimbursement in years, and there are several aspects that are concerning to many,” Committee Chairman Joseph R. Pitts, R-Pa., said during the hearing. “The most concerning aspect of this proposal is that it came from unelected bureaucrats who made decisions behind closed doors affecting our seniors and their health care. These concerns over provider reimbursement … are so considerable that 242 bipartisan members of Congress wrote to the administration and asked that it be withdrawn.”

Clinicians’ concerns

Although several members of the committee made clear that they did not hold blanket oppositions to demonstration programs, they asserted that the changes put forth by CMS extended too far.

“The health and well-being of seniors is nothing to be experimented with,” Pitts said. “This rule could result in grave consequences for our seniors.”

Other committee members worried that the new model would hold negative consequences for smaller and rural medical practices.

“I have 19 counties in my district, and some of the more rural counties are quite concerned about this,” Rep. Marsha Blackburn, R-Tenn., said during the hearing. “The providers … fear that this might be the type of component that pushes them to the brink, and out of the business.”

Blackburn suggested that the planned implementation was designed to mirror a clinical trial, but without the requisite safeguards required by medical research.

“I understand that clinical trials are important,” Blackburn said. “In my district, we have a lot of physicians and researchers who participate in them. I have visited with some of them, and they are quite concerned about the way this is moving.”

Debra Patt, MD, MPH, MBA, vice president of Texas Oncology in Austin, medical director of The U.S. Oncology Network, and chair of ASCO’s Clinical Practice Committee, agreed, calling the changes an “unworkable experiment.”

“CMS has proposed an experiment that randomizes physicians by zip code into test and control groups,” Patt said during her testimony. “In my world, this is clinical research. Unlike the CMS experiment, however, patients have to volunteer their participation in a clinical trial. There is no opting out of this mandatory national experiment. There is no opting out for patients, no monitoring for adverse events, and no ability to evaluate impact on quality and outcomes — the central requirements of any ethical research.”

The idea that changes to the reimbursement model would lower overall costs is flawed, according to Patt.

 “I would like to focus on how few opportunities there are to select therapeutic alternatives on drug price,” Patt said. “Ten years ago, we knew that patients with breast cancer that was metastatic to the brain lived an average of a few weeks. One of my patients had the option of a different treatment, and was given a novel and targeted therapy that we knew would change her course dramatically. She continues to receive targeted treatments today and continues to live a good life. These targeted treatments are expensive, but the alternatives would lead to an early death. Premature death is not a treatment alternative.”

Michael C. Schweitz, MD, FACP, MACR, national advocacy chair for the Coalition of State Rheumatology Organizations and a Healio Rheumatology Peer Perspective Board member, agreed that clinical decision-making is not influenced by cost.

“I take issue with the underlying premise of the rule, which is that clinical decision-making is driven by the opportunity to maximize revenue,” Schweitz said. “Data supporting this premise are nonexistent. In fact, a recent report looked at utilization of rheumatoid arthritis medications and found that physicians are not routinely prescribing the most expensive product. In 2014, the most expensive product was one of the least prescribed.”

The new rule could force smaller firms out of practice.

“The current 6% add-on already results in practices without volume purchasing power being underwater on several products,” Schweitz said. “A reduction from 6% to 2.5%, plus a nominal flat fee, will result in unsustainable cuts, especially since CMS did not incorporate the impact of sequestration in its calculations. … Rheumatology is a specialty of small practices. In my state of Florida, there are only a few practices with seven or more doctors. Practices of one or two rheumatologists do not have the purchasing power to buy at average sales price.”

Voices in favor

Several committee members and witnesses voiced support for the proposed changes, which they hoped would alleviate the ever-growing cost of medication in the United States.

“I strongly believe that lowering drug prices is imperative to the sustainability of our health care system, and especially to our public insurance programs like Medicare,” Rep. Janice Schakowsky, D-Ill., said during the hearing. “I support the CMS proposal, and luckily I am not alone. Many organizations that represent beneficiaries — including AARP, Aetna, the AFL-CIO, the Alliance for Retired Americans, AFSCME, the American Federation of Teachers, the Center for American Progress, the Center for Medicare Advocacy, Doctors for America, Kaiser Permanente, the Medicare Rights Center, and the National Education Association, among others — support this proposal.”

Heather Block, a patient advocate and a patient with metastatic breast cancer, stated that she believed the rule changes would bear down to more manageable costs for patients.

“While drugs are keeping me alive, I am also going through my savings at an alarming rate,” Block said during her testimony. “I spend a ridiculous amount of time and energy trying to cut costs and draft budgets based on living with less money and rising drug costs.”

Although Block is aged younger than 65 years, she qualified for Medicare coverage under a provision that allows individuals who are unable to work and receive Social Security disability income to enroll.

“My drugs are billed through Part B, but my relief was short-lived when I realized my drugs were exceedingly expensive, and that I am always on the hook for my 20% copay,” Block said. “This means that I am responsible for paying 20% of every cancer drug I receive, and this is why I was pleased to hear about the demonstration. It is a way for the government to begin to shift pricing incrementally based on what they learn. I want to know that the drugs being used to treat my cancer are the ones that will do the best job, and not just the ones that will make my doctor money.”

The changes to the model will not change how medication is prescribed, according to Joe Baker, president of the Medicare Rights Center, which supports the changes.

“The model seeks to realign perverse payment incentives while ensuring that doctors can continue to prescribe the medication best suited to the individual needs of patients,” Baker said during his testimony. “The model brings innovative, value-based strategies being explored in private markets to the Medicare Program.”

These changes may positively affect Medicare beneficiaries who lack supplemental insurance coverage.

“Estimates suggest that between 10% and 14% of recipients only have original Medicare,” Baker said. “These beneficiaries are exposed to catastrophic costs, which can reach as high as over $100,000. Calls to withdraw the Part B payment model fail to acknowledge the very real and unrelenting beneficiary access challenges that exist under the current payment model, not merely hypothetical ones.” – by Cameron Kelsall

Disclosure: HemOnc Today could not confirm the speakers’ relevant financial disclosures.