[Senate Hearing 114-666]
[From the U.S. Government Publishing Office]
S. Hrg. 114-666
EXAMINING THE PROPOSED MEDICARE
PART B DRUG DEMONSTRATION
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
JUNE 28, 2016
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
______
U.S. GOVERNMENT PUBLISHING OFFICE
26-393 PDF WASHINGTON : 2017
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
Washington, DC 20402-0001
COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHUCK GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming MARIA CANTWELL, Washington
JOHN CORNYN, Texas BILL NELSON, Florida
JOHN THUNE, South Dakota ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina THOMAS R. CARPER, Delaware
JOHNNY ISAKSON, Georgia BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania MICHAEL F. BENNET, Colorado
DANIEL COATS, Indiana ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina
Chris Campbell, Staff Director
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
----------
OPENING STATEMENTS
Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman,
Committee on Finance........................................... 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 3
ADMINISTRATION WITNESS
Conway, Patrick, M.D., M.Sc., Acting Principal Deputy
Administrator, Deputy Administrator for Innovation and Quality,
and Chief Medical Officer, Centers for Medicare and Medicaid
Services, Department of Health and Human Services, Baltimore,
MD............................................................. 5
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Conway, Patrick, M.D., M.Sc.:
Testimony.................................................... 5
Prepared statement........................................... 31
Responses to questions from committee members................ 34
Hatch, Hon. Orrin G.:
Opening statement............................................ 1
Prepared statement with attachment........................... 69
Roberts, Hon. Pat:
Letter to Chairman Hatch and Ranking Member Wyden from the
AIDS Institute et al., June 28, 2016....................... 77
Wyden, Hon. Ron:
Opening statement............................................ 3
Prepared statement........................................... 79
Communications
Academy of Managed Care Pharmacy................................. 81
American Society of Health-System Pharmacists (ASHP)............. 83
American Society of Retina Specialists (ASRS).................... 85
BioRx, LLC....................................................... 90
The Center for Fiscal Equity..................................... 94
National Association of Chain Drug Stores (NACDS)................ 96
National Rural Health Association (NRHA)......................... 99
(iii)
EXAMINING THE PROPOSED MEDICARE
PART B DRUG DEMONSTRATION
----------
TUESDAY, JUNE 28, 2016
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10:10
a.m., in room SD-215, Dirksen Senate Office Building, Hon.
Orrin G. Hatch (chairman of the committee) presiding.
Present: Senators Grassley, Crapo, Roberts, Thune, Burr,
Portman, Toomey, Coats, Heller, Scott, Wyden, Stabenow,
Cantwell, Menendez, Carper, Cardin, Brown, Bennet, Casey, and
Warner.
Also present: Republican Staff: Brett Baker, Health Policy
Advisor; Chris Campbell, Staff Director; and Jay Khosla, Chief
Health Counsel and Policy Director. Democratic Staff: Elizabeth
Jurinka, Chief Health Advisor; Joshua Sheinkman, Staff
Director; and Beth Vrable, Senior Health Counsel.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
UTAH, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. All right, the committee will come to order.
I would like to welcome everyone to this morning's hearing
that will allow the committee to examine the Obama
administration's proposed Medicare Part B demonstration. I
would particularly like to thank Dr. Patrick Conway from the
Centers for Medicare and Medicaid Services for testifying.
Today's topic is very important. The proposed CMS
demonstration project would radically alter the ways in which
Medicare pays for drugs and biologics, treatments that
physicians prescribe and administer to patients in the
outpatient settings that are covered under Part B.
Typically, these are drugs and treatments that are given in
a physician's office or hospital. They are used to treat
vulnerable beneficiaries who have serious medical conditions
such as cancer, macular degeneration, rheumatoid arthritis,
neurological disorders, primary immunodeficiency diseases, and
a number of rare illnesses.
From the day CMS made their proposed demonstration public
this past March, I have made my opinion very clear. I believe
this experiment is ill-conceived and likely to harm
beneficiaries. It is an overreach on the part of CMS that, in
my opinion, goes beyond the agency's statutory authority,
extends nationwide, and requires all Medicare Part B providers
to participate.
And as we all know, the experiment would change the Part B
payment system in two phases, both of which are very troubling,
and that is putting it kindly.
Given these inherent concerns, I would like to hear an
explanation from CMS as to why they believe their new payment
changes will not harm Medicare beneficiaries. So far what they
have given us lacks any such explanation or justification.
And that is not all that is missing from the elements of
the demonstration that have been made public. Indeed, this
proposal is troubling--and again, I am being kind with that
description--not only for what is in it, but what has been left
out.
For example, with its proposal, CMS has not indicated the
conditions for which the agency believes a physician has the
option to prescribe a high- or low-cost drug that has the same
patient benefit. In addition, CMS has not provided an analysis
of how many physicians, including those in small and rural
practices, would lose money purchasing needed drugs. They have
not provided an analysis of how often physicians would have to
refer beneficiaries to the less-convenient, more costly
hospital outpatient setting.
And CMS has not yet indicated how it will assess the impact
on beneficiary access and quality, both during the course of
the demonstration and the formal evaluation of it.
Not surprisingly, the proposed experiment has been widely
condemned by experts and stakeholders. Almost immediately after
the proposed demonstration was released, we received a letter
from over 300 stakeholder organizations asking for our help in
getting CMS to withdraw the proposal.
Now, these organizations included the Arthritis Foundation,
the Caregiver Action Network, the Immune Deficiency Foundation,
the Lung Cancer Alliance, and the National Alliance for Mental
Illness.
The organizations that have reached out with concerns about
this proposal represent patients who suffer from the diseases
treated by these drugs, including cancer, arthritis, mental
illness, and HIV. They represent the physicians who treat the
patients with these devastating conditions, including
oncologists, rheumatologists, and ophthalmologists.
I have also heard from my constituents in Utah. Many
Utahans feel that the proposed demonstration would deprive them
of the drugs that best treat their conditions and require them
to have to travel great distances and incur significant
additional expenses to receive the needed care.
Obviously, Utah is not alone here. Patients and providers
from virtually every State have weighed in on this matter,
which prompted all of the Republican members of the Finance
Committee to send a letter to Acting CMS Administrator Slavitt
urging the withdrawal of the proposal.
That is right. Fourteen Senators from the only Senate
committee with oversight jurisdiction sent a detailed and
thoughtful letter to CMS about their proposal. And how did the
agency respond? We received what essentially amounts to a form
letter thanking the committee members for sharing their views
and noting that CMS will consider all public comments.
It could not have been more dismissive in its tone. That is
the level of attention and seriousness CMS ascribes to
oversight from Congress. And sadly, this is not an isolated
incident. For 7 years now, the entire Obama administration has
patronized, stonewalled, or flat-out ignored oversight efforts
on the part of Finance Committee Republicans.
Now, there are countless examples. Sometimes the agencies
show disregard for the law, like when they refused to provide
any meaningful response to numerous inquiries about illegal
reinsurance payments issued under the so-called Affordable Care
Act. And other times they discount our oversight role entirely,
like when they denied Finance Committee staff access to last
week's Medicare and Social Security Trustees reports until the
press conference putting the administration's own misleading
spin on the reports was well under way.
Now, I have on numerous occasions during hearings like this
and elsewhere, expressed my hope that the administration as a
whole will change its ways and become more transparent. I have
asked countless nominees that have come before the committee to
commit to being responsive to Senators' inquiries. Yet over 7
years, this unprecedented level of disregard has continued
unabated.
Given the short time left with this administration, I will
not renew these calls for more cooperation and responsiveness
today. I feel quite certain that there are no new improvements
on the immediate horizon.
However, given that we have a high-ranking administration
official before us today, I hope that at the very least we can
finally get some straight answers to the many questions raised
by CMS's Part B drug proposal.
I note that our witness, Dr. Conway, stated in an early May
interview on the proposed demonstration that CMS, quote, ``will
interact with Congress and take feedback and make adjustments
as necessary.''
And I do hope that our conversation today will be more
consistent with that sentiment than the dismissive response
letter shortly after that statement was made. The Senators on
this committee and, more importantly, the constituents we
represent, deserve at least that much.
[The prepared statement of Chairman Hatch appears in the
appendix.]
The Chairman. With that, I will turn to Senator Wyden for
his opening remarks.
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman.
Mr. Chairman and colleagues, what underlies this debate is,
we are entering an era where there are going to be miracle
treatments and there are going to be cures. There are drugs on
the market and close on the horizon that were science fiction
not very long ago.
The question for me, the foremost question, is whether or
not the American people are going to be able to afford these
medicines. With business as usual, too many of these treatments
are going to clobber too many family budgets and threaten
health programs across the country.
And that was one of the big takeaways, colleagues, from the
18-month investigation Senator Grassley and I conducted on a
bipartisan basis into the rollout of one blockbuster drug. It
was a drug that treats Hepatitis C and had a list price of
$1,000 a pill. And I think that this is going to be the
pattern, colleagues, for years and years to come, absent
reform: lots of cures and a big, big question mark when it
comes to access and affordability.
Now, the Hepatitis C drug that Senator Grassley and I did
our bipartisan inquiry into is not the primary focus of today's
hearing. Today the committee is going to examine a
demonstration project set to begin in Medicare Part B, which,
of course, is the Medicare program that covers outpatient care.
Part B pays for a small share of the drugs many seniors are
prescribed, and the demonstration would affect the way those
drugs are paid for. The demonstration has brought to the
forefront additional major questions about how the country is
going to address the trend of escalating pharmaceutical prices.
The fact is, too many seniors are getting pounded today by
prescription drug bills. In my view, there is an enormous
amount of work that has to be done to guarantee that seniors
have affordable access to the medications they need.
In Medicare Part B, seniors are often hit especially hard
because their share of drug costs is a co-insurance instead of
a co-pay. That means rather than a flat, manageable fee, some
older people face a huge burden, stuck paying a percentage of a
drug's total cost.
I look at that burden the same way I look at the rising
out-of-pocket costs for older people in Medicare Part D. So for
Part D, I have proposed legislation that would establish an
out-of-pocket cap to help protect older people. And in my view,
this committee ought to take a close look at ways to make sure
that seniors do not get pounded under Part B as well.
There are important questions to be addressed with respect
to this particular demonstration project. That is why all of
the Finance Committee Democrats and I sent a letter in April to
Andy Slavitt, the Acting Administrator of the Centers for
Medicare and Medicaid Services, outlining the key concerns we
had about the impact the project is going to have on patients.
At their core, our concerns are about making sure that
older people who are especially vulnerable have access to
lifesaving medications. Protecting access is especially
important in rural America, where seniors today so often face
fewer choices and lower quality of care.
It is extremely important as well that the project not
result in patients being told that they have to go get
treatment at the hospital, where treatment is often more costly
and less convenient.
Finally, our letter said that this demonstration project
has to be in sync with the effort Medicare is making to move
towards paying for treatment based on value, rather than
volume. When you focus on the value and the efficiency of care,
there is the potential to raise the quality of care for older
people while saving money at the same time.
So, Mr. Chairman and colleagues, I hope the committee will
examine these issues carefully as it looks at the Medicare Part
B demonstration.
I also want to thank Dr. Conway for joining the committee
here as well. We look forward to his testimony and members
having the chance to ask questions.
Thank you.
The Chairman. Thank you, Senator.
[The prepared statement of Senator Wyden appears in the
appendix.]
The Chairman. Now I would like to take a few minutes to
introduce today's witness.
Dr. Patrick Conway is here on behalf of the Centers for
Medicare and Medicaid Services. Dr. Conway holds a number of
high-ranking titles at CMS. In those positions, he has
responsibility for overseeing health programs that provide
services to over 100 million people.
Two of his roles, overseeing the CMS Innovation Center and
serving as the Chief Medical Officer, make him well-suited to
testify on the agency's proposed Part B drug demonstration.
Prior to coming to CMS, Dr. Conway was the director of
hospital medicine and associate professor at Cincinnati
Children's Hospital. Dr. Conway earned his medical degree from
Baylor College of Medicine and completed his pediatric
residency at Harvard Medical School's Children's Hospital,
Boston.
I want to thank you, Dr. Conway, for taking the time to
appear here today. And we will be glad to take your statement
at this time.
STATEMENT OF PATRICK CONWAY, M.D., M.Sc., ACTING PRINCIPAL
DEPUTY ADMINISTRATOR, DEPUTY ADMINISTRATOR FOR INNOVATION AND
QUALITY, AND CHIEF MEDICAL OFFICER, CENTERS FOR MEDICARE AND
MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES,
BALTIMORE, MD
Dr. Conway. Thank you, sir.
Chairman Hatch, Ranking Member Wyden, and members of the
committee, thank you for the invitation to discuss the Centers
for Medicare and Medicaid Services' initiative to improve how
Medicare pays for Part B drugs to support physicians and other
clinicians in delivering higher-quality care to beneficiaries
in the Medicare program.
We very much value the input and feedback that we receive
from Congress and members of this committee, and we are
carefully reviewing the comments we have received from you and
the public.
Part B drug spending has risen significantly over time, and
CMS has heard from many stakeholders about concerns about
access to and the cost and value of prescription drugs. To
address these concerns, CMS issued a proposed rule to test a
new model, with the aim of improving patient care and the value
of Medicare drug spending.
This proposal aligns with the CMS Innovation Center's
statutory goal to test innovative payment and service delivery
models that reduce expenditures while preserving or enhancing
the quality of care. The proposal is part of the
administration's broader strategy to encourage better care,
smarter spending, and healthier people by paying for what works
and finding new ways to coordinate and integrate care to
improve quality.
CMS values public input and comments and looks forward to
continuing to work with stakeholders through the rulemaking
process in an ongoing manner to maximize the value and learning
from the proposed model.
We have received feedback from a wide range of stakeholders
on several issues, including the size of the model, patient
access in small practices in rural areas, and the importance of
patient input. We are reviewing all comments closely to
determine whether adjustments are needed.
Our goal is to be responsive to the public comments and
input from Congress. Under the current system, many Part B
drugs, including drugs furnished in the hospital outpatient
setting, are paid for based on the Average Sales Price, or ASP,
plus a 6-percent add-on payment.
CMS's proposed rule outlines a new Part B drug payment
model that would test whether alternative drug payment designs
may improve how Medicare Part B pays for prescription drugs and
support physicians and other clinicians in delivering higher-
quality care.
Physicians can often choose among several drugs to treat a
patient, and the current Part B drug payment methodology can
create disincentives for doctors to select lower-cost drugs,
even when these drugs are as good as or better for patients,
based on the evidence.
Among the approaches to be tested are the elimination of
certain incentives that work against the selection of high-
performing drugs, as well as the creation of positive
incentives for the selection of higher-performing drugs,
including reducing or eliminating patient cost-sharing to
improve patients' access and use of effective drugs.
In the first phase of the model, CMS would test whether
changing the current 6-percent add-on payment to 2.5 percent
plus a flat fee of $16.80 per drug per day changes prescribing
incentives and leads to improved quality and value. The flat
fee is calculated such that it is budget-neutral in the
aggregate.
The second phase focuses directly on better outcomes and
clinical indicators to improve the value of drug payments by
utilizing value-based pricing tools currently employed by
private health plans, pharmacy benefit managers, hospitals, and
other entities that manage health benefits and drug utilization
successfully.
Ensuring beneficiary access to high-quality care and
treatment is always at the forefront of CMS's work. Under the
proposed model, beneficiaries would still have access to the
same drugs and would retain complete freedom of choice of
doctors, hospitals, and other providers or suppliers.
The proposed model would not affect drug coverage or any
other Medicare benefits. It also includes a number of
beneficiary protections. For example, the proposed model would
include a new pre-appeals exceptions process, in addition to
the standard appeals processes, that would allow the
beneficiary, provider, or supplier to explain why Medicare's
value-based pricing policy is not appropriate for a given
beneficiary and to seek an exception from the model's value-
based pricing approach under phase II.
In addition, CMS would closely monitor beneficiary access
and health outcomes during the model. This would help ensure
that Medicare beneficiaries will continue to have access to
Part B drugs under the model.
Millions of Americans rely on medications to manage chronic
illnesses and to treat acute conditions. CMS is committed to
ensuring that its beneficiaries have and maintain access to the
high-quality treatments they need while pursuing better drug
value.
Moving forward, HHS and CMS are committed to listening to
and working together with Congress and other stakeholders to
advance ideas that improve access, affordability, and
innovations so all Americans have access to the breakthroughs
ahead.
There are no easy answers to these multi-faceted
challenges, but there is a significant benefit to all of us
working together to find a solution.
I appreciate the committee's interest and look forward to
answering your questions. Thank you for having me.
[The prepared statement of Dr. Conway appears in the
appendix.]
The Chairman. Well, thank you, Doctor. I appreciate you
appearing before the committee. And perhaps you can be of great
help to us here today to understand some of these things.
You know, some people feel that CMS intends to use the
Innovation Center to undermine the successful Part D
prescription drug program, perhaps by unilaterally waiving the
provision that prevents the Federal Government from negotiating
drug prices. Now clearly, such an undertaking would be a
massive overreach beyond CMS's statutory authority. However, as
we have seen on a number of occasions, the Obama administration
does not always feel bound by the clear limits that are
provided in the statute.
That being the case, I take the specific speculation about
Part D very seriously. Therefore, I feel compelled to ask, is
the Innovation Center working on any project or initiative that
would allow the government to negotiate prices or on any other
Part D change related to drug prices? And, as you are the head
of the Innovation Center, I would like to have a direct answer
on that, if I could.
Dr. Conway. We have no Part D proposals at this time. We
are constantly listening to and engaging with stakeholders
across the health-care system. So we have payers,
manufacturers, providers, others that bring ideas to us across
health care, including in the drug space.
We view it as our role to engage with those stakeholders,
to listen to ideas, whether they come from Congress or
providers or payers or others, so we engage deeply on our
statutory mission, which is to engage in testing payment and
service delivery models with a high likelihood of improving
quality and maintaining or lessening expenditures.
The Chairman. Well, Dr. Conway, my stated position, that
CMS needs to withdraw this proposed Part B rule, is shared by
many. Once again, over 300 stakeholder groups weighed in and
called for the proposal to be withdrawn almost immediately upon
its release.
And without objection, the letter I referenced, signed by
over 300 patient provider organizations, will be included in
this record.
[The letter appears in the appendix on p. 71.]
The Chairman. In addition to these stakeholders, nearly 300
members of Congress, Republicans and Democrats alike, have
urged CMS to withdraw the proposal.
Many of the 1,300 public comments that CMS received pointed
out serious flaws. Considering all this backlash, I would say
it is pretty obvious that if CMS moves forward with this
experiment, it would be doing so against the interests and
judgment of the vast majority of experts and policymakers in
this field.
Now, are you willing to acknowledge that there is
widespread opposition and commit to withdraw this proposed
rule?
Dr. Conway. So we take the input from Congress and from
stakeholders across the health system very seriously. That is
why we proceeded through the rulemaking process, which is the
most public and transparent of processes that we can engage in.
We are reviewing the comments now and plan to make
adjustments in the final rule. Currently we have over 1,300
public comments. We want to review those closely, carefully,
and thoroughly so that we can be as responsive and thoughtful
as possible to the public input and the input from Congress.
The Chairman. Well, it seems that with this rule, CMS is
operating under a premise that physicians are knowingly and
purposefully prescribing higher-cost drugs when a lower-cost
equivalent drug is available.
Now, the agency's view is apparently that most physicians'
clinical decisions are driven by maximizing profit instead of
patient welfare. It seems to me that this is overly simplistic.
Now, given that you are a doctor, can you tell us the
specific type of prescribing changes that physicians are
expected to make under the phase I payment scheme? And please,
if you will, provide specific conditions and drugs, if you
could do that for us.
Dr. Conway. Yes. So I am a practicing physician. I think
the vast majority of physicians make prescribing decisions
based on patient interest. And I want to say clearly I would
want every physician and clinician to prescribe the medicine
needed for their patient.
We believe this proposal allows that to happen, and we are
looking closely at whether adjustments are needed, because
access to medications, as you alluded to, is the first priority
for CMS and for myself personally.
In terms of the reason we proposed this test, the current
system can have disincentives for physicians who may use lower-
cost medication. So, for example, if a physician prescribes a
$10 medication, the current 6-percent add-on is only 60 cents,
and that may not fully cover the cost of acquiring and
administering that medication.
And so we are proposing this test to test a proposal that
we think would remove some of the current disincentives in the
system to allow physicians, clinicians, to make prescribing
decisions without regard to financial incentives. And we
clearly want physicians and clinicians to prescribe the
medicines that their patients need and for patients to receive
those medicines.
The Chairman. Senator Wyden?
Senator Wyden. Thank you, Mr. Chairman.
Dr. Conway, let us go right to the question of prescription
drug prices, because for so many older people, they just feel
like they are getting hit by a wrecking ball.
Medicare Part B drug spending more than doubled between
2005 and 2015, increasing from $9.4 billion in 2005 to $22
billion in 2015. Now Medicare has, as you know, begun to move
toward paying for quality and value, rather than the volume of
services. That has been something that has been recommended for
ages, and finally it is under way. But so far, prescription
drugs have largely been left out of that equation, that move
towards paying for value rather than volume.
I have been working on these issues since the days when I
was co-director of the Oregon Gray Panthers, and I think it is
appropriate to ask now, if the issue of prescription drug
prices is not addressed, aren't the costs going to become
increasingly unaffordable for older people, and really put at
risk the Medicare guarantee? Because that is what Medicare is:
it is a guarantee.
Will these costs not put at risk the Medicare guarantee for
future generations?
Dr. Conway. Thank you, Senator Wyden. You correctly note
the growth in Part B drug spending, and it has been over 8-
percent growth, year on year, since 2007.
I share your concern on access to medications. The current
environment, as you noted, with co-insurance and the potential
for 20-percent co-insurance, as you can imagine, for seniors on
a fixed income--20 percent of a $10,000 drug or whatever the
cost might be--can be a substantial financial hardship and can
limit access to medications.
We also did propose this test because we had not to date
had a proposal directly in the drug space--paying for value. We
do think paying for value is important, as you said, across the
health system, including in the drug space. And so hence, we
made this proposal.
We have other proposals that include drugs as a part of the
proposal, but we do think paying for value in drugs is
important, similar to how it is important across our health
system, whether it is hospitals, physicians, et cetera.
Senator Wyden. Does this threaten the sustainability of the
program for future generations, absent some reforms?
Dr. Conway. So the costs of the Medicare program have the
potential to threaten the program, and drugs are a substantial
part of that cost.
And the reason I do this job, quite frankly, is I care
deeply about the 55-plus million Americans in Medicare,
including my own mother, and I want Medicare to be around for
my four children. And I think we have to make major positive
changes in delivery system reform for that to be the case.
Senator Wyden. Now, I appreciate the agency's interest in
looking at strategies to improve quality and value in all
aspects of the health system, including prescription drugs. But
one of the concerns that has been brought to members--certainly
members on our side--is, especially in a rural area, a small
rural area with not exactly a large practice, physicians can be
put in a position where the cost of the drugs is higher than
the Medicare payment.
So what we are getting told on our side is that it would
not be possible to afford to provide the medications to the
patients.
I would be interested in your response to this, and also
if, in responding, you could tell us what happens if that is
the case, where the provider sends their patient to a hospital
outpatient program, which means you have then higher overall
costs for both the older people and for Medicare. Tell me your
response to that.
Because I know members on our side have heard that and have
brought it up; we have all talked about it. I assume colleagues
on the other side have as well. Your reaction to that?
Dr. Conway. Thank you for the question.
So we propose to include rural providers and small
practices. However, we noted in the proposal concern about some
of these issues about making sure that we have access both to
medications and treatment while we propose these changes.
We will look closely at the public comments and determine
whether any adjustments are needed for rural practices or small
practices. We are doing that review now, and the type of things
we would look at include maintaining access to medications.
In addition, we proposed a monitoring plan similar to what
we have used in other programs, which can include real-time
claims data monitoring. But we are monitoring for access,
patient outcomes, and shifts in site of service.
So we would monitor that, to see if we needed to make
adjustments, both at the macro level in the policy, if you
will, but also with an exceptions process where we could make
adjustments down to the individual patient or practice level,
if needed.
Senator Wyden. Thank you, Mr. Chairman.
The Chairman. Senator Grassley?
Senator Grassley. I only have two questions, but before I
ask those, Dr. Conway, I want to thank you for coming today.
And as you have heard, there are many people concerned about
this ill-
conceived experiment. Additionally, the administration has not
been responsive to congressional inquiries.
In addition to the letter signed by every Republican on the
committee, I sent my own letter to Secretary Burwell April
29th. I have not yet received an adequate response.
In my letter, I asked for clarification on whether the
proposal constitutes human subject research. I hope that you
would expedite an answer to that.
One question among the many concerns I have over this
proposal is the result it will have on practices that are
small, particularly in rural areas like most of my State of
Iowa, or for those patients with rare diseases.
First question: what safeguards does CMS have with regard
to treating patients served by smaller practices, those in
rural areas, and those with rare diseases?
Dr. Conway. Yes, Senator, I share your commitment to small
and rural practices. I grew up in a small town in Texas with a
two-person family practice caring for our family.
We did propose to include rural and small practices, but we
also noted in the proposed rule that we were concerned and
focused on the access issues and that we would address access
issues, if needed. So we sought comment about whether any
adjustments or exclusions or other changes were needed either
for small or rural practices. So we will assess the comments
and determine whether any adjustments are needed.
Senator Grassley. Number two, we have heard from a number
of groups that many patients' and providers' concerns in the
proposal could have been avoided if patients had been included
in the design of the demo at the front end.
What plans have you put in place to involve small practices
and rural and rare disease stakeholders in the future?
Dr. Conway. Yes. So we proposed a process for phase II that
would include input at multiple points, including patient
input. We are looking at the comments now to determine if any
adjustments or enhancements are needed for that process.
To give you a tangible example, I personally met with 20-
plus patient and consumer groups, and I do that routinely. That
was about 2 weeks ago. They gave input on this proposal and
things across the Innovation Center.
So that patient-consumer input is probably the most
critical input we get into these models, because our focus
needs to be on the beneficiary, on the patient, on the
consumer, at all times.
Senator Grassley. Mr. Chairman, I will yield back my time.
Thank you, Dr. Conway.
The Chairman. Senator Stabenow?
Senator Stabenow. Well, thank you very much, Mr. Chairman
and Ranking Member. And, Dr. Conway, we appreciate your time,
and we appreciate your leadership on so many issues that affect
all of us and our constituents. I just want to underscore what
has been talked about first and our ranking member talking
about our letter that a number of us sent to you.
I am concerned that the scope of the current proposal seems
broader than is typical of a demonstration project, and just to
underscore the concerns that have been raised about rural
communities, I also share those.
And I understand the proposal is intended to drive
providers toward prescribing more generic drugs in order to
produce cost savings, and I fully support that objective.
But I think, as we look at those savings, there are other
questions that I have about things that we should be focused on
more in order to be able to do that. And so that leads me
basically to questions in a broader sense.
First of all, the Medicare trustees report released last
week--I just want to underscore, I think for all of us--shows
that once again Part B premiums could be impacted by new
enrollees and those who are dual-eligibles, as we call them,
those who both qualify for Medicare and Medicaid, a situation
we will learn more about this fall as it relates to the Social
Security cost-of-living adjustments' impact on Part B.
And so, the chairman and our ranking member, I know, will
follow this closely. I am very concerned about what could
happen in terms of seniors and unintended increases in premiums
related to them. And so I just want to get that out there now,
that this is something we need to be very involved in.
And then another issue raised by the trustees report is
really the big issue, which is Part D, which has been talked
about. But as you noted in your testimony, in 2015 CMS and
seniors, through cost-sharing, paid $22 billion in Part B drugs
and, according to the trustees report, nearly $89.5 billion in
Part D.
So if we are talking about the elephant in the room, the
area where we should be most focused is on Part D in terms of
the costs for seniors. Part D spending increased last year 8.3
percent, the year before, 8.6 percent. Part B, which we are
talking about today, increased 2.4 percent.
So when we are talking about 3\1/2\ times more growth, this
is, I think, the area we need to be focused on.
So, Dr. Conway, if the goal is to drive down the
prescription drug costs for seniors, for beneficiaries on the
Medicare program in general, are we focusing on the right part
when we say Part B, or should we not be paying more attention
to Part D costs?
Dr. Conway. Yes. So in terms of Part D, in the President's
budget there are a number of proposals for Congress to consider
in the Part D space. We are open to ideas, including in Part D,
at all times.
We have had manufacturers come to us with ideas around Part
D and value-based arrangements in Part D. Similarly, we have
had providers--for example, in our next-generation ACO
program--talk about how they want to bring in arrangements that
are voluntary between the provider and Part D plans for a new
payment model.
So we are open to ideas from Congress, from you, Senator,
from stakeholders across the health system, on ideas of what we
should be doing in the Part D space as well.
Senator Stabenow. Thank you. And just to underscore what
our ranking member said--and he has been such a champion on
these issues--I have heard from three constituents in the last
few months that have had Hepatitis C. They were not sick enough
to get their insurance company to pay for the expensive drug
treatment, but they had insurance, so they did not qualify for
charity care.
Now, in one case we were able to help someone be able to
get the medication that he needed, frankly, to cure his
disease. But in the other two instances, that has not happened
yet, and it is not a very good system when somebody has to call
their U.S. Senator to intervene for them to get the medicine
that they need to be able to save their life.
And so this is a huge, huge issue, whether it is Medicare,
Medicaid, private insurance. We have to do much better. And I
hope we will be doing actually a hearing on Part D where the
focus is on the costs and the areas with which I think seniors
are most concerned.
So thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Roberts?
Senator Roberts. Yes, thank you, Mr. Chairman.
I would like to ask unanimous consent that a letter here
from over 20 patient groups--including the National Alliance on
Mental Illness, the Arthritis Foundation, the Lupus Foundation
of America, Veterans Health Council, and the AIDS Institute--to
the Finance Committee, highlighting concerns in opposition to
the demonstration project, be included in the record.
The Chairman. All right. Without objection.
[The letter appears in the appendix on p. 77.]
Senator Roberts. When this committee was debating the
Affordable Care Act, I was concerned about several provisions
that I believed would decrease individual choice and open the
door to government rationing.
There were four rationing bodies created by the Affordable
Care Act. CMMI is one of those creations. And we have before us
a proposed demonstration project or test, as the agency's press
release called it, which could disrupt care from some of
Medicare's most vulnerable patients.
By the way, Dr. Conway, thank you for being here today.
I want to first share with you some comments and questions
from a couple of constituents in Kansas. Eileen of Overland
Park suffers from hypogammaglobulinemia and lupus. She wrote to
me asking, ``Is anyone at CMS looking at the possible effect of
such a demonstration on the people it will impact? Do any of
them care that good, honest Americans will die without access
to these treatments, or are they merely trying to save money by
cutting costs? Their proposed actions will at least cause a
degraded overall health outlook for many rheumatology,
arthritis, and other patients and will certainly sign the death
warrant for many patients like me.''
Another constituent, Bradley from Wichita, wrote, ``The CMS
experiment is an intrusion on the close relationship our
doctors have with patients and their clinical decision-making.
This experiment will backfire, costing patients and taxpayers
even more for cancer care.''
Now, according to the statute, CMMI is to test innovative
payment and service delivery models to reduce program
expenditures while preserving or enhancing the quality of care.
That is where I think we are running smack into trouble.
How are you going to ensure that beneficiaries do not have
trouble accessing appropriate and timely treatments in the
setting they prefer? I give the example of a patient going to a
rural oncology doctor in a rural area, sent to a hospital about
100 miles away.
Is there any data indicating these proposed payment changes
will improve quality of care or patient outcomes?
Dr. Conway. Yes. So first, the goal of the Innovation
Center is to improve quality, as you said, or maintain quality.
And I will say--and this is what I have been doing for 20-plus
years, both in the public and private sector--the paramount
importance is improving quality and better patient outcomes. It
also, as you said, is to maintain or reduce expenditures.
In this specific proposal, we are proposing a value-based
framework in phase II which, from the private sector, from
private payers, from pharmacy benefit managers, from providers,
has been demonstrated to focus on paying for value in
medications.
We are proposing to test that in Medicare Part B, and we
believe it can maintain or improve quality. And that is our
focus on the quality side of the equation.
Senator Roberts. Well, on that issue--and pardon me for
interrupting, but I have very limited time. Under the ACA, the
Secretary is prohibited from using comparative effectiveness
research findings in determining Medicare coverage.
However, in phase II, CMS plans to test paying for a drug
based on how effectively it treats different conditions. Does
CMMI believe it has the authority to waive this prohibition, or
are you doing what you should not be doing?
Dr. Conway. So in terms of the CMMI, or the Innovation
Center, we are proposing to pay for value, which can be things
like risk-based sharing arrangements based on outcomes. So it
is consistent with the statutory authority to test new payment
and service delivery models.
I would highlight on CMMI broadly, we have thousands of
providers in every State in the Nation engaged in delivery
system reform. We have millions of patients who have received,
in many instances demonstrated by independent evaluation
reports, improved outcomes, improved care experience. And we
can certainly talk about that more; I know we are tight on
time.
Senator Roberts. Thank you, Doctor. I appreciate that. Let
me just say that you have said the public comment period for
the proposed rule concluded on May 9th, and CMS is carefully
considering all the public comments on this proposal that were
received by the end of the comment period. You said, ``We value
public input; we look forward to continuing to work with
stakeholders to maximize the value and learning from this
model.''
That is in direct conflict with the letter that we have
here from 32 patient groups that say there was a lack of
stakeholder input from the beginning of this process and many
of the problems with the demonstration could have been
mitigated had patient groups been involved on the front end.
I think what we have here is a failure to communicate. I
remain gravely concerned about how this demonstration, or test,
as the administration calls it, will impact patient access to
care.
I would like to reaffirm my request, as all on this side of
the aisle have requested, that CMS simply withdraw this
proposal.
Thank you, Mr. Chairman.
The Chairman. Well, thank you.
Senator Menendez is not here. Senator Portman, you are
next.
Senator Portman. Mr. Chairman, thanks very much. And I
appreciate you being here, Dr. Conway, and your service at
Cincinnati Children's where, as you know, my wife is very
involved: vice chair and incoming chair of one of our great
children's hospitals.
I wish I could say the same things about this proposal that
I can about Children's Hospital. I am concerned about it, and I
am concerned about it for some of the reasons that have been
stated already.
And I want to ask you about one specific, deep concern I
have about the specific proposal. First, it is called a
demonstration, and yet my understanding is it is going to cover
about 75 percent of Part B medications, which is hardly an
experiment. The control group is 25 percent.
And I was just looking through some of the correspondence
that I have gotten, and letters and e-mails from some of my
constituents. Tom Clark, his wife is a cancer patient. He is
very worried about her ability to get her cancer treatments.
Barb E. writes me a long letter about her immunodeficiency
disease and what is going to happen to her. She is applying for
disability now. She is already having a tough enough time. She
wanted to do her infusions at home; she fainted at home. She
has to go to her doctor. She has told her if she goes to the
hospital, it will be much more expensive and/or they will not
be able to afford to provide it. So just a lot of deep concerns
about it.
The specific concern that I am hearing from Ohio is more
about these community health centers and rural health centers.
We have lost over 50 practices, physicians' practices, as you
know, because you have been in Ohio, going to the big
hospitals. This will continue that and accelerate it.
So I think this proposal, which is, again, not a
demonstration--hardly, if it is 75-percent coverage--but is a
wholesale change, is going to really dislocate a lot of the
people I represent and cause a huge concern among some of these
smaller practices that are already having a tough time making
it in the current health-care environment with the Affordable
Care Act.
But let me ask you about something that concerns me about
your specific proposal that perhaps you are not aware of. I
assume if you were aware of it, you would not be doing it.
But this is a revenue-neutral proposal, and so you cut
reimbursement for some of these outpatient clinics we are
talking about, some of these rural providers and so on, who are
going to have a tough time making it. And you increase
reimbursement in other areas in order to make it revenue-
neutral.
One of the places where you increase reimbursement, as you
know, is with regard to prescription drugs that are used for
pain management. And specifically, you have a dramatic increase
in reimbursement incentives for the kinds of pain medication
that are addictive and that are causing much of the problem we
have now with this opioid epidemic that we have in Ohio and
around the country.
And let me give you some numbers on that, just in case you
are not aware of it. But on the expected impact on
interventional pain management medication, you are seeing an
increase of 46.9 percent and 33.7 percent versus a cut on
hematology/oncology drugs by minus .6 percent.
So it is a dramatic increase, and I think the whole basis
of your proposal is that, if the reimbursement is cut, there is
going to be less utilization, right? That is part of how you
are trying to save money.
And on the other hand, you are increasing reimbursement at
a time when I think there is a general sense in the
administration, certainly at HHS--because we have worked with
them very closely--that there is too much overprescribing of
certain kinds of pain medication that are addictive, that are
causing so much of the opiate crisis.
The Comprehensive Addiction Recovery Act, which has passed
the Senate by 94 to 1, deals with that overprescribing issue,
including enhanced drug monitoring. I think there is generally
a view at HHS that this is a problem. We work closely with
them. Senator Whitehouse and I are the coauthors of that
legislation. This seems to run counter to that.
So all the concerns you will hear from other colleagues, as
you did from Senator Stabenow, Senator Roberts, and others
about these providers, are of course concerns of mine in the
fact that this is not a demonstration.
But I have this bigger concern about the fact that under
this proposed rule, which you say is to drive the prescribing
of the most effective drugs, the reimbursement for these
particular kind of opioids, this increase, could have a very
negative impact and increase the problem with this opioid
epidemic.
For those who do not follow it closely, it is believed that
four out of the five heroin addicts who are overdosing today--
and 129 will lose their lives today, on average--four out of
five of them started on prescription drugs. And often it was
for pain medication; it was a prescription that they got
because of a procedure.
So could you briefly respond to that, Dr. Conway?
Dr. Conway. Yes. Three quick responses. One, on the scope,
we are evaluating the comments. We will determine whether
adjustments are needed. Two, on the practice issue, overall it
is budget-neutral, as you described. Overall, there is a slight
shift in the impact tables towards the physician/clinician
space.
A specific thank-you for your focus on the opioid epidemic.
As you know, for the first time in U.S. history we have ZIP
codes in the U.S. where life expectancy is going down, and a
large portion is driven by opioid issues. We will evaluate
comments, including in specific classes of drugs.
What you have named here is the fixed fee. Because the
fixed fee is $16.80 as proposed, there are some very low-cost
drugs, as you named, where the percentage increase looks large.
So we will have to look at that specifically and determine
across classes of drugs--and you named one--are any adjustments
needed in the proposals?
Senator Portman. Just briefly--and I am sorry, Mr.
Chairman--just one comment, if I could have an answer to this
maybe in writing.
Fentanyl is an example; it is a big problem right now
around the country. It is believed that it is causing more
overdoses in Ohio, by the way, than heroin is right now. It is
a synthetic form of heroin. As I look at this, it receives a
2,000-percent increase in reimbursement under this model,
Fentanyl alone.
So again, I am very concerned that we are going to
incentivize increased utilization, rather than the opposite.
Dr. Conway. And that is from the fixed fee, but we can give
you a formal answer to that. But it is from the $16 fixed fee.
Senator Portman. Thank you, Dr. Conway.
The Chairman. Senator Thune?
Senator Thune. Thank you, Mr. Chairman, and thank you, Dr.
Conway, for being here.
As many of my colleagues have pointed out, the lack of
consultation with stakeholders is striking, and it further
indicates not only the flawed nature of this demonstration, but
of CMMI as an entity.
But I want to draw attention to one section of CMMI's
authorizing statute which states that CMMI shall consult
representatives of relevant Federal agencies.
Now, we know at the Federal level there is HHS's Rural
Health Task Force, the HHS National Advisory Committee on Rural
Health and Human Services, and the newly created Rural Health
Council, all dedicated to rural health policy.
And I have also been told that CMS coordinates with HRSA's
Office of Rural Health Policy to, and I quote, ``ensure that
health care providers in rural America can function to the best
of their ability within the boundaries of our statutory and
regulatory frameworks.''
So the question I have is, can you inform us as to whether
CMMI, as it is statutorily required to do, consulted with these
various Federal entities dedicated to rural health policy to
ensure that what many of us believe is a flawed demonstration
program would not adversely impact care delivery in rural
areas?
Dr. Conway. Yes. CMMI works closely across the Federal
Government. This proposal went through the standard clearance
interaction processes. And you mentioned the CMS Rural Health
Policy Task Force that Mr. Slavitt and I established. We think
that that is critical for rural issues.
And as I noted earlier, we made a proposal in rural areas,
but we also noted that we were focused on access in rural areas
and access to medications. And so we are going to review the
public comments now and determine whether any adjustments are
needed in rural areas.
Senator Thune. Dr. Conway, could you detail the feedback
that you received from these entities that I mentioned after
this hearing, or provide the committee with any documents you
might have regarding that input?
Dr. Conway. Yes, we can provide input on the process.
Senator Thune. Good. Well, it would be nice to know if in
fact those entities that I mentioned were in fact consulted and
what their feedback consisted of.
Dr. Conway. I understand.
Senator Thune. All right. It is well-known that not all
drugs utilized for the treatment of cancer have cheaper
alternatives. So the question is, how will beneficiaries who
need these lifesaving treatments have better access to care
when their best treatment option may force their provider into
a situation where he or she can no longer afford to provide it?
Dr. Conway. So we would want, and I would want personally,
every doctor, including any cancer doctor, to prescribe the
medicine that their patient needs. We believe this proposal
maintains access through paying the Average Sales Price plus a
2.5-percent add-on fee plus a fixed fee.
However, these are the type of comments that we would look
closely at. If a physician or clinician could show that this is
an access concern, in the comment period where we consider
whether adjustments are needed, we would consider that. We also
proposed an exceptions process where we proposed practices for
patients where the proposal created an access issue, so we
could make adjustments.
Sorry to give a long answer on this one, but it is--I was
asked earlier. I personally get e-mails all the time today from
Medicare beneficiaries who cannot access their medications.
As a practicing physician, I care about that deeply, and I
want patients to have access to the right medicine. I want
every patient to get the medicine they need, and I want every
doctor to be able to prescribe the medicine they need for their
patients.
And so those are the type of comments that we will look
very closely at.
Senator Thune. Well, and I would just add too, if you have
a provider who no longer is able to afford the drug and you
have a senior who must receive treatment at a hospital's
outpatient department as a consequence of that, then how is
that increased cost-sharing going to impact that patient's
ability to continue to receive the treatment? I mean, that is--
--
Dr. Conway. So we will review first of all what comments
came in, but also if you think about a practice, I hope there
are people in the practices looking at it across the board, as
opposed to one individual drug. If reimbursement goes up for
some oncology products in terms of the ASP formula that was
proposed, that is obviously revenue to a practice.
So we are going to look at overall access to medications in
the aggregate from the policy and whether adjustments are
needed.
And then also in the specifics, MedPAC has also put out
information on this and what different ideas they had and
access numbers that they think are covered by different ASP
plus 2.5, 3.5 permutations. So we will look at information from
the public comments, most importantly, and also the public
domain.
Senator Thune. Mr. Chairman, my time has expired. Thank
you.
The Chairman. Well, thank you.
Senator Carper?
Senator Carper. Thanks, Mr. Chairman. Dr. Conway, very nice
to see you. Thank you for joining us today. Thanks for your
hard work and that of your staff.
You have a tough job. You have a tough job, but we
acknowledge that and admire the energy and intellect you bring
to a very tough challenge.
Dr. Conway. Thank you.
Senator Carper. Among the comments I have heard about the
demonstration is, why is it so big? You normally think of
demonstrations--we work with demonstrations across the Federal
Government. I am an old Governor, and we always think of the
States as laboratories of democracy. We try something out in a
State, see how it works before we try to do it in an entire
country.
Why such a large, expansive demonstration, please?
Dr. Conway. Yes. So first, it is a proposal, so we will
seek comments on the scope, and many people have noted that.
What we think about in terms of proposals is, first and
primarily, the statutory mission, which is to propose models we
think have a high likelihood of improving quality and lowering
cost.
Then on the geographic scope, we need to think about three
issues primarily. One, that areas are big enough that most
practices are going to be within an area, sort of the
geographic size.
Two, that it is evaluatable. So the goal is to evaluate
models and determine whether they meet criteria in improving
quality and lowering cost. So you have to have a sufficiently
large sample so you can evaluate the model.
And three, that you are able to have comparison groups so
geography allows you to compare to other comparable
geographies. But we will look at the public comments and
determine, based on those criteria and the public input,
whether adjustments are needed.
Senator Carper. Thank you.
My staff gave me a briefing. I am sure all of our staffs
gave us briefings. They said--I just want to read you a short
paragraph from a briefing memo my staff gave me.
CMS expects--this is phase I, all right?--CMS expects this
phase of the proposed demonstration project to incentivize
physicians and health-care providers to select drugs of better
value and lower cost for patients, leading to savings--
something we are all interested in. Certain doctors, such as
oncologists and rheumatologists, who often prescribe higher-
cost drugs, will receive somewhat lower payments under this
demonstration, while primary-care physicians who may prescribe
lower-cost drugs will likely receive higher payments.
Is that a correct assessment? Would you just talk about
that? Is that correct? Do you want to modify that? What would
you have to say about that paragraph?
Dr. Conway. Yes, that is from the impact table, so it is
correct. There are relatively modest--it was actually quoted
earlier--adjustments for oncology and rheumatology. There are
also adjustments up in the primary-care arenas.
But we publish an impact table because we want to be
transparent about the current proposal's effects, and if
adjustments are made, we would then publish a final impact
table with the effects across practice types also: urban,
rural, et cetera. These are the types of issues we care deeply
about, and we want to be transparent.
Senator Carper. Last year the Medicaid Part B program
spent, I believe, about $22 billion on prescription drugs. Does
that sound about right?
Dr. Conway. Yes.
Senator Carper. A cost shared by seniors, as you know--
disabled individuals, taxpayers, and our government. Several
drug companies have proposed value-based payment models to
ensure that patients and Medicare are getting the best value
and outcomes in return for a fair reimbursement.
My question is, in the proposed Part B demonstration
project, how is CMS to effectively evaluate value-based payment
models for prescription drugs? And the second half of that is,
is the first phase of the demonstration program necessary for
advancing these alternative payment models for prescription
drugs?
Dr. Conway. Yes, so we proposed the two-phase approach.
They are proposed as separate arms, if you will, of
intervention. And yes, the second phase directly builds on what
we have seen in the private sector, or are hearing from the
private sector, about the desire to test value-based
arrangements such as outcomes-based pricing and other
methodologies that incentivize higher value and outcomes.
Hence, our proposal.
Senator Carper. You have answered a lot of questions here
today that you anticipated. Is there a question that you wish
had been asked that has not been asked? What would be a good
question, say, why did he not ask me that one?
I see your staff writing feverishly behind you.
Dr. Conway. Yes, they probably will give a better answer
later, and then I will feel bad.
You know, I think, one, we have not noted that Congress
wrote in the Innovation Center statute--and I will not get the
statutory language exactly right--that we cannot limit any
benefit to Medicare beneficiaries. And we are not limiting
benefits to Medicare beneficiaries.
I have said this, but to reiterate it, we care deeply about
access to medications, innovation, and better health outcomes.
The question we collectively have to work on is, how do we
propose tests and models that help us achieve those outcomes?
Sorry for the long answer, but about the current system
today, I literally get contacted daily from beneficiaries who
do not have access to a given medication or do not have access
to care in a given area.
So if we think the status quo is optimal, we are mistaken,
and we need to test new payment and service delivery models to
improve care for millions of Americans. And I think we are on a
learning path today that is much better than it was 3 years
ago.
Senator Carper. All right. Thanks so much.
Senator Wyden [presiding]. Senator Toomey?
Senator Toomey. Thank you, Senator Wyden.
Dr. Conway, thanks for joining us. Just a couple of
questions. We are running well into the vote here, so I want to
move quickly.
I do want to go back to the scope issue, because it is
something that is a concern raised by many of my constituents.
And by my reading of the statute, the Affordable Care Act
States that CMMI has the authority to test a model addressing,
and I quote, ``a defined population for which there are
deficits in care.''
But this rule would change the terms of reimbursement for
75 percent of all docs who administer Part B drugs under the
ASP-plus-6 approach, and every single drug that is subject to
the ASP-plus-6 reimbursement, as I understand it.
How could that be consistent with the congressional intent
of a defined population? It just seems almost universal, which
is not the same.
How is it a defined population?
Dr. Conway. So as you noted, the Innovation Center
authority is to propose tests of new payment and service
delivery models. You know, here we defined a population based
on geography. We are looking at the comments now.
The scope of that geography is a key issue that we will
evaluate.
Senator Toomey. But just so that I understand, it is true
that, as I understand it, there are these different subsets
that will undergo different experiments. But almost everybody
is involved in this broader experiment to some degree.
Dr. Conway. So the current proposal has three arms and
therefore does have, as you noted, 75 percent approximately of
the country in Innovation arms. We will evaluate the comments
and take a look at key issues around the number of arms or
interventions in the study and the geographic scope and whether
adjustments are needed.
Senator Toomey. Well, yes, I would just strongly urge you
to focus on that particular issue. I was not here when the
Affordable Care Act was written, but I think a layman's reading
of a defined population suggests something much narrower than
what is contemplated here.
A second question I have for you goes to the purpose, as I
understand it. At least one of the stated purposes is to make
sure there is no incentive to drive a physician toward a more
expensive alternative than some other alternative, which the
current system seems to suggest.
In its June report, MedPAC listed the 10 drugs with the
highest Part B expenditures. Do you know how many of them had
FDA-approved alternatives?
Dr. Conway. I do not want to quote a number and be wrong.
Senator Toomey. That is fine. The answer is zero among the
top 10. So it strikes me that clearly it is not the payment
model that drives the docs to prescribe the 10 highest-
expenditure drugs; it is the fact that there is no alternative.
So if we were to make this change, is there a concern that
it could create an incentive for physicians to experiment with
off-label use for some purposes? Was that a consideration?
Dr. Conway. So, a few comments. One, the proposal does not
just focus on drugs where there are interchangeables, if you
will; so for example, as you noted, interchangeable to generic.
We are proposing to pay the Average Sales Price, which is
the average cost of the drug, plus 2.5 percent, plus a fixed
fee. We are going to look at the public comments to determine
if there are adjustments that are needed in that formula,
either overall or in certain settings.
So the goal is, for both high-cost drugs and low-cost
drugs, that we are paying appropriately for those drugs. The
current system does have a disincentive that we have heard
about from MedPAC and others on the low-cost drugs, where if it
is a $10 drug and it is 60 cents, the real question is about
whether it covers the cost of the physician or the clinician
prescribing said medication.
So we are trying to remove the financial incentive but
still pay appropriately for the provision of drugs that you
named or of other drugs. And we would want the oncologist or
rheumatologist, physicians, clinicians, to prescribe the
medicine that they need us to pay for and the physician--or the
patient--to receive the medicine that they need.
Senator Toomey. Thanks, Mr. Chairman.
Senator Wyden. I thank my colleague.
Dr. Conway, we are at the point in the hearing where the
choice is really for me to either filibuster until my
colleagues get back or to offer a couple of additional
questions.
So I am going to opt for the second route and ask you about
how this proposal interacts with other payment reform
proposals. It is obvious that there has been progress made
overall toward moving the health-care system to one that moves
away from volume, that incentivizes quality and value.
You all reached the target of making 30 percent of Medicare
payments through alternative payment models. That is a plus--9
months earlier than expected. And obviously, what is called the
MACRA legislation--the Medicare access bill and the bill that
had the critical program for kids--was passed last year to
replace this hugely flawed, what is called the SGR program,
with a payment system that rewards doctors for providing high-
quality, cost-
effective care to patients.
Now, I have heard from some providers that the proposed
Part B drug demonstration could unintentionally discourage
participation in the new payment delivery and reform models,
such as the Oncology Care Model and the alternative payment
models incentivized by the major Medicare legislation.
What would be your response to those concerns? And how do
you envision making sure that this demonstration does not in
any way discourage participation in these other model programs
you all are looking at?
Dr. Conway. Thank you, Senator Wyden. We think this
proposal aligns with those programs. So, specifically to give
you an example, the basic construct of MACRA--and we want to
thank Congress for that--was to pay physicians and clinicians
based on value, so quality resource use, clinical practice
improvement, and use of technology.
This proposal also aligns with paying physicians and
clinicians based on value, so we think they would actually work
well together. We also, through different methods of evaluating
one model to a comparison group in another area where it is
not, can estimate the effects of various models.
But we think this Part B model will actually align with
MACRA and encourage participation in these alternative payment
models.
I will not filibuster, but I do want to take the
opportunity----
Senator Wyden. Go ahead.
Dr. Conway. You know, your leadership and this committee's
leadership on delivery system reform has been hugely important.
The Care Choices model, where I was with the hospice and
palliative care community on concurrent hospice and palliative
care just a couple of weeks ago, was due to your leadership,
and I want to thank you for that.
Senator Wyden. I thank you, Doctor. I think it would be
very helpful if you could explain in something resembling
English exactly how Medicare Care Choices works. Because this
was something that I had really been dreaming would be done
almost since those Gray Panther days.
And as I understand it, what you all are doing with
Medicare Care Choices is trying to make sure that eventually--
because this is a big pilot now--every senior in America could
have the opportunity to get hospice without giving up the
prospect of curative care.
And you are a physician, and a very skilled one. I gather
that this also would make it easier for patients and families
to time the kinds of choices they make so it is best for them.
Could you explain how that works?
Dr. Conway. You are correct. We are pilot-testing the
ability for patients and families to choose concurrent hospice
and palliative care with so-called curative care. It is
actually in almost 40 States. And it allows for much more
patient-centered choices.
I will actually, if it is all right, use not my own words,
but in that panel I had the pleasure of sitting beside Atul
Gawande, who talked eloquently about the importance of this
model and how it was one of the biggest positive changes in
palliative and hospice care in U.S. history.
We will continue to modify and learn and refine, based on
input from Congress and others, but it is a huge positive step.
As a son and a physician, I have been through that with family
members and patients, and it enables much more patient-centered
choice.
And probably the most powerful thing was, on the other side
of me sat a gentleman whose wife passed away, and he said if
this had been available for her, they would have been able to
make better choices that would have more aligned with their
goals of care.
And at the end of the day, that is what it is about. It is
about patients and families, as you know well. You have been a
leader in making choices for them.
Senator Wyden. Well, keep me apprised on this.
I want to recognize Senator Cardin. I just want it
understood that that program, that program to provide more
choices for older people, that was really born in this room.
Because during the Affordable Care Act debate--my
colleagues remember this discussion--we constantly heard this
nonsense about how there were death panels. Well, there were no
death panels.
And now with Medicare Care Choices, it is very clear that
older people are going to have a wide array of choices that
allow them to choose what is best for them in line with their
views about health and religion and morals and all of the other
factors. I appreciate your taking us through it.
Senator Cardin?
Senator Cardin. Thank you, Senator Wyden. And, Dr. Conway,
thank you very much.
I really want to drill down a little bit as to what your
objectives are, particularly as you move towards the second
phase of the demonstration.
As I understand the first phase--and I was listening to
Senator Portman's questioning--it is revenue-neutral, which
means you are going to have winners and losers. You have those
challenges; I understand that. I understand what you are trying
to achieve, and you are trying to do it in a way that uses
current resources more effectively in dealing with the
reasonable costs associated with administering these drugs.
With the second phase, I am not quite as clear as to your
objectives. Is it your anticipation that it will save projected
costs? And if it is going to save projected costs, do you know
the range that you are trying to get to in that second phase?
Dr. Conway. Yes. We believe both phases have the potential
to maintain or generate savings and improve quality for
patients.
And in the second phase, as we put in the proposal, we
would come forward with, in the future, the specifics around
drug classes and the various arrangements. We had different
tools, so outcomes-based pricing, risk-sharing arrangements,
indication-based payment. We would come forward with the
classes and the proposals, would get patient input, consumer
input, and input from Congress and others on those proposals.
A tangible example that has actually come to us from
outside CMS is entities that want to do risk-sharing
arrangements, where if a given drug may lower costs in the Part
A and B space, we think about how that could have benefits
across the health-care sector to improve quality and lower
costs.
To give you an example, we have lower cost-sharing for
beneficiaries who are selecting certain medications as one of
the proposed tools.
So the goal here is to test an array of tools that have
been used in the private sector to improve quality and lower
costs, to test them in the Medicare Part B program.
Senator Cardin. We have seen in previous efforts to impose
delivery system changes that are more cost-effective, give you
better value, that the budget can prevent it from being
implemented the way it was intended, because you need to
produce a certain amount of cost savings, since everyone has to
share in the realities of the budget.
Do you build into this demonstration the confidence and
credibility that you really are looking for value and not just
to cut the cost issues here?
Dr. Conway. Our statutory authority calls out both quality
and expenditures, but we actually focus on quality and patient
outcomes first. So when we think about new payment model tests,
we lead with quality and patient outcome.
So I think we would take that approach here as well, where
our goal is to maintain access, to improve outcomes for
patients, and then to either maintain or lessen expenditures.
And the statute includes the provision, if a program improves
quality and maintains its expenditures, that that can meet
criteria for expansion.
Senator Cardin. And how do you intend to engage the
stakeholders as you go through into the two phases here?
Dr. Conway. So we are reviewing the comments now. But I
would say the principles that we will try to put in place,
which are true across the Innovation Center, are robust patient
and consumer input into the models, input from providers and
stakeholders across the health system, certainly input from
Congress. At the end of the day, broad input and transparent
processes are critical to shaping this work.
I mentioned this earlier, but we now have innovations in
our models in all 50 States, thousands of providers, millions
of beneficiaries, and it is deep, deep engagement with the
various participants.
In our bundled payment model, our voluntary BPCI, Bundled
Payment for Care Improvement model, 48 States and over 1,500
hospitals, physician groups, and others, are redesigning care
for patients and improving care and care coordination. So that
is the kind of engagement we want.
Senator Cardin. Thank you.
Thank you, Mr. Chairman.
Senator Wyden. Does my colleague have any additional
questions?
Senator Cardin. Well, I have a lot of comments, but I
think, related to this subject, Maryland is in a somewhat
unique position. And one of the issues that we will need to
talk about is the impact it has on each State, including my own
State. But it is different for Maryland.
Dr. Conway. Yes.
Senator Cardin. But I assure you, my principal objective is
getting better value, better outcomes. I think the more you can
coordinate, the better off you are.
But I always am concerned about the pressures on the budget
that are used, at times, to use well-intended programs just to
produce savings rather than to produce better outcomes.
And, Dr. Conway, I take you at your word when you say that
that is not the objective here. And we obviously will be
watching this pretty closely.
Dr. Conway. Thank you.
Senator Wyden. I thank my colleague. And just one last
question from me, Dr. Conway.
So phase II of the demonstration seeks to move into this
value-based arena which you have heard that I and certainly
others--this has been something that has had support on both
sides of the aisle for some time--believe is constructive,
moving away from clunky, volume-driven, fee-for-service
medicine. That is what phase II builds on.
How does it coordinate with the other laudable goal of
precision medicine? In other words, you all seek, in the days
ahead, to really make sure that drugs and treatments--and what
is striking about this is, this means what it sounds like--
really are tailored exactly to the needs of a particular
individual, recognizing that one particular drug or therapy
does not affect George and Harry in the same way, and certainly
does not affect George and Sally in the same way.
Tell us, if you would, so we have a sense of where you are
going, how does phase II, in particular, in effect build on the
Precision Medicine Initiative in the administration?
Dr. Conway. Thank you for the question. We think it very
much aligns with Precision Medicine, and let me explain how.
For example, if you had a new therapy that generated
significantly better outcomes for patients and you are paying
based on outcomes and value, that actually supports paying for
that therapy and the innovation and better patient outcomes it
delivered.
Similarly, for indications of base pricing, you could
imagine if you can really tease apart for which patients this
therapy is maximally effective and then pay appropriately for
that, it really incentivizes innovation and precision medicine,
better outcomes for the specific patients who will benefit from
specific therapies.
And we think it is a very exciting place to work across the
health-care system: manufacturers, payers, providers, patient
groups in support of both precision medicine and paying for
value and better patient outcomes.
Senator Wyden. Senator Burr?
Senator Burr. Thank you, Mr. Chairman.
Dr. Conway, I have great admiration for the role that you
play. And it has to be extremely tough for a doc to defend an
agency that says we can determine treatment better than the
attending physician, because I think that is what this Part B
rule in fact does.
You stated that you met regularly with patient and provider
groups. Have any of those groups that you met with been
supportive of this rule?
Dr. Conway. Yes, we continually meet with patient groups,
consumer groups, provider groups.
Senator Burr. The question is very simple. Have any of them
been supportive of the Part B rule, yes or no?
Dr. Conway. Yes. We received----
Senator Burr. Would you provide for this committee the list
of those groups that have come out and said, we are supportive
of this Part B rule?
Dr. Conway. Yes, and I believe we may have even received
another letter recently. But yes, we can provide that
information.
Senator Burr. Is CMS considering withdrawing this rule, yes
or no?
Dr. Conway. We are evaluating the public comments now and
intend to take those comments into account in finalizing the
rule.
Senator Burr. Is CMS considering withdrawing the rule?
Dr. Conway. We intend to take the public comments into
account in finalizing the rule.
Senator Burr. Are you doing this to save money or to reach
a better health outcome?
Dr. Conway. We are doing it because we believe it can both
reach a better health outcome and maintain or lessen
expenditures.
Senator Burr. Does CMS believe they can design a better
treatment pathway than a physician can?
Dr. Conway. As you noted, I am a practicing physician. I
believe physicians care about their patients, and I want
physicians and clinicians to make treatment decisions based on
what is best for their patients.
I would like to maintain, and the agency has focused on
maintaining, that a patient, a beneficiary, should receive the
medicine they need, and that a physician or clinician should
prescribe in all instances the medicine that is best for their
patient.
Senator Burr. And would you also agree that the location
they get that at is important? Transportation is the number one
issue with health care in this country. It is in the Veterans
Administration, it is in Medicaid, and I believe it is in
Medicare.
So when you limit the rural access to these lifesaving
treatments, have you in fact bettered the outcome?
Dr. Conway. We do not want to limit access, including in
rural areas. Many of my family members are private practice
physicians in independent practice. We support independent
physician-
clinician practice.
We are proposing a model that we think can support
independent physician-clinician practice, including rural and
small practices. But we will review the public comments to
determine whether adjustments are needed.
Senator Burr. Well, you talked earlier--and I apologize for
being out; I had to go vote--about disincentives that exist in
the current system. You do not consider it a disincentive for a
local-based delivery point when you are saying, but if you go
to the hospital, we are going to pay you more money?
Dr. Conway. This proposal proposed to pay the same ASP plus
2.5 percent plus a fixed fee, both in the hospital outpatient
and physician setting.
Senator Burr. Dr. Conway, 4 years ago I authored the
Advancing Breakthrough Therapies for Patients Act with the
chairman and my good friend from Colorado, Senator Bennet. And
our objective was to bring forward promising breakthrough
therapies as fast as possible, including those that would be
impacted by what CMS is proposing.
This bipartisan law saw remarkable success, particularly in
bringing forward cancer treatments even faster. As a result of
the law, in its first 4 years, over 130 drugs have been
designated as breakthrough and more than 45 drugs have been
approved by FDA so far.
I fear that this demonstration project will jeopardize
access to these breakthrough drugs just as they are becoming
available.
Can you assure the committee today that your proposal will
not negatively impact the success of the breakthrough therapy
legislation?
Dr. Conway. We believe the proposal aligns with innovative
breakthrough therapies that improve patient outcomes, because
the proposal is about focusing on paying for drugs and
therapies that generate better outcomes for patients.
Senator Burr. My constituents have also written me
expressing concerns about this CMS proposal. The CEO of an
oncology clinic in Hickory, NC said this: ``Physicians and
caregivers are not prescribing medications to profit
themselves. This team in Hickory, NC is prescribing medications
and therapies because they work.''
Do you fear that providers are profiting themselves, versus
providing the therapies because they work?
Dr. Conway. I would want those physicians to continue
providing those therapies that work for their patients.
Senator Burr. So if they feel like this in some way, shape,
or form takes that ability away from them, then you would see a
need to change this legislation?
Dr. Conway. We want to review theirs and any other public
comments, because we want the proposal to support access to
medications for beneficiaries.
Senator Burr. Last thing, Mr. Chairman.
Senator Wyden. The time of the gentleman has expired. Why
don't you have one last question so we can go to Senator Scott?
Senator Burr. Thank you, Mr. Chairman.
A North Carolinian suffering from primary immune deficiency
who relies on infusion treatments writes: ``Members of my
community on Medicare and the providers who care for them
already face complexities accessing medical care and
treatments. They should not have to face the consequences of an
initiative that eliminates their treatment options. This cost-
cutting measure would become a life-cutting measure, and I urge
you to intervene to stop this proposed reimbursement model.''
That is a patient. I think a patient probably heard from a
provider that if this goes through, here is the impact on you.
What do you say, as a doc, to that patient with immune
deficiency disorder?
Dr. Conway. I would say as a doctor to that patient, I want
them to receive the medicine they need for their immune
deficiency. I would say to their physician, I want them to
prescribe the right medicine to their patient at all times,
like all physicians should.
Senator Burr. Then I urge you to really look at this
proposed rule.
Thank you, Mr. Chairman.
Senator Wyden. Senator Scott?
Senator Scott. Thank you, Mr. Chairman.
Thank you, Dr. Conway, for being here today. And certainly
you are from a rural part of Texas. I am from a very rural
State, South Carolina. So I think we both have the appreciation
and affinity for the health-care costs and challenges for
people living in rural areas that are absolutely severe.
The thing I have heard from my constituents consistently as
it relates to this demonstration project is fear. They are
scared.
Picture, if you will--and I know your mother is on
Medicare, as you stated, and mine is as well--picture if you
will senior citizens living in rural South Carolina scared.
They are on fixed incomes, and we now have a demonstration
project that covers the entire Nation. And what they see as the
result of this experiment is higher prices, less access, and
perhaps, in order to receive the lifesaving treatment that they
need desperately to stay alive to see their grandkids one more
time, a 2- or 3-hour drive from Manning, SC to Charleston. And
so with great uncertainty, feeling confused and afraid, they
write into our offices.
And one of the more difficult things to do in Congress
today is to find a way to unite Republicans and Democrats on a
topic. And this demonstration project has done a very good job
of creating and getting concerns from Republicans and Democrats
that all sound fairly similar, save one component of the
discussion.
And my questions are not that different from the questions
you have heard so far, Dr. Conway. They are around rural
access; they are around rare diseases, the impact on the folks
who are socially and economically challenged and folks who are
concerned that now we are seeing the government practicing
medicine and determining value, as opposed to working together
to figure out what truly is the value proposition of their
visit to the doctor.
And I think, Dr. Conway, you and I both can agree at least
that these concerns are at least valid concerns, given the
scope, the magnitude, the impact on citizens. And I believe
that your desires, your intentions are good.
Frankly, you are looking for a way, as you said earlier, to
help Medicare be there not only for your mother, who is
currently receiving the benefits, but for your four kids. I
think we share the same concern, perhaps with a different
outcome.
And I hope, I would even plead with you on behalf of the
citizens of South Carolina who are so concerned about this
project, to take a second look, a step back from a nationwide
implementation that could have dire effect on folks depending
on their very certain paychecks, on their certain benefit from
Social Security.
And so just to highlight a couple of areas, one question
being in the rare disease arena where, for patients in my
State, sickle cell anemia is a very powerful weapon against so
many folks in my State.
For patients with sickle cell and other rare diseases,
blood transfusions are one of the only methods of treatment.
While it is clear that blood products are excluded from phase I
of the demonstration, it is unclear if they will be excluded
during phase II of the demonstration.
Can you clarify for my folks at home?
Dr. Conway. So, you are right on blood products. They were
proposed to be excluded from phase I. We have put out a
proposal for phase II that we would come forward with the
specific drug classes or areas for phase II that we plan to
address and receive comment on those areas, both public input
and patient consumer input.
So our goal is to engage with Congress and with the public
and specifically patients, consumers. And we did note in the
proposed rule that if there were specific classes or other
issues that needed to be addressed, and rare diseases was an
example we named, that we would look to those public comments
and consider how best to address those issues.
Senator Scott. Mr. Chairman, do you have time for me to ask
another question?
Senator Wyden. Everyone else has gotten an extra one or
two, so please feel free, Senator Scott.
Senator Scott. Well, thank you, sir. I appreciate the extra
10 minutes. I really appreciate that, sir. [Laughter.] I did
not think that was that funny, but we will go on anyway.
I certainly have appreciated the concern of my constituents
about the amount of time that they could spend on the road
trying to find the right practitioner, perhaps the right
hospital to go to. If you are living in Manning, Sumter, or in
a rural area of South Carolina, driving to Columbia or
Charleston is not just a hop, skip, and a jump. It is a more
serious proposition.
I also note that Obamacare is going to provide a
partnership or ride-sharing service for young folks to sign up
for the health-care law. How can we justify the department
going out of its way to transport the young adults to sign up
for Obamacare when the program you are proposing will limit
access for some of our most vulnerable, like the elderly and
disabled?
Have we figured out a transportation-sharing program that
will help with the impact of transportation in rural areas?
Dr. Conway. So for the proposal, we would want the proposal
to maintain access, including in rural areas, smaller
practices, et cetera. For patients and physicians who want to
deliver medicines, we want them to receive the medicines when
and where and how they want to receive said medicines.
We put forward the proposal because we thought the proposal
maintained access and improved quality and could maintain or
lower expenditures. But we will be looking closely at the
public comments, including on smaller physician practice issues
and rural issues, in determining whether adjustments are
needed.
Senator Scott. Well, Mr. Chairman, I will stop where I
started.
I do not doubt the sincerity or the intentions of Dr.
Conway or anyone within his employ. I do want to echo my
concerns for my citizens, particularly those in rural areas,
those with rare diseases--sickle cell being among them--those
folks who are just financially strapped. A life that is
socially, economically challenged, that sounds cool, but the
fact of the matter is it means that you have too much month for
the money that you have.
And so we are talking about people who are seriously
challenged, and now are very concerned. And, as you have heard
echo throughout the hearing today, the concerns are real,
because, while the intentions are good, the access issues are
still real concerns.
And frankly, the pricing, though you may have a static
number, $16.80, the impact of those numbers on the actual costs
can be quite high.
Thank you, Dr. Conway. Thank you, Mr. Chairman.
Senator Wyden. Thank you, Senator Scott.
Dr. Conway, I just want to make sure. You are a
pediatrician. You are a career employee in the department. You
are not a political appointee. I know you have been published
in some of the country's leading medical journals, and you are
a career employee. Is that correct?
Dr. Conway. Yes, sir. I am a career employee.
Senator Wyden. All right. On behalf of Chairman Hatch, I
would ask for colleagues and staff who are here that any
written questions for the record be submitted by Tuesday, July
12, 2016.
With that, the Finance Committee is adjourned.
[Whereupon, at 11:50 a.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Patrick Conway, M.D., M.Sc., Acting Principal
Deputy Administrator, Deputy Administrator for Innovation and Quality,
and Chief Medical Officer, Centers for Medicare and Medicaid Services,
Department of Health and Human Services
Chairman Hatch, Ranking Member Wyden, and members of the committee,
thank you for the invitation to discuss the Centers for Medicare and
Medicaid Services' (CMS) initiative to improve how Medicare pays for
Part B drugs and to support physicians and other clinicians in
delivering higher quality care in the Medicare program.
Part B drug spending has risen significantly over time. Total Part
B payments for separately paid drugs in 2015 were estimated at $22
billion (this includes cost sharing). In 2007, the total payments were
$11 billion; the average annual increase since 2007 has been 8.6
percent. This significant growth has largely been driven by spending on
separately paid drugs in the hospital outpatient setting, which more
than doubled between 2007 and 2015, from $3 billion to $8 billion
respectively.\1\
---------------------------------------------------------------------------
\1\ CMS Proposed Rule, ``Medicare Program; Part B Drug Payment
Model,'' https://www.
federalregister.gov/articles/2016/03/11/2016-05459/medicare-program-
part-b-drug-payment-model.
CMS has heard from many stakeholders about concerns about the cost,
value, and access to prescription drugs. As part of an initiative to
address rising drug costs, the Department of Health and Human Services
(HHS), convened a forum that brought together consumers, physicians,
clinicians, employers, manufacturers, health insurance companies,
representatives from State and Federal Government, and other
stakeholders to discuss ideas on how the health care system can meet
the dual imperatives of encouraging drug development and innovation,
while ensuring access and affordability for patients. To help further
this mission, CMS issued a proposed rule to test a new model to help
---------------------------------------------------------------------------
improve patient care and the value of Medicare drug spending.
This proposal is part of the administration's broader strategy to
encourage better care, smarter spending, and healthier people by paying
for what works, unlocking health care data, and finding new ways to
coordinate and integrate care to improve quality. CMS values public
input and comments as part of the rulemaking process, and looks forward
to continuing to work with stakeholders through the rulemaking process
to maximize the value and learning from the proposed tests. We have
received feedback from a wide range of stakeholders on several issues,
including the size of the model, patient access in small practices and
rural areas, and the importance of patient input. We are reviewing all
comments closely to determine whether adjustments are needed. Our goal
is to be responsive to the public comments and input from Congress
while preserving the integrity and effectiveness of the model.
proposed new medicare part b drug payment model
Medicare Part B includes a limited drug benefit that encompasses
certain drugs and biologicals. Currently covered Part B drugs fall into
three general categories: drugs furnished incident to a physician's
services, drugs administered via a covered item of durable medical
equipment (DME), and other drugs specified by statute. These types of
drugs include intravenous infusions (IVs) like cancer treatment drugs,
injectables like antibiotics or eye care treatments, and other drugs
that require a medical professional to administer.
Many Part B drugs, including drugs furnished in the hospital
outpatient setting, are paid based on the Average Sales Price (ASP)
plus a statutorily mandated 6 percent add-on. The ASP is calculated
quarterly using the manufacturer-submitted data on sales to all
purchasers (with limited exceptions specified in statute, such as sales
at nominal charge and sales exempt from best price) with manufacturers'
rebates, discounts, and price concessions included in the ASP
calculation. The ASP payment amount does not take into account the
effectiveness of a particular drug nor the cost of clinically
comparable drugs. The Medicare Payment Advisory Commission (MedPAC) has
noted that ASP methodology may encourage the use of more expensive
drugs because the 6 percent add-on generates more revenue for more
expensive drugs.
The proposed rule that CMS issued describes a new Part B Drug
Payment Model that would test whether alternative drug payment designs
may improve how Medicare Part B pays for prescription drugs and
supports physicians and other clinicians in delivering higher quality
care. More specifically, this proposed rule is designed to test
different provider and patient incentives to do two things: drive the
prescribing of the most effective drugs and test new payment approaches
that reward positive patient outcomes. Physicians often can choose
among several drugs to treat a patient, and the current Medicare Part B
drug payment methodology can penalize doctors for selecting lower-cost
drugs, even when these drugs are as good or better for patients based
on the evidence. Among the approaches to be tested are the elimination
of certain incentives that work against the selection of high
performing drugs, as well as the creation of positive incentives for
the selection of high performing drugs, including reducing or
eliminating patient cost sharing to improve patients' access and
appropriate use of effective drugs.
Phase 1: Adjustments to the ASP+6 Percent Add-on Methodology
The proposed model would test whether changing the current 6
percent add-on payment to 2.5 percent plus a flat fee payment of $16.80
per drug per day changes prescribing incentives and leads to improved
quality and value. CMS would update the flat fee at the beginning of
each year by the percentage increase in the consumer price index for
medical care for the most recent 12-month period.
CMS expects that the add-on payment of 2.5 percent plus a flat
$16.80 fee will cover the cost (the ASP) of any drug paid under
Medicare Part B. The flat fee is calculated such that it is budget
neutral in aggregate. CMS intends for the test to result in savings
through changes in prescribers' behavior, as we hope that the revised
pricing removes any excess financial incentive to prescribe high cost
drugs over lower cost ones when comparable low cost drugs are
available. In other words, we believe that removing the financial
incentive that may be associated with higher add-on payments may lead
to some savings during phase I of the proposed model.
Phase 2: Value-Based Purchasing (VBP) Tools
Commercial health plans, pharmacy benefit managers, hospitals, and
other entities that manage health benefits and drug utilization
successfully employ an array of tools including value-based pricing and
feedback on prescribing patterns to improve the value of drug payments.
To produce a menu of value-based purchasing options, CMS reviewed the
numerous tools used by entities that manage drug and health benefits
and identified those that may be applicable to payment for Part B drugs
with the same positive results.
The proposed rule sought comments on testing different alternative
approaches for Part B drugs to improve outcomes and align incentives to
improve quality of care and spend dollars wisely; these include:
Discounting or eliminating patient cost-sharing. Patients are
often required to pay for a portion of their care through cost-sharing.
This proposed test would decrease or eliminate cost sharing to improve
beneficiaries' access and appropriate use of effective drugs.
Feedback on prescribing patterns and online decision support
tools. This proposed test would create evidence-based clinical decision
support tools as a resource for providers and suppliers focused on safe
and appropriate use for selected drugs and indications. Examples could
include best practices in prescribing or information on a clinician's
prescribing patterns relative to geographic and national trends.
Indications-based pricing. This proposed test would vary the
payment for a drug based on its clinical effectiveness for different
indications. For example, a medication might be used to treat one
condition with high levels of success but an unrelated condition with
less effectiveness, or for a longer duration of time. The goal is to
pay for what works for patients.
Reference pricing. This proposed test would analyze the
practice of setting a standard payment rate--a benchmark--for a group
of therapeutically similar drug products.
Risk-sharing agreements based on outcomes. This proposed test
would allow CMS to enter into voluntary agreements with drug
manufacturers to link patient outcomes with price adjustments.
Scope of the Model
The proposed model would run for 5 years with the goal of having
the incentive and value-based purchasing tests fully operational during
the last 3 years to evaluate changes and collect sufficient data. All
providers and suppliers furnishing and billing for Part B drugs would
be required to participate in the model. This would help ensure that
observed outcomes do not suffer from selection bias inherent in a
voluntary participation model and would help test whether the model can
ultimately be generalized to providers and suppliers billing for Part B
drugs with various characteristics, such as different geographies,
patient populations, and specialty mix. With limited exception, CMS
proposed to include all Part B drugs and biologicals in this model.
Under the proposal, providers and suppliers would be placed in a
control or study groups based on Primary Care Service Areas, which are
clusters of zip codes based upon patterns of Medicare Part B primary
care services (excluding the State of Maryland where hospital
outpatient departments operate under an all-payer model). The exact
geographic locations the model would be operational in would be posted
once the model is finalized, as we have done with other models.
Maintaining Beneficiary Access to Quality Care
Ensuring beneficiary access to high quality care and treatment is
always at the forefront of CMS's work. In Medicare Part B, most
beneficiaries pay a monthly premium for coverage of certain services
including prescription drugs administered by infusion or injection in
physician offices and hospital outpatient departments, doctors'
services, outpatient care, and durable medical equipment (DME).
Beneficiaries must also meet a deductible of $166 in 2016; once that is
met, the beneficiary typically pays 20 percent of the Medicare-approved
amount for the services they receive. Under this structure,
beneficiaries utilizing Part B drugs, especially those using higher
cost drugs, may face significant out-of-pocket expenses. To the extent
that prescribing patterns do shift toward lower cost drugs, in
aggregate, beneficiaries would benefit along with the Medicare program.
Under the proposed model, beneficiaries would still have access to
the same drugs and would retain the complete freedom of choice of
doctors, hospitals, and other providers or suppliers. The proposed
model would not affect drug coverage or any other Medicare benefits.
The proposed model also includes a number of beneficiary protections.
All standard Medicare appeals processes would stay the same. The
proposed model would include a new pre-appeals exceptions review
process under Phase II, in addition to the standard Medicare appeals
processes, that would allow the beneficiary, provider, or supplier to
explain why Medicare's value pricing policy is not appropriate for the
beneficiary and to seek an exception from the model's pricing approach.
Exceptions decisions would be issued within five business days. In
addition, CMS would be closely monitoring beneficiary access and health
outcomes during the model. There would be a real-time claims monitoring
program to track utilization, spending, and prescribing patterns as
well as changes in site of service delivery, mortality, hospital
admissions, and several other high-level claims-based measures. This
would help ensure that Medicare beneficiaries will continue to have
access to Part B drugs under the model.
The public comment period for the Proposed Rule concluded on May 9,
2016, and CMS is carefully considering all the public comments on this
proposal that were received by the close of the comment period. HHS and
CMS value public input, and we look forward to continuing to work with
stakeholders to maximize the value and learning from this model.
conclusion
Millions of Americans rely on medications to manage chronic
illnesses and treat acute conditions. CMS is dedicated to ensuring that
its beneficiaries have and maintain access to the high quality
treatments they need while pursuing better drug value. Moving forward,
HHS and CMS are committed to continuing to listen and work together
with stakeholders to advance ideas that improve access, affordability,
and innovation so all Americans have access to the breakthroughs ahead.
There are no easy answers to these multifaceted challenges, but there
is a significant benefit--to all of us--of working together to find a
solution. I appreciate the committee's interest and look forward to
answering your questions.
______
Questions Submitted for the Record to Patrick Conway, M.D., M.Sc.
Questions Submitted by Hon. Orrin G. Hatch
analysis behind proposed demonstration
Question. Does CMS have data indicating that the payment changes in
the phases of the proposed model, or demonstration will improve quality
of care, patient outcomes, or result in savings? If so, why were they
not included in the proposed rule?
Answer. The Medicare Part B Drug Payment Model proposed rule
proposed to test a new model under the authority of the Center for
Medicare and Medicaid Innovation (the Innovation Center). Section 1115A
of the Social Security Act (the Act) authorizes the Innovation Center
to test innovative payment and service delivery models to reduce
program expenditures while preserving or enhancing the quality of care
furnished to Medicare, Medicaid, and Children's Health Insurance
Program beneficiaries.
Testing the proposed Part B Drug Payment model would allow us to
learn more about how value-based purchasing tools and changes to
Average Sales Price (ASP)-based reimbursement could reduce Medicare
spending on drugs, while preserving or enhancing the quality of care
furnished to Medicare Part B beneficiaries. The current ASP methodology
for Part B drugs may encourage use of more expensive drugs because the
6 percent add-on generates more revenue for more expensive drugs.
The proposed rule discusses the specific approach for the use of an
add-on percentage with a flat fee described in MedPAC's June 2015
Report to Congress. Specifically, as described in the proposed rule,
MedPAC evaluated changing the add-on to 2.5 percent of ASP plus a
budget neutral flat fee per dose of $14. The result redistributed add-
on payments by decreasing payments for expensive drugs in favor of
drugs that are paid at lower amounts. Redistribution under this
approach favors the provider specialties and suppliers that utilize
relatively inexpensive drugs. The June 2015 MedPAC report determined
that under this approach physician specialties that heavily utilize
drug therapy would see a decrease in drug revenues while specialties
that utilize fewer drugs like primary care would see an increase in
drug revenue. CMS has proposed the same basic approach under phase I of
the model that was described in the June 2015 MedPAC report: A fixed
percentage with a flat fee, specifically, a fixed percentage of 2.5
percent and a flat fee of $16.80 per drug per day administered.
Question. The proposed rule presupposes there are lower cost Part B
drug alternatives available for all Medicare patients. How many
treatment situations exist where there are true clinical substitutes,
with one costing significantly less than the other? What evidence did
the agency use in making that determination? Did the agency account for
patients' perspectives and experiences in making the determination?
Answer. CMS proposed two phases for the Part B Drug Payment Model.
In phase I of the model, CMS proposed implementing a variation to the
add-on component of Part B drug payment methodology in different
geographic areas of the country. Phase I would establish payment at
Average Sales Price (ASP) plus a 2.5 percent add-on percentage and a
flat fee per administration day as a budget neutral test.
In phase II of this proposed model, CMS proposed to implement
value-based purchasing (VBP) tools in conjunction with the phase I
variation of the ASP add-on payment amount for drugs paid under Part B.
Phase II would use tools currently employed by commercial health plans,
pharmacy benefit managers (PBMs), hospitals, and other entities that
manage health benefits and drug utilization. Specifically, CMS proposed
to apply one or more VBP tools, such as indications-based pricing,
reference pricing, and clinical decision support tools to Part B drugs.
Neither phase of the Part B model presupposes there are lower cost
Part B drug alternatives available for all Medicare patients. Rather,
the proposed model would test, in specific geographic areas, whether
the proposed alternative approach for the ASP add-on payment and
proposed VBP tools would strengthen the financial incentives for
physicians to choose higher value drugs.
Under the proposed Part B drug payment model, beneficiaries would
still have access to the same drugs and would retain the complete
freedom of choice of doctors, hospitals, and other providers or
suppliers. The proposed model would not affect drug coverage or any
other Medicare benefits. In the proposed rule, CMS noted that the
current Part B drug payment policy at ASP+6 percent could have
incentives for prescribing higher cost drugs when comparable lower cost
drugs are available, increasing expenditures. CMS also proposed a pre-
appeals exceptions review process for phase II of the model, which
would create a mechanism for beneficiaries, providers, and suppliers to
request an exception to Medicare's value-based pricing policy, if
warranted in the beneficiary's circumstances. CMS is carefully
considering the comments received from stakeholders during the comment
period on the proposed model to determine whether adjustments are
needed.
effect of reduced average sales price add-on
Question. The reality is that the Part B drug payment rate is not
Average Sales Prices (ASP) plus 6 percent but ASP plus 4.3 percent
after the mandatory sequester is applied. This effective rate does not
even take into account prompt pay discounts, which are widely estimated
at 1-2 percent of ASP. Does CMS agree with this assessment?
Answer. CMS is required to reduce Medicare payments for Part B
drugs under the Balanced Budget and Emergency Deficit Control Act of
1985 (BBEDCA), as amended by the Budget Control Act of 2011. The
application of the sequestration requires the reduction of Medicare
payments by 2 percent for Medicare FFS claims with dates-of-service or
dates of discharge on or after April 1, 2013. The manufacturer's ASP is
calculated based on sales to all purchasers other than sales exempt
from best price (such as prices charged to 340B covered entities) and
sales at nominal charge, and is net of volume discounts, prompt pay
discounts, cash discounts, free goods that are contingent on any
purchase requirement, chargebacks and rebates (other than rebates under
the Medicaid drug rebate program). The model does not address the
underlying ASP calculation, including the inclusion of prompt discounts
in accordance with the ASP statute. The model also does not consider
reductions applied to Medicare payment under sequestration, which is
independent of Medicare payment policy.
Question. Considering that ASP is an average, with some providers
inherently paying above it and some below it, won't some providers be
paying more to acquire some drugs that they are reimbursed for them
considering that the payment rate amounts to ASP plus less than 1
percent?
Answer. Under phase I of the Part B Drug Payment Model, CMS
proposed to modify the ASP add-on amount in a budget neutral manner.
Overall, Part B drug payment to practitioners, pharmacies, and
hospitals by specialty in phase I of this proposed model would not
change, as the ASP add-on revision is proposed to be budget neutral. We
do not expect a sizable overall reduction in Part B drug spending
associated with phase I of this model, but we do anticipate an
incentive to use higher value drugs. We believe that phase I of this
model will not change how Part B drugs are acquired by providers or
suppliers, or how drug manufacturers sell their products to providers,
suppliers, or intermediaries such as wholesalers. CMS is carefully
considering the comments received from stakeholders during the comment
period on the proposed model to determine whether any adjustments to
the model are needed.
Question. The Medicare Payment Advisory Commission (MedPAC) looked
at invoice prices for 34 high expenditure drugs, many of them likely
cancer drugs, and found that one-third were being sold at more than 102
percent of ASP. How does CMS expect oncologists (or other physician
specialists) in small, rural and community-based practices to acquire
necessary cancer drugs if they will be paid less than their acquisition
cost?
Answer. CMS is aware of the unique challenges that patients and
providers in rural areas and providers in small practices may face. The
proposed rule set forth our belief that the proposed payment rate of
102.5 percent of ASP plus $16.80 should be sufficient to cover the
provider's or supplier's purchase price. Additionally, in the proposed
rule, we estimated that overall spending on drugs furnished in the
office setting would increase while spending on drugs furnished in the
hospital setting would decrease under phase I of the model. As part of
the proposed rule, we specifically solicited comments on the potential
effect that this proposed model may have on rural practices, how rural
practices may differ from non-rural practices, and whether rural
practices should be considered separately from other practice
locations. We also solicited comments on any potential effects this
proposed model may have on small practices, how small practices may
differ from large practices, and whether small practices should be
considered separately from other practices. These are important issues,
and CMS is closely reviewing the comments received during the comment
period to determine whether adjustments are needed.
Question. Has CMS conducted any analysis as to whether certain
practices, especially those that are small and/or rural, would close or
sell to a hospital?
Answer. There have been longstanding trends in site of service
driven by market forces unrelated to what the proposed Part B Drug
Payment Model would be testing.\1\ This proposed Part B Drug Payment
Model is intended to lead to better value for Part B by encouraging
providers and suppliers to choose higher value drugs. While the
proposed rule presented information indicating that the model design
would not favor hospitals over physician practices, we have received
feedback from stakeholders on this issue. In the proposed rule, we
estimated that, in the aggregate, rural practitioners would be
estimated to experience a net benefit under phase I of the model. And
overall, spending on drugs furnished in the office setting would
increase while spending on drugs furnished in the hospital setting
would decrease under phase I of the model. We are carefully considering
the comments received during the comment period to determine whether
adjustments to the model are needed.
---------------------------------------------------------------------------
\1\ MedPAC March 2016 report, http://www.medpac.gov/docs/default-
source/reports/chapter-3-hospital-inpatient-and-outpatient-services-
march-2016-report-.pdf?sfvrsn=0.
Question. If practices are unable to provide drugs for which their
acquisition cost exceeds the payment--and close or sell to a hospital
as a result--it is possible that beneficiaries would forgo or delay
receiving needed drug treatments? If so, what is the impact on
beneficiary health and program expenditures on account of the likely
increase in other services, including expensive preventable hospital
---------------------------------------------------------------------------
admissions and readmissions?
Answer. The proposed Part B Drug Payment Model is intended to lead
to better value for Part B by encouraging providers and suppliers to
choose higher value drugs. The proposed rule set forth our belief that
the proposed payment rate of 102.5 percent of ASP plus $16.80 should be
sufficient to cover the provider's or supplier's purchase price.
CMS's evaluation of the Part B Drug Payment Model would test the
proposed innovative health care payment model in this proposed rule to
examine its potential to lower program expenditures while maintaining
or improving the quality of care furnished to Medicare Program
beneficiaries. One of the key evaluation questions that CMS proposed
for this purpose pertained to the proposed model's impact on quality of
care, access to care, timeliness of care, and the patient experience of
care.
Additionally, as discussed in CMS's testimony, CMS would be closely
monitoring beneficiary access and health outcomes during the model.
There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
In addition to the current Medicare claims appeals processes, which
would remain available, CMS is proposing to establish a pre-appeals
payment exceptions review process for phase II of the model which would
allow the provider, supplier, or beneficiary to explain why an
exception to the model's value-based payment policy is warranted in the
beneficiary's circumstance. This process would be in addition to, not
in lieu of, the current appeals process. Payment exceptions decisions
would be issued within 5 business days of receipt of the request for a
payment exception. CMS sought comment on these proposed beneficiary
protections and values public input. We are carefully reviewing all the
comments we received during the comment period, and CMS looks forward
to continuing to work with stakeholders to ensure quality care and high
value for Medicare beneficiaries.
shift in site of service; potential for consolidation
Question. Has CMS evaluated how this demonstration could impact the
ability of a physician practice in the community, including those in
oncology, rheumatology, ophthalmology, and others, to remain
independent and keep patients out of more costly care settings?
Answer. The proposed Part B Drug Payment Model is intended to lead
to better value for Part B by encouraging providers and suppliers to
choose higher value drugs. The proposed rule includes estimated impacts
of the proposed rule on physician specialties, including oncologists,
rheumatologists and ophthalmologists. In the proposed rule, we
estimated that overall spending on drugs furnished in the office
setting would increase while spending on drugs furnished in the
hospital setting would decrease under phase I of the model. While the
proposed rule presented information indicating that the model design
would not favor hospitals over physician practices, we have received
feedback from stakeholders on this issue. We are carefully considering
the comments received during the comment period to determine whether
adjustments to the model are needed.
Question. The cost of treating patients in community-based clinics
treating cancer (and other conditions) as opposed to the outpatient
hospital setting results in significantly lower costs to both patients
and the Medicare program. What steps is CMS taking to ensure this
demonstration will not push patients out of community care settings
into the more costly hospital based setting?
Answer. Under the proposed Part B drug payment model, beneficiaries
would still have access to the same drugs and would retain the complete
freedom of choice of doctors, hospitals, and other providers or
suppliers. The proposed model would not affect drug coverage or any
other Medicare benefits. We know that under the current Part B cost
structure, beneficiaries utilizing Part B drugs, especially those using
higher cost drugs, may face significant out-of-pocket expenses. To the
extent that prescribing patterns do shift towards lower cost drugs, in
aggregate, beneficiaries would benefit along with the Medicare program.
As discussed in CMS testimony, CMS would also be closely monitoring
beneficiary access and health outcomes during the model. There would be
a real-time claims monitoring program to track utilization, spending,
and prescribing patterns as well as changes in site of service
delivery, mortality, hospital admissions, and several other high-level
claims-based measures. This would help ensure that Medicare
beneficiaries will continue to have access to Part B drugs under the
model.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted in the
beneficiary's circumstance. CMS values public input and looks forward
to continuing to work with stakeholders to ensure quality care for
Medicare beneficiaries.
Question. What impact will this proposal have on consolidation in
the health-care system and the continued shift of care from the
physician office to the hospital?
Answer. The proposed Part B Drug Payment Model was intended to lead
to better value for Part B by encouraging providers and suppliers to
choose drugs that are higher value, while preserving or enhancing the
quality of care provided to Medicare beneficiaries. There have been
longstanding trends driving changes in site of service driven by market
forces unrelated to what the proposed Part B Drug Payment Model would
test.\2\
---------------------------------------------------------------------------
\2\ MedPAC March 2016 report, http://www.medpac.gov/docs/default-
source/reports/chapter-3-hospital-inpatient-and-outpatient-services-
march-2016-report-.pdf?sfvrsn=0.
While the proposed rule presented information indicating that the
model design would not favor hospitals over physician practices, we
have received feedback from stakeholders on this issue. In the proposed
rule, overall, we estimated spending on drugs furnished in the office
setting would increase while spending on drugs furnished in the
hospital setting would decrease under phase I of the model. We are
carefully considering the comments received during the comment period
---------------------------------------------------------------------------
to determine whether adjustments to the model are needed.
Question. How will CMS track, and respond to, shifts in the site of
care that may result from the proposed demonstration? What protections
will CMS take to ensure that the demonstration does not further
exacerbate the existing trend of hospital-physician consolidation?
Answer. As discussed in CMS testimony, CMS would be closely
monitoring beneficiary access and health outcomes during the model.
There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns, as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
While the proposed rule presented information indicating that the
model design would not favor hospitals over physician practices, we
have received feedback from stakeholders on this issue. We are
carefully considering the comments received during the comment period
to determine whether adjustments to the model are needed.
beneficiary impact and engagement
Question. As the proposed rule does not contain detail on how CMS
will assess beneficiary access to needed drugs and the quality of care
they receive for their conditions during the course of the
demonstration nor the evaluation of it, please indicate: the mechanisms
the agency has in place, or plans to develop, to track patient access
to Part B drugs; and the plan to monitor patient outcomes in real time
to ensure patients are accessing appropriate courses of treatment.
Answer. CMS's evaluation of the Part B Drug Payment Model would
test the proposed innovative health-care payment model in this proposed
rule to examine its potential to lower program expenditures while
maintaining or improving the quality of care furnished to Medicare
Program beneficiaries. One of the key evaluation questions that CMS
proposed for this purpose pertained to the proposed model's impact on
quality of care, access to care, timeliness of care, and the patient
experience of care.
Additionally, as discussed in CMS's testimony, CMS would also be
closely monitoring beneficiary access and health outcomes during the
model. There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
Question. What quality measures will the agency use to determine if
patients are receiving not just appropriate but high quality care?
Answer. CMS's proposal to evaluate the Part B Drug Payment Model
would focus upon whether the intervention reduces costs while
maintaining or improving quality of care. We proposed to examine the
model impact at the provider and supplier level and at the beneficiary
level. The evaluation would address questions such as: what is the
impact on quality of care, access to care, timeliness of care, and the
patient experience of care? It also could include assessments of
prescribing and utilization patterns, health outcomes, Medicare
expenditures, provider and supplier costs, and other potential impacts
of interest to stakeholders.
Question. How will the agency act fast enough to address any
access, quality, or outcome problems identified so as to ensure that
beneficiary care is not jeopardized or beneficiaries are otherwise put
at risk?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. In accordance with
the statute, CMS will modify or terminate the model if, after testing
has begun, the Part B Drug Payment Model is not expected to improve or
maintain the quality of care for beneficiaries.\3\
---------------------------------------------------------------------------
\3\ https://www.ssa.gov/OP_Home/ssact/title11/1115A.htm.
Under the proposed model, beneficiaries would still have access to
the same drugs and would retain the complete freedom of choice of
doctors, hospitals, and other providers or suppliers. The proposed
---------------------------------------------------------------------------
model would not affect drug coverage or any other Medicare benefits.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted in the
beneficiary's circumstance.
Additionally, as discussed in CMS's testimony, CMS would also be
closely monitoring beneficiary access and health outcomes during the
model. There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
Question. Does CMS plan to track the impact of this demonstration
on long-term biopharmaceutical innovation?
Answer. In phase I of the model, CMS proposed to implement a
variation to the add-on component of Part B drug payment methodology in
different geographic areas of the country. We would test whether an
alternative approach for the ASP add-on payment would strengthen the
financial incentive for physicians to choose higher value drugs. While
this proposed approach would address the add-on to the manufacturer's
ASP, it does not directly address the manufacturer's ASP, which is a
more significant driver of drug expenditures than the add-on payment
for Part B drugs.
As required by statute, CMS's evaluation of the Part B Drug Payment
model would focus upon whether the intervention reduces costs while
maintaining or improving quality of care. As proposed, the evaluation
would focus on key policy questions such as: payment, prescribing
patterns, prescriber acquisition prices, outcomes/quality, unintended
consequences and variable model effects. In addition, in the Part B
Drug Payment Model proposed rule, CMS sought comments on other
potential questions for inclusion in the evaluation of the Part B Drug
Payment Model. We are assessing the comments received during the public
comment period.
Question. Given that there is a concern about randomizing patients
to treatment arms that may have fewer treatment options and diminished
quality of care, does CMS plan to require patients to provide informed
consent prior to participating in this demonstration?
Answer. Ensuring beneficiary access to high-quality care and
treatment is always at the forefront of CMS's work. Under the proposed
model, beneficiaries would still have access to the same drugs and
would retain the complete freedom of choice of doctors, hospitals, and
other providers or suppliers regardless of model arm. The proposed
model would not affect drug coverage or any other Medicare benefits.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted under
the beneficiary's circumstances. In addition, CMS would be evaluating
beneficiary access, quality of care, timeliness of care, and the
patient experience of care during the model. For example, there would
be a real-time claims monitoring program to track utilization,
spending, and prescribing patterns as well as changes in site of
service delivery, mortality, hospital admissions, and several other
high-level claims-based measures. This would help ensure that Medicare
beneficiaries will continue to have access to Part B drugs under the
model. CMS has released a fact sheet for beneficiaries that includes
key information they need to know about the proposed model.\4\ CMS
values public input and looks forward to continuing to work with
stakeholders to ensure quality care and high value for Medicare
beneficiaries.
---------------------------------------------------------------------------
\4\ https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/
2016-Fact-sheets-items
/2016-03-08-02.html.
---------------------------------------------------------------------------
overlapping models and interaction with other payment changes
Question. The Oncology Care Model (OCM) officially launched on July
1st. Has CMS thoroughly evaluated how this proposed demonstration will
impact those practices participating in the OCM? If both demonstrations
run concurrently, how does CMS plan to track outcomes and attribute
savings achieved to either model?
Answer. We acknowledged in the proposed rule that there is
potentially greater overlap between the Part B Drug Payment Model
presented in the proposed rule and the Oncology Care Model (OCM) in
that both models would affect providers' and suppliers' incentives for
the use of oncology drugs, but in different ways. The proposed rule set
forth our belief that including OCM practices in the Part B Drug
Payment Model would not compromise our ability to evaluate effectively
the effects of either model. In the proposed rule, we solicited comment
on our approach to include OCM practices. We also solicited comment on
our proposal to include OCM practices, including the best mechanism to
account for the overlap between these two models in our sample design
and whether we should consider excluding OCM practices entirely. We are
carefully reviewing all of the comments received during the comment
period to determine whether adjustments are needed.
Question. Some have speculated that CMS will exempt oncologists
participating in the OCM from this demonstration. While this would be a
step in the right direction, it would not spare beneficiaries with
cancer from potential adverse impact. How many oncologists are
participating in the OCM and how many oncologists who treat Medicare
patients are not participating?
Answer. The goal of OCM is to utilize appropriately aligned
financial incentives to enable improved care coordination,
appropriateness of care, and access to care for beneficiaries
undergoing chemotherapy. OCM encourages participating practices to
improve care and lower costs through an episode-based payment model
that financially incentivizes high-quality, coordinated care. The
Innovation Center expects that these improvements will result in better
care, smarter spending, and healthier people. In June 2016, CMS
announced that 195 practices and 17 non-Medicare payers are
participating in the Oncology Care Model. More than 3,200 oncologists
are participating in OCM from these physician practices, and these
practices treat nearly a quarter of all Medicare Fee-for-Service
beneficiaries with cancer who receive chemotherapy.\5\
---------------------------------------------------------------------------
\5\ http://www.hhs.gov/about/news/2016/06/29/hhs-announces-
phvsician-groups-selected-initiative-promoting-better-cancer-care.html.
Question. In 2015, Congress enacted physician payment reforms
through the bipartisan Medicare Access and CHIP Reauthorization Act
(MACRA) that encourage physicians to participate in alternative payment
models (APMs). This Part B drug proposed demonstration significantly
effects oncologists, rheumatologists, ophthalmologists,
gastroenterologists, and physicians in other specialties that are
interested in developing or participating in APMs. Doesn't this
demonstration, especially with its reduced ASP based payment for many
drugs, make it significantly harder for physicians to invest the time
and resources to successfully participate in APMs as envisioned by
---------------------------------------------------------------------------
MACRA and as the administration has made a priority?
Answer. The proposed Part B Drug Payment Model is intended to lead
to better value for Part B by encouraging providers and suppliers to
choose higher value drugs. The proposed rule includes estimated impacts
of the proposed rule on physician specialties, including oncologists,
rheumatologists, and ophthalmologists. The proposed rule set forth our
belief that the proposed payment rate of 102.5 percent of ASP plus
$16.80 should be sufficient to cover the provider's or supplier's
purchase price.
In the proposed rule, we estimated that overall spending on drugs
furnished in the office setting would increase while spending on drugs
furnished in the hospital setting would decrease under phase I of the
model. While the proposed rule presented information indicating that
the model design would not favor hospitals over physician practices, we
have received feedback from stakeholders on this issue. We are
carefully considering the comments received during the comment period
to determine whether adjustments to the model are needed.
We know that physicians and other clinicians may need assistance in
transitioning to the Merit-based Incentive Payment System (MIPS)
created by the Medicare Access and CHIP Reauthorization Act (MACRA),
and we want to make sure that they have the tools they need to succeed
in a redesigned system. MACRA provided funding for technical assistance
to small practices, rural practices, and practices in medically
underserved health professional shortage areas (HPSAs).
CMS announced the availability of $20 million of this funding for
on-the-ground training and education for Medicare clinicians in
individual or small group practices of 15 clinicians or fewer. These
funds will help provide hands-on training tailored to small practices,
especially those that practice in historically under-resourced areas
including rural areas, HPSAs, and medically underserved areas. As
required by MACRA, HHS will award $20 million each year for 5 years,
providing $100 million in total to help these practices successfully
participate in the Quality Payment Program.
In addition to MACRA implementation efforts, last month, CMS
launched the second round of the Support and Alignment Networks under
the Transforming Clinical Practice Initiative. TCPI is leveraging
primary and specialist care transformation work and learning that will
catalyze the adoption of APMs on a large scale. CMS is carefully
considering the comments received from stakeholders on the Part B Drug
Payment Model proposed rule and the proposed MACRA rule.
phase ii policy ideas
Question. The proposed rule provides little detail on the numerous
phase II policy ideas, while leaving it open that providers will have
to participate in up to all five of the ideas as early as January 1,
2017. CMS has made comments subsequent to the release of the proposed
rule seeming to acknowledge that, at a minimum, a multi-step process is
needed to develop any of the ideas before they are even possibly
workable. Does CMS plan to engage stakeholders in an iterative process
before implementing any of these ideas?
CMS proposes that phase II include reference pricing, which would
effectively limit payment for Part B drugs based on a CMS assessment of
whether there is a ``therapeutically similar'' medicine available at a
lower cost.
How will CMS identify ``therapeutically similar'' therapies
considering the highly individualized reactions that patients can have
to different treatments, especially biologicals that interact directly
with a patient's own immune system.
Answer. Phase II of the proposed Part B Drug Payment Model would
use tools currently employed by commercial health plans, pharmacy
benefit managers, hospitals, and other entities that manage health
benefits and drug utilization. The proposed rule set forth our belief
that some of these approaches, when appropriately structured, may be
adaptable to Part B.
In the proposed rule, we proposed several value-based pricing
tools: reference pricing, indications-based pricing, outcomes-based
risk sharing agreements, and discounting or eliminating patient
coinsurance amount. This group of tools would serve as a framework for
interventions for selected Part B drugs. We would not apply all these
tools to all Part B drugs but implement these tools in a limited manner
for certain HCPCS drug codes after considering these tools'
appropriateness to specific Part B drugs within these codes.
As we noted in the proposed rule, we would gather additional
information on the proposed tools, including which specific Part B
drugs would be suitable candidates for the application of specific
tools within the group. CMS also proposed to finalize the
implementation of specific tools for specific HCPCS codes after
soliciting public input on each proposal by posting on the CMS website,
and we would allow 30 days for public comment. CMS will also notify the
public by posting on the CMS website of application of any VBP tools 45
days before implementation.
Question. Does CMS have a plan in place to address situations in
which not every product in a therapeutic class is approved for the
exact same set of clinical indications?
Answer. Under phase II of the proposed Part B Drug Payment Model,
CMS would gather additional information on the proposed tools,
including which specific Part B drugs are suitable candidates for the
application of specific tools within the group. We would not apply all
these tools to all Part B drugs but implement these tools in a limited
manner for certain HCPCS drug codes after considering these tools'
appropriateness to specific Part B drugs within these codes. CMS also
proposed to finalize the implementation of specific tools for specific
HCPCS codes after soliciting public input on each proposal by posting
on the CMS website, and we would allow 30 days for public comment. CMS
will also notify the public by posting on the CMS website of
application of any VBP tools 45 days before implementation.
Furthermore, CMS has proposed a new pre-appeals payment exceptions
review process under phase II of the model, in addition to the current
Medicare claims appeals processes, that would allow the beneficiary,
provider, or supplier to explain why an exception to Medicare's value
based pricing policy is warranted in the beneficiary's circumstances.
Question. CMS proposes that phase II include indications-based
pricing, which seeks to pay for treatment of different indications for
a drug at different rates. Does CMS have the ability to track the
specific indication for which a drug is provided through the current
coding and claims processes?
Answer. CMS proposed to use indications-based pricing, which would
pay varying prices for a given drug based on its varying clinical
effectiveness for different indications that are covered under existing
Medicare authority, specifically section 1861(t) of the Act, and
existing national and local coverage determinations. Tracking a
specific indication for which a drug is furnished is part of ensuring
that items and services furnished are reasonable and necessary for
Medicare coverage and payment.\6\
---------------------------------------------------------------------------
\6\ https://innovation.cms.gov/initiatives/part-b-drugs.
Question. What evidence would CMS use to determine a drug's
---------------------------------------------------------------------------
effectiveness for each of the different indications?
Answer. In the proposed rule, CMS proposed to use indications-based
pricing where appropriately supported by published studies and reviews
or evidenced-based clinical practice guidelines to more closely align
drug payment with outcomes for a particular clinical indication.
Indications-based pricing decisions would reflect the clinical evidence
available and strive to rely on competent and reliable scientific
evidence from neutral and/or independent sources. As defined in the
proposed rule, high quality evidence is comprehensive, relies on
randomized trial designs where possible, and measures outcomes.
Research findings should be valid, competent, reliable and
generalizable to the Medicare population.
Question. Would the determination of effectiveness reflect the
standard of care for individual patients?
Answer. As noted above, CMS proposed to use indications-based
pricing where appropriately supported by published studies and reviews
or evidence-based clinical practice guidelines to more closely align
drug payment with outcomes for a particular clinical indication. As we
stated in the proposed rule, research findings should be valid,
competent, reliable and generalizable to the Medicare population.
Furthermore, CMS has proposed a new pre-appeals payment exceptions
review process under phase II of the model, in addition to the current
Medicare claims appeals processes, that would allow the beneficiary,
provider, or supplier to explain why an exception to Medicare's value
based pricing policy is warranted in the beneficiary's circumstances.
Question. CMS proposes that phase II include value-based
contracting, which would determine the payment for a drug based on the
outcome achieved by the patients taking it. How would the agency
determine the desired outcome for a drug; e.g., would it be done by
agency officials, contractor personnel?
Answer. Under phase II of the Part B Drug Payment model, we
proposed to test approaches for transitioning from a volume-based
payment system into one that encourages or even rewards providers and
suppliers who maintain or achieve better patient outcomes while
lowering Part B drug expenditures. As we noted in the proposed rule,
the market today uses the term ``value based'' to encompass a wide
variety of different options designed to improve clinical results,
quality of care provided, and reduce costs. The following example
highlights one of the value based pricing tools currently in use, which
was described in the proposed rule. We proposed to test one or more of
these tools during phase II of the model.
We proposed to use indications-based pricing where appropriately
supported by published studies and reviews or evidenced-based clinical
practice guidelines to more closely align drug payment with outcomes
for a particular clinical indication.
Indications-based pricing decisions would reflect the clinical
evidence available and strive to rely on competent and reliable
scientific evidence from neutral and/or independent sources. We
understand that the quality of available evidence can vary for any
given drug or indication. As defined in the proposed rule, high quality
evidence is comprehensive, relies on randomized trial designs where
possible, and measures outcomes. Research findings should be valid,
competent, reliable, and generalizable to the Medicare population.
To protect beneficiaries and to allow for the consideration of
special circumstances that may warrant the use of non-model payments in
certain situations, we proposed a pre-appeals payment exceptions
process for phase II of the model. CMS also sought comment on potential
safeguards that could be implemented with each of the value-based
pricing tools to make certain that the intent of the policy is not
undermined. We are carefully reviewing the comments received during the
comment period.
Question. Does CMS believe that the existing data infrastructure is
equipped to measure patient outcomes in real time and determine, in an
evidence-based manner, that the outcomes are the direct result of
treatment decisions? Has the agency assessed the impact of these phase
II ideas on the ability to realize the promise of personalized
medicine, which is a priority of the administration?
Answer. We proposed the Part B Drug Payment Model to test whether
alternative drug payment designs would lead to a reduction in Medicare
expenditures, while preserving or enhancing the quality of care
provided to Medicare beneficiaries. This proposed model's goals are
consistent with the administration's broader strategy to encourage
better care, smarter spending, and healthier people by paying providers
and suppliers for what works, unlocking health-care data, and finding
new ways to coordinate and integrate care to improve quality.
Ensuring beneficiary access to high-quality care and treatment is
always at the forefront of CMS's work. Under the proposed model,
beneficiaries would still have access to the same drugs and would
retain the complete freedom of choice of doctors, hospitals, and other
providers or suppliers. The proposed model would not affect drug
coverage or any other Medicare benefits. As we noted in the proposed
rule, we would gather additional information on the proposed value
based pricing tools, including specific Part B drugs suitable for the
application of these group of tools.
As stated above, CMS's proposed evaluation of the Part B Drug
Payment Model would also test the proposed innovative health care
payment model in this proposed rule to examine its potential to lower
program expenditures while maintaining or improving the quality of care
furnished to Medicare Program beneficiaries. One of the key evaluation
questions that CMS proposed for this purpose pertained to the proposed
model's impact on quality of care, access to care, timeliness of care,
and the patient experience of care. In the context of our proposal
regarding outcomes-based risk-sharing agreements, we also sought
comment on methods to collect and measure outcomes, including
parameters around standardizing value metrics based on differences in
drug treatments and their targeted patient subpopulations.
In addition, as discussed in CMS testimony, CMS would be closely
monitoring beneficiary access and health outcomes during the model.
There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
immune disorder impact
Question. The Part B drug demonstration as proposed will have an
adverse impact on patients with auto-immune diseases such as rheumatic
diseases, Crohn's Disease, and Lupus, among others. These patients face
debilitating pain and suffering, often eased only by the use of
targeted medications provided by or under the close supervision of a
rheumatologist. Further, these diseases often precipitate or are
associated with collateral chronic conditions and are often associated
with heightened sensitivity to changes in medication.
Did CMS conduct any analyses on the impact of this proposed
demonstration on patients with immune disorders?
Answer. Under the proposed Part B Drug Payment Model,
beneficiaries, including those with immune disorders, would still have
access to the same drugs and would retain the complete freedom of
choice of doctors, hospitals, and other providers or suppliers. The
proposed model would not affect drug coverage or any other Medicare
benefits.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted in the
beneficiary's circumstances. In addition, CMS would be evaluating
beneficiary access and health outcomes during the model.
For example, there would be a real-time claims monitoring program
to track utilization, spending, and prescribing patterns as well as
changes in site of service delivery, mortality, hospital admissions,
and several other high-level claims-based measures. This would help
ensure that Medicare beneficiaries will continue to have access to Part
B drugs under the model. CMS values public input and looks forward to
continuing to work with stakeholders to ensure quality care and high
value for Medicare beneficiaries.
Question. Which, if any, specialty societies and/or patient groups
were consulted to assure that any reimbursement-driven change in
medications would not negatively impact the health of patients with
immune disorders?
Answer. We solicited comments on many different aspects of the
proposed Part B Drug Payment Model such as scope of the model and the
effects on small practices and practices in rural areas. In all, we
received more than 1,350 comments from a wide range of stakeholders,
including specialty societies and patient groups. The Department of
Health and Human Services (HHS) also convened the HHS Pharmaceutical
Forum where we heard from a broad range of stakeholders on
opportunities to improve patient access to affordable prescription
drugs, develop innovative purchasing strategies and incorporate value-
based and outcomes-based models into purchasing programs in both the
public and private sectors. Stakeholder input is very important to us,
and is one key reason why we utilized the notice and comment rulemaking
process in developing this model. We are carefully considering the
comments received during the comment period to determine whether
adjustments are needed. Our goal is to be responsive to public comments
received during the comment period and input from the Congress.
Question. The proposed demonstration will have a significant impact
on physicians that treat immune disorders. The vast majority of
rheumatologists practice with at most 1 or 2 fellow physicians, and
those practicing in rural areas often have solo practices. In fact,
many smaller communities have access to few or no rheumatologists.
Further, while the demand for rheumatology services is projected to
grow significantly in the next decade, the number of practicing
rheumatologists will only increase by just over 1 percent.
Did CMS examine the relative impact on rheumatologists by urban and
rural location, or by size of practice?
Answer. We are aware of the unique challenges that rheumatologists
and other types of practitioners in small practices or in rural areas
may face. The Part B Drug Payment Model proposed rule includes
estimated impacts of the proposed rule on physician specialties,
including rheumatologists. In the proposed rule, we estimated that, in
the aggregate, rural practitioners would be estimated to experience a
net benefit under phase I of the model. And overall, spending on drugs
furnished in the office setting would increase while spending on drugs
furnished in the hospital setting would decrease under phase I of the
model.
As part of the proposed rule, we specifically solicited comments on
the potential effect that this proposed model may have on rural
practices, how rural practices may differ from non-rural practices, and
whether rural practices should be considered separately from other
practice locations. We are carefully considering the comments received
during the comment period to determine whether adjustments are needed.
Question. Did CMS undertake any distributional analyses of the
affected specialty physicians, in particular whether its use of Primary
Care Service Areas as an organizing principle was appropriate for a
project affecting shortage specialties such as rheumatology?
Answer. CMS proposed Primary Care Service Areas (PCSAs) as a unit
of analysis to meet the needs of the Part B Drug Payment proposed
model. The PCSAs were developed with funding from the Health Resources
and Services Administration (HRSA) to address health workforce planning
and policy, and the PCSA datasets available from HRSA include measures
of specialty physician capacity that can be used to examine their
distributions.\7\ CMS also solicited comment in the proposed rule for
many topics that could affect the way the model test would have to
address shortage specialties, including the scope of the model and the
effect of the model on small practices and rural areas. We are
reviewing all comments received during the comment period to determine
whether adjustments are needed.
---------------------------------------------------------------------------
\7\ http://bhpr.hrsa.gov/healthworkforce/data/
primarycareserviceareas/index.html.
Question. Did CMS assess the impact of the demonstration on the
health-care workforce, especially with respect to the number of
---------------------------------------------------------------------------
rheumatology internship positions?
Answer. We are aware of the unique challenges that rheumatologists
in small practices or in rural areas may face. The Part B Drug Payment
Model proposed rule included estimated impacts of the proposed model on
physician specialties, including rheumatologists. However, CMS did not
assess the impact of the model on the number of rheumatology internship
positions for purposes of the proposed rule.
Question. My understanding is that Medicare Part B covers seven
drugs to treat rheumatoid arthritis. It is also my understanding that
it is very common for rheumatoid arthritis patients to try multiple
treatments before they find the one that works well for them. Even once
a patient is stable, they can stop responding to a treatment and may
need to switch medications to continue to effectively manage their
condition. For these patients the availability of multiple treatment
options is the key to optimizing their health. Realizing that the
proposed payment changes are may effectively limit the number of
treatment options, doesn't this amount to CMS making decisions
regarding the best treatment option as opposed to the physician and the
patient?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. Under the proposed
model, beneficiaries would still have access to the same drugs and
would retain the complete freedom of choice of doctors, hospitals, and
other providers or suppliers. The proposed model would not affect drug
coverage or any other Medicare benefits.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted under
the beneficiary's circumstances. In addition, CMS would be evaluating
beneficiary access, quality of care, timeliness of care, and the
patient experience of care during the model. For example, there would
be a real-time claims monitoring program to track utilization,
spending, and prescribing patterns as well as changes in site of
service delivery, mortality, hospital admissions, and several other
high-level claims-based measures. This would help ensure that Medicare
beneficiaries will continue to have access to Part B drugs under the
model. CMS values public input and looks forward to continuing to work
with stakeholders to ensure quality care and high value for Medicare
beneficiaries.
self-administered drugs
Question. What is the CMS rationale for including the self-
administered drugs covered under Part B in the demonstration when the
prescriber is not financially connected to the prescription? This
scenario seems to be outside of the agency's primary stated purpose for
the demonstration.
Answer. The Part B drug benefit includes many categories of drugs,
and encompasses a variety of care settings. With limited exceptions,
CMS proposed to include all Part B drugs in this model so that
alternative payment approaches could be examined across the entire
range of Part B drugs. CMS solicited comments on the drugs that were
proposed for inclusion in the model. We are carefully reviewing the
comments received during the comment period to determine whether
adjustments are needed.
______
Questions Submitted by Hon. Pat Roberts
Question. How does, or will, CMMI account for whether this test is
putting the next generation of treatment advances at risk by stifling
innovation, and subsequently new medicines, for Medicare patients due
to the level of uncertainty in Medicare payment that this proposal
creates?
Answer. In phase I of the Part B Drug Payment Model, CMS proposed
to implement a variation to the add-on component of Part B drug payment
methodology in different geographic areas of the country. We proposed
to test whether an alternative approach for the ASP add-on payment
would strengthen the financial incentive for physicians to choose
higher value drugs. While this approach would address the add-on to the
manufacturer's ASP, it would not directly address the manufacturer's
ASP, which is a more significant driver of drug expenditures than the
add-on payment for Part B drugs.
CMS's evaluation of the Part B Drug Payment Model would test the
proposed innovative health care payment model in this proposed rule to
examine its potential to lower program expenditures while maintaining
or improving the quality of care furnished to Medicare Program
beneficiaries. One of the key evaluation questions that CMS proposed
for this purpose pertained to the proposed model's impact on quality of
care, access to care, timeliness of care, and the patient experience of
care. In addition, in the Part B Drug Payment Model proposed rule, CMS
sought comments on other potential questions for inclusion in the
evaluation of the Part B Drug Payment Model.
Additionally, as discussed in CMS's testimony, CMS would also be
closely monitoring beneficiary access and health outcomes during the
model. There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model. We are carefully considering the comments received
during the comment period to determine whether adjustments to the model
are needed.
Question. Does CMMI believe it has the authority to waive the
Affordable Care Act's prohibition from using comparative effectiveness
research findings in determining Medicare coverage? And if so, please
provide the statutory citation from where this is derived.
Answer. Section 1115A of the Act authorizes the Innovation Center
to test innovative payment and service delivery models to reduce
program expenditures while preserving or enhancing the quality of care
furnished to Medicare, Medicaid, and Children's Health Insurance
Program beneficiaries. The statute gives the Secretary the authority to
design and test payment and service delivery models that meet certain
requirements as to spending and quality. For the Part B Drug Payment
Model, we proposed to exercise this authority to test whether
alternative drug payment designs discussed in the proposed rule would
lead to spending our dollars more wisely for drugs paid under Part B,
that is, a reduction in Medicare expenditures, while preserving or
enhancing the quality of care provided to Medicare beneficiaries. Under
the proposed model, beneficiaries would still have access to the same
drugs and would retain the complete freedom of choice of doctors,
hospitals, and other providers or suppliers. The proposed model would
not affect drug coverage or any other Medicare benefits.
Question. How does CMS plan to monitor and respond to site of care
changes that may occur as a result of the proposal?
Answer. There have been longstanding trends driving changes in site
of service driven by market forces unrelated to what the proposed Part
B Drug Payment Model would be testing.\8\ This proposed Part B Drug
Payment Model is intended to lead to better value for Part B by
encouraging providers and suppliers to choose higher value drugs. While
the proposed rule presented information indicating that the model
design would not favor hospitals over physician practices, we have
received feedback from stakeholders on this issue. In the proposed
rule, we estimated that, in the aggregate, rural practitioners would be
estimated to experience a net benefit under phase I of the model. And
overall, spending on drugs furnished in the office setting would
increase while spending on drugs furnished in the hospital setting
would decrease under phase I of the model. We are carefully considering
the comments received during the comment period to determine whether
adjustments to the model are needed.
---------------------------------------------------------------------------
\8\ MedPAC March 2016 report, http://www.medpac.gov/docs/default-
source/reports/chapter-3-hospital-inpatient-and-outpatient-services-
march-2016-report-.pdf?sfvrsn=0.
Question. How does CMS plan to monitor that patients' access to
medications remains the same as prior to the model? If issues arise,
---------------------------------------------------------------------------
how would the agency address the issue in a timely manner?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. Under the proposed
model, beneficiaries would still have access to the same drugs and
would retain the complete freedom of choice of doctors, hospitals, and
other providers or suppliers. The proposed model would not affect drug
coverage or any other Medicare benefits. One of the key evaluation
questions that CMS proposed for this purpose pertained to the proposed
model's impact on quality of care, access to care, timeliness of care,
and the patient experience of care.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted under
the beneficiary's circumstances. In addition, CMS would be evaluating
beneficiary access, quality of care, timeliness of care, and the
patient experience of care during the model. For example, there would
be a real-time claims monitoring program to track utilization,
spending, and prescribing patterns as well as changes in site of
service delivery, mortality, hospital admissions, and several other
high-level claims-based measures. This would help ensure that Medicare
beneficiaries will continue to have access to Part B drugs under the
model CMS values public input and looks forward to continuing to work
with stakeholders to ensure quality care and high value for Medicare
beneficiaries.
In addition, as discussed in CMS testimony, CMS would be closely
monitoring beneficiary access and health outcomes during the model.
There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures.
Question. CMMI is in the process of implementing the Enhanced MTM
Management Model. How many applications did CMS receive, were they even
across the 5 regions, how many Part D beneficiaries are expected to be
affected by the demo? In addition, please provide a description of the
types of models that you are working to implement with detail on the
manner in which MTM is delivered--either in person or remotely.
Answer. The Part D Enhanced Medication Therapy Management (Enhanced
MTM) model is an opportunity for stand-alone basic Prescription Drug
Plans (PDPs) in selected regions to offer innovative MTM programs,
aimed at improving the quality of care while also reducing costs. As
part of the ``better care, smarter spending, healthier people''
approach to improving health delivery, CMS will test changes to the
Part D program that would achieve better alignment of PDP sponsor and
government financial interests, while also creating incentives for
robust investment and innovation in better MTM targeting and
interventions. The objectives for this model are for stand-alone basic
PDP sponsors to learn how to ``right-size'' their investment in MTM
services and identify and implement innovative strategies to optimize
medication use, improve care coordination, and strengthen system
linkages.
The Enhanced MTM model test will begin January 1, 2017 with a five-
year performance period. CMS will test the model in 5 Part D regions:
Region 7 (Virginia), Region 11 (Florida), Region 21 (Louisiana), Region
25 (Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota,
Wyoming), and Region 28 (Arizona). Eligible basic stand-alone PDPs in
these regions, upon approval from CMS, can vary the intensity and types
of MTM items and services based on beneficiary risk level and seek out
a range of strategies to individualize beneficiary and prescriber
outreach and engagement. Given that the model participants and their
model strategies are still in the provisional acceptance phase, it
would be premature to release any information on the model applicants,
number of Part D beneficiaries impacted by the model, plans
provisionally selected for the model and their proposed MTM model
strategies before participants are finalized.
______
Questions Submitted by Hon. Johnny Isakson
Question. I believe that health-care providers and patients should
make treatment decisions based on individual patients' needs. If
health-care providers are subject to CMS's proposed policies that place
them under increased financial pressure, is it possible that CMS
reimbursement policy changes will drive decision making rather than the
individual needs of a patient?
Answer. Under the proposed model, beneficiaries would still have
access to the same drugs and would retain the complete freedom of
choice of doctors, hospitals, and other providers or suppliers. The
proposed model would not affect drug coverage or any other Medicare
benefits.
CMS proposed in phase I of this model to test whether an
alternative approach for the ASP add on would strengthen the financial
incentives for physicians to choose higher value drugs.
As described in the proposed rule, the 6 percent add-on may create
incentives for use of higher cost drugs when lower priced alternatives
exist. To remove the financial incentive that may be associated with
higher add-on payments, CMS proposed in phase I to test whether an
alternative approach for the ASP add-on would strengthen the financial
incentives for physicians to choose higher value drugs.
Phase II of the proposed Part B Drug Payment Model would use tools
currently employed by commercial health plans, pharmacy benefit
managers, hospitals, and other entities that manage health benefits and
drug utilization. The proposed rule set forth our belief that some of
these approaches, when appropriately structured, may be adaptable to
Part B. CMS also proposed a pre-appeals exceptions review process for
phase II of the model, which would create a mechanism for
beneficiaries, providers, and suppliers to request an exception to
Medicare's value-based pricing policy, if warranted in the
beneficiary's circumstances. CMS is carefully considering the comments
received from stakeholders during the comment period on the proposed
model to determine whether adjustments are needed.
Question. How is CMS factoring in individual needs of patients with
complex illnesses such as Parkinson's, Multiple Sclerosis, and others
into its reimbursement proposals?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. Under the proposed
Part B Drug Payment Model, beneficiaries would still have access to the
same drugs and would retain the complete freedom of choice of doctors,
hospitals, and other providers or suppliers. The proposed model would
not affect drug coverage or any other Medicare benefits. We know that
under the current Part B cost structure, beneficiaries utilizing Part B
drugs, especially those using higher cost drugs, may face significant
out-of-pocket expenses. To the extent that prescribing patterns do
shift towards lower cost drugs, in aggregate, beneficiaries would
benefit along with the Medicare program.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted in the
beneficiary's circumstances. In addition, CMS would be evaluating
beneficiary access and health outcomes during the model. As discussed
in CMS testimony, CMS would also be closely monitoring beneficiary
access and health outcomes during the model. There would be a real-time
claims monitoring program to track utilization, spending, and
prescribing patterns as well as changes in site of service delivery,
mortality, hospital admissions, and several other high-level claims-
based measures. This would help ensure that Medicare beneficiaries will
continue to have access to Part B drugs under the model. CMS values
public input and looks forward to continuing to work with stakeholders
to ensure quality care and high value for Medicare beneficiaries.
Question. If community providers--who will be hit hardest by these
proposals--cannot afford to furnish these therapies to patients,
patients will either have to forgo care or seek care in hospital
outpatient departments. Won't this increase costs for the Medicare
program given that treating patients in the hospital outpatient
department is more expensive than treating them in the community
setting?
Answer. There have been longstanding trends driving changes in site
of service driven by market forces unrelated to what the proposed Part
B Drug Payment Model would be testing. The Part B Drug Payment Model
was proposed to lead to better value for Part B by encouraging
providers to choose higher value drugs.
The proposed rule set forth our belief that the proposed payment
rate of 102.5 percent of ASP plus $16.80 should be sufficient to cover
the provider's or supplier's purchase price. The proposed rule
presented information that, overall, spending on drugs furnished in the
office setting would increase while spending on drugs furnished in the
hospital setting would decrease under phase I of the model.
Under the proposed Part B drug payment model, beneficiaries would
still have access to the same drugs and would retain the complete
freedom of choice of doctors, hospitals, and other providers or
suppliers. The proposed model would not affect drug coverage or any
other Medicare benefits.
CMS's evaluation of the Part B Drug Payment Model would test the
proposed innovative health-care payment model in this proposed rule to
examine its potential to lower program expenditures while maintaining
or improving the quality of care furnished to Medicare Program
beneficiaries. One of the key evaluation questions that CMS proposed
for this purpose pertained to the proposed model's impact on quality of
care, access to care, timeliness of care, and the patient experience of
care.
In addition to the current Medicare claims appeals processes, which
would remain available, CMS is proposing to establish a pre-appeals
payment exceptions review process for phase II of the model which would
allow the provider, supplier, or beneficiary to explain why an
exception to the model's value-based payment policy is warranted in the
beneficiary's circumstance. This process would be in addition to, not
in lieu of, the current appeals process. Payment exceptions decisions
would be issued within 5 business days of receipt of the request for a
payment exception.
CMS has proposed to closely evaluate beneficiary access and health
outcomes during the model. Additionally, as discussed in CMS testimony,
CMS would be closely monitoring beneficiary access and health outcomes
during the model. There would be a real-time claims monitoring program
to track utilization, spending, and prescribing patterns as well as
changes in site of service delivery, mortality, hospital admissions,
and several other high-level claims-based measures. This would help
ensure that Medicare beneficiaries will continue to have access to Part
B drugs under the model.
CMS sought comment on these proposed beneficiary protections and
values public input. We are carefully reviewing all the comments we
received during the comment period, and CMS looks forward to continuing
to work with stakeholders to ensure quality care and high value for
Medicare beneficiaries.
Question. Won't this also result in higher out-of-pocket costs for
patients due to higher copays/coinsurance?
Answer. CMS's proposal to evaluate the Part B Drug Payment Model
would focus upon whether the intervention reduces costs while
maintaining or improving quality of care. We proposed to examine the
model impact at the provider and supplier level and at the beneficiary
level. The evaluation would address questions such as: what is the
impact on quality of care, access to care, timeliness of care, and the
patient experience of care. It also could include assessments of
prescribing and utilization patterns, health outcomes, Medicare
expenditures, provider and supplier costs, and other potential impacts
of interest to stakeholders.
Question. If patients have to forgo care, won't this negatively
impact their health, and increase Medicare expenditures due to
otherwise preventable hospitalizations, surgical interventions, and
physician offices visits as well as other expensive services?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. Under the proposed
Part B Drug Payment Model, beneficiaries would still have access to the
same drugs and would retain the complete freedom of choice of doctors,
hospitals, and other providers or suppliers. The proposed model would
not affect drug coverage or any other Medicare benefits.
CMS has proposed to closely evaluate beneficiary access and health
outcomes during the model. CMS's proposed evaluation of the Part B Drug
Payment Model would also test the proposed innovative health care
payment model in this proposed rule to examine its potential to lower
program expenditures while maintaining or improving the quality of care
furnished to Medicare Program beneficiaries. One of the key evaluation
questions that CMS proposed for this purpose pertained to the proposed
model's impact on quality of care, access to care, timeliness of care,
and the patient experience of care.
Additionally, as discussed in CMS testimony, CMS would be closely
monitoring beneficiary access and health outcomes during the model.
There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
Question. Did CMS account for these higher costs to Medicare when
developing the proposed rule?
Answer. The Medicare Part B Drug Payment Model proposed rule
presented information indicating that the model design would not favor
hospitals over physician practices. Specifically, CMS estimated that
overall spending on drugs furnished in the office setting would
increase while spending on drugs furnished in the hospital setting
would decrease under phase I of the model. However, we received
feedback from stakeholders on this issue. We are carefully considering
the comments received during the comment period to determine whether
adjustments to the model are needed.
Question. I am concerned about the impact the proposed
demonstration will have on ``small'' practices. However, I think it is
important that we carefully consider what constitutes ``small'' in the
context of the proposed demonstration. In this case, ``small'' isn't
just necessarily the number of providers in a practice. ``Small'' could
also be determined by the number of doses of a drug that a practice
orders. Practices that do not order large quantities are less likely to
be able to secure rebates or other discounts that high volume
practitioners receive when purchasing medications. For example, in
ophthalmology, a ``small practice'' might be one that orders 1,000 or
fewer injections per year for the treatment of age-related macular
degeneration.
How is CMS looking at what is considered a ``small'' practice to
ensure that the demonstration does not negatively impact patient access
to their needed treatment options?
Answer. In the proposed rule on the Part B Drug Payment Model, CMS
estimated that overall spending on drugs furnished in the office
setting would increase while spending on drugs furnished in the
hospital setting would decrease under phase I of the model. In
addition, CMS solicited comments on any potential effects this proposed
model may have on small practices, how small practices may differ from
large practices, and whether small practices should be considered
separately from other practices. We are carefully considering the
comments received during the comment period to determine whether
adjustments to the model are needed.
______
Questions Submitted by Hon. Rob Portman
Question. Medicare Advantage plans must cover the same benefits as
FFS, but their reimbursement is partially tied to fee for service
costs. The Part B demo will change reimbursement for drugs covered
under Part B covered drugs for the majority of the country if
implemented as proposed. How does the demo interact with MA bids and
benchmarks particularly after year one of the demo?
Answer. Under phase I of the proposed Part B Drug Payment Model,
CMS proposed to modify the ASP add-on amount in a budget neutral
manner. Overall, as proposed, Part B drug payment to practitioners,
pharmacies, and hospitals by specialty in phase I of this proposed
model would not change, as the ASP add-on revision was proposed to be
budget neutral. We do not expect a sizable overall reduction in Part B
drug spending associated with phase I of this model, but we do
anticipate an incentive to use higher value drugs. The proposed rule
set forth our belief that phase I of this model would not change how
Part B drugs are acquired by providers or suppliers, or how drug
manufacturers sell their products to providers, suppliers, or
intermediaries such as wholesalers. The model only applies to payment
for Part B drugs for beneficiaries with Medicare fee-for-service; Part
D drugs and drug payment under Medicare Advantage plans are not
included. However, any changes to Medicare FFS spending, whether or not
they are attributable to this model, would be reflected in Medicare
Advantage benchmarks in future years. As noted in the proposed rule,
Medicare Part B currently covers and pays for a limited number of
prescription drugs.
Question. CMS is currently testing a number of demonstration
programs in the oncology space, including the oncology care model. How
does the ASP demo relate to the OCM demo? If a provider is in the OCM
demo, will they be forced to also participate in the ASP demo? What
about for other wide-scale demos, particularly mandatory ones like the
Comprehensive Care for Joint Replacement model? Similarly, can you
explain in detail how the demo will interact with the push to move to
alternative payment models for reimbursement for both Phase I and Phase
II of the model?
Answer. As noted in the Part B Drug Payment Model proposed rule,
there are possibilities of overlap between the proposed Part B Drug
Payment Model and the Medicare Shared Savings Program, the Medicare
Intravenous Immune Globulin (IVIG) Demonstration, and other Innovation
Center payment models, such as the Oncology Care Model (OCM) and the
Bundled Payments for Care Improvement (BPCI) initiative. In general,
CMS proposed not to exclude beneficiaries, suppliers, physicians or
providers in the Part B Drug Payment Model from other Innovation Center
models or CMS programs, such as the Medicare Shared Savings Program.
For other models tested by the Innovation Center, we have worked to
prevent duplication and to monitor arrangements that minimize
duplication of effort. We expect limited overlap between this model and
bundled payment models such as BPCI and CJR, given that the incentives
to reduce spending in those bundled payment models are not generally
targeted at Part B drugs. As we also noted in the proposed rule, we
anticipate undertaking similar efforts for the Part B Drug Payment
Model.
We acknowledged in the proposed rule that there is potentially
greater overlap between the proposed Part B Drug Payment Model and the
OCM in that both models will affect providers' and suppliers'
incentives for the use of oncology drugs, but in different ways. CMS
proposed to include OCM practices in all arms of the Part B Drug
Payment Model.
In the proposed rule, we solicited comment on our approach to
include OCM practices, including the best mechanism to account for the
overlap between these two models in our sample design and whether we
should consider excluding OCM practices entirely. We are carefully
considering the comments received during the comment period to
determine whether adjustments to the model are needed.
Question. The administration has promoted many initiatives and
requested $1.1 billion from Congress to combat the prescription opioid
and heroin abuse epidemic. The Surgeon General has also recently laid
out a goal to reduce opioid prescriptions. In contrast, the Part B demo
seeks to increase reimbursement for pain management providers in order
to make the cuts to Part B drugs for most providers appear budget
neutral. In fact, these providers will receive larger increases than
any other provider category under the proposal. Given that the premise
of the model stands on the notion that reimbursement for drugs
incentivizes prescribing behavior, what is CMS' estimate for the impact
this will have on prescribing of opioids and how will this impact other
initiatives to decrease prescriptions for opioids and the opioid and
heroin abuse epidemic overall.
Answer. Addressing the opioid crisis is a top priority for the
administration, and the Secretary is committed to bipartisan solutions
and evidence-informed interventions to turn the tide against opioid
drug-related overdose and misuse. As a part of this effort, the
Department of Health and Human Services (HHS) and CMS are committed to
working with providers to encourage appropriate prescribing of
opioids.\9\
---------------------------------------------------------------------------
\9\ HHS Announces New Actions to Combat Opioid Epidemic, https://
www.hhs.gov/about/news/2016/07/06/hhs-announces-new-actions-combat-
opioid-epidemic.html.
While we share the concern regarding unnecessary opiate use, we
believe it is important to distinguish between the types of opiate
analgesics covered under Medicare Part B and those opiate analgesics
covered under other parts of the Medicare program. With the exception
of implanted pain pumps and palliative care, opiates furnished under
the Medicare Part B drug benefit are generally not used for long-term
analgesia. Instead, these short-acting injectable agents are typically
used in incident to settings (e.g., in the physician's office) for
acute pain relief and procedure-related analgesia/sedation. Opiates
furnished under the Medicare Part B drug benefit are not self-
administered and must be administered by a physician in an office or
hospital outpatient department. Also, these drugs generally would not
be provided to patients to be used in the home, unlike oral and other
self-administered opiate analgesics that are covered under Medicare
Part D and dispensed at retail pharmacies. We also note that overall
utilization for opiate analgesics under Medicare Part B is limited,
although we are aware that a large portion of injectable morphine and
hydromorphone use is associated with the care and treatment of
---------------------------------------------------------------------------
terminally ill beneficiaries with cancer.
In the Part B Drug Payment Model proposed rule, we noted that the
proposed flat fee of $16.80 would increase the payment for some low
cost drugs. While we expect that contractors will continue to examine
claims (as well as patterns of claims) for potentially unnecessary use
(that is use that is not reasonable and/or necessary), we also sought
comment on whether additional measures should be taken to limit add-on
amounts, especially for very low cost drugs. As discussed, opioids
covered under Medicare Part B are used in the physician practice
setting are primarily used in a limited number of circumstances and are
not typically administered to patients outside of the outpatient
setting. CMS is carefully reviewing comments received on the proposed
model during the comment period to determine if adjustments are needed.
Question. Can CMS align national provider identifiers to claims
information and the ASP pricing file to determine if prescribing
increases when prices and ASPs increase? Why or why not? If not, can
CMS detail and provide the exact data that indicates that the current
ASP structure is contributing to increased prescribing of more
expensive drugs when a cheaper alternative is available?
Answer. As a result of the design of the average sales price (ASP)
payment methodology established in 1847A of the Act, CMS only has
information on manufacturers' reported ASP, which is an average.
Providers and suppliers do not report their drug acquisition costs to
CMS and are not required to do so when submitting a claim.
CMS is able to determine from the claims data when utilization has
increased. A relatively small number of drugs account for a significant
share of Part B spending. The top 20 drugs in terms of Medicare payment
account for 57 percent of total Part B spending while the top 10
account for 38 percent of total payments.\10\
---------------------------------------------------------------------------
\10\ ASPE Issue Briefing: Medicare Part B Drugs, Pricing, and
Incentives, https://aspe.hhs.gov/pdf-report/medicare-part-b-drugs-
pricing-and-incentives.
Phase I of the proposed model would test a change in the percent
add-on portion of the payment methodology, but would not alter the ASP
reporting structure. The add-on provides a larger payment to a provider
or supplier when that provider or supplier prescribes a more expensive
drug than a cheaper drug. We proposed to change the add-on from a
percentage to a flat fee plus smaller percentage to strengthen the
---------------------------------------------------------------------------
financial incentive for physicians to choose higher value drugs.
Question. Did CMS explore smaller demonstration areas, such as CMS
regions? Is it necessary to ``test'' the changes in payment methodology
to the entire country in order to obtain valid results? How does CMS
plan on differentiating the effects of this demo when layered on top of
other demos and payment changes that are taking place in the Medicare
program simultaneously?
Answer. In the Part B Drug Payment Model proposed rule, CMS
solicited feedback from stakeholders on the geographic unit of the
proposed model. In order to fully test the model, the proposed rule set
forth three criteria for selecting the geographic unit. First, the
areas would need to be sufficiently large so that most providers and
suppliers do not have practice locations in multiple areas. Second, the
areas would need to be sufficient in number to ensure adequate
statistical power for evaluation of the model. And third the areas
would need to have characteristics that are relatively similar when
compared to one another so that observed changes can be more clearly
attributed to the intervention and not to other factors.
As noted in the Part B Drug Payment Model proposed rule, there are
possibilities of overlap between the proposed Part B Drug Payment Model
and the Medicare Shared Savings Program, the Medicare Intravenous
Immune Globulin (IVIG) Demonstration, and other Innovation Center
payment models, such as the oncology care model (OCM) and the Bundled
Payments for Care Improvement (BPCI) initiative. In general, CMS
proposed not to exclude beneficiaries, suppliers, physicians or
providers in the Part B Drug Payment Model from other Innovation Center
models or CMS programs, such as the Medicare Shared Savings Program.
For other models tested by the Innovation Center, we have worked to
prevent duplication and to monitor arrangements that minimize
duplication of effort. We expect limited overlap between this model and
bundled payment models such as BPCI and CJR, given that the incentives
to reduce spending in those bundled payment models are not generally
targeted at Part B drugs. As we also noted in the proposed rule, we
anticipate undertaking similar efforts for the Part B Drug Payment
Model.
CMS sought comment on our proposed approach and the potential
interactions with existing models and payment provisions. We are
currently reviewing comments we received during the comment period.
Question. Will CMS have an exceptions process if beneficiaries are
negatively impacted by the demo? For example, if a rural provider
decides to no longer treat patients, and the patient must travel a
distance (say more than 50 miles) to a hospital to receive
chemotherapy, will CMMI exempt the provider from the demo's payment
reductions?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS' work. Under the proposed
Part B Drug Payment Model, beneficiaries would still have access to the
same drugs and would retain the complete freedom of choice of doctors,
hospitals, and other providers or suppliers. The proposed model would
not affect drug coverage or any other Medicare benefits.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted under
the beneficiary's circumstances. In addition, CMS proposed to evaluate
beneficiary access and health outcomes during the model. CMS values
public input and looks forward to continuing to work with stakeholders
to ensure quality care and high value for Medicare beneficiaries.
Additionally, while the proposed rule presented information
indicating that the model design would not favor hospitals over
physician practices, we have received feedback from stakeholders on
this issue. In the proposed rule, we estimated that, in the aggregate,
rural practitioners would be estimated to experience a net benefit
under phase I of the model. And overall, spending on drugs furnished in
the office setting would increase while spending on drugs furnished in
the hospital setting would decrease under phase I of the model. We are
carefully considering the comments received during the comment period
to determine whether adjustments are needed.
Question. Please detail the manner in which CMS will monitor
patient access and quality outcomes compared to the control group under
the current system. If either patient access or quality of care is
determined to be harmed, what are CMS's plans for altering the model or
making exceptions for patients who cannot access medications in a
timely and affordable manner?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. Under the proposed
Part B Drug Payment Model, beneficiaries would still have access to the
same drugs and would retain the complete freedom of choice of doctors,
hospitals, and other providers or suppliers. The proposed model would
not affect drug coverage or any other Medicare benefits.
CMS has proposed to closely evaluate beneficiary access and health
outcomes during the model. CMS's proposed evaluation of the Part B Drug
Payment Model would also test the proposed innovative health care
payment model in this proposed rule to examine its potential to lower
program expenditures while maintaining or improving the quality of care
furnished to Medicare Program beneficiaries. One of the key evaluation
questions that CMS proposed for this purpose pertained to the proposed
model's impact on quality of care, access to care, timeliness of care,
and the patient experience of care.
As discussed in CMS testimony, CMS also would be closely monitoring
beneficiary access and health outcomes during the model. There would be
a real-time claims monitoring program to track utilization, spending,
and prescribing patterns as well as changes in site of service
delivery, mortality, hospital admissions, and several other high-level
claims-based measures. This would help ensure that Medicare
beneficiaries will continue to have access to Part B drugs under the
model.
In addition to the current Medicare claims appeals processes, which
would remain available, CMS is proposing for phase II to establish a
new pre-appeals payment exceptions process which would allow the
provider, supplier, or beneficiary to explain why an exception to the
model's value-based pricing policy is warranted in the beneficiary's
circumstances.
Question. Can CMS detail the metrics and methods it will use to
determine success or failure of the demo for both phase I and phase II?
In particular, what quality metrics are included and how will they be
analyzed? If no quality metrics are included in the analysis, why not?
Answer. As required by statute, CMS's evaluation of the Part B Drug
Payment model would focus upon whether the intervention reduces costs
while maintaining or improving quality of care. We proposed to examine
the model impact at the provider and supplier level and at the
beneficiary level. As proposed, the evaluation would examine the impact
on quality of care, access to care, timeliness of care, and the patient
experience of care. It also could include assessments of patient
experience of care, prescribing and utilization patterns, health
outcomes, Medicare expenditures, provider and supplier costs, and other
potential impacts of interest to stakeholders.
Question. CMS intends the demonstration to be budget neutral. In
cases where there is only one targeted therapy and cheaper alternatives
do not exist, which is often the case with diseases treated by Part B
covered drugs, and the drugs will receive a lower reimbursement under
the proposal, how is it possible to maintain budget neutrality under
the proposal? In fact, Avalere estimated that any drug that costs more
than $480 is the point at which a drug will be cut. Can CMMI detail the
number and percentage of drug administered under Part B that are both
over and under the $480 threshold? How many of these drugs over $480 do
not have a clinically equivalent or comparable alternative?
Answer. Under phase I of the Part B Drug Payment Model, we proposed
to modify the ASP add-on amount to be 2.5 percent plus a flat fee of
$16.80. We proposed to establish the amount of the flat fee to ensure
total estimated payments under this model would be budget neutral to
aggregate Part B spending, using the most recent year of available
claims data. Said differently, while payments for expensive drugs would
be lower, payments for less expensive drugs would be higher--resulting
in a budget neutral impact.
Neither part of the Part B Drug Payment Model presupposes there are
lower cost Part B drug alternatives available for all Medicare
patients. Rather, phase I of the proposed model would test, in specific
geographic areas, whether the alternative approach for the ASP add-on
payment strengthens the incentives for physicians to choose higher
value drugs, where appropriate and available.
Question. Since CMMI will be increasing payment rates for lower
cost drugs, how will this impact beneficiary cost sharing?
Beneficiaries are subject to 20 percent cost sharing for these drugs.
Similarly, beneficiary costs have been proven to increase when
outpatient provider offices are required by hospitals or if a patient
must move to an inpatient to access services. If a provider office
sells its practice because it cannot cover the cost of procuring more
expensive drugs due to the cuts in reimbursement or if a provider
office closes and patients must revert to an inpatient setting, how
will patient cost sharing be impacted? Similarly, how will the Medicare
trust fund and general treasury funds be impacted?
Answer. The Part B Drug Payment Model was proposed to lead to
better value for Part B by encouraging providers to choose higher value
drugs. The proposed rule set forth our belief that the proposed payment
rate of 102.5 percent of ASP plus $16.80 should be sufficient to cover
the provider's or supplier's purchase price. The proposed rule
presented information that, overall, spending on drugs furnished in the
office setting would increase while spending on drugs furnished in the
hospital setting would decrease under phase I of the model.
Under the proposed Part B drug payment model, beneficiaries would
still have access to the same drugs and would retain the complete
freedom of choice of doctors, hospitals, and other providers or
suppliers. The proposed model would not affect drug coverage or any
other Medicare benefits.
CMS's evaluation of the Part B Drug Payment Model would test the
proposed innovative health care payment model in this proposed rule to
examine its potential to lower program expenditures while maintaining
or improving the quality of care furnished to Medicare Program
beneficiaries. One of the key evaluation questions that CMS proposed
for this purpose pertained to the proposed model's impact on quality of
care, access to care, timeliness of care, and the patient experience of
care.
In addition to the current Medicare claims appeals processes, which
would remain available, CMS is proposing to establish a pre-appeals
payment exceptions review process for phase II of the model which would
allow the provider, supplier, or beneficiary to explain why an
exception to the model's value-based payment policy is warranted in the
beneficiary's circumstance. This process would be in addition to, not
in lieu of, the current appeals process. Payment exceptions decisions
would be issued within 5 business days of receipt of the request for a
payment exception.
CMS has proposed to closely evaluate beneficiary access and health
outcomes during the model. Additionally, as discussed in CMS testimony,
CMS would be closely monitoring beneficiary access and health outcomes
during the model. There would be a real-time claims monitoring program
to track utilization, spending, and prescribing patterns as well as
changes in site of service delivery, mortality, hospital admissions,
and several other high-level claims-based measures. This would help
ensure that Medicare beneficiaries will continue to have access to Part
B drugs under the model.
CMS sought comment on these proposed beneficiary protections and
values public input. We are carefully reviewing all the comments we
received during the comment period, and CMS looks forward to continuing
to work with stakeholders to ensure quality care and high value for
Medicare beneficiaries.
Question. The President's budget includes a proposal to lower the
ASP add on from 6 percent to 3 percent, which produces savings of $6.8
billion, according to CBO. The Part B demo proposes to lower ASP to 2.5
percent plus a dispensing fee of $16.83 minus sequestration, yet CMS
maintains the demo will be budget neutral. Please explain in detail how
the proposal is budget neutral and how the demo wouldn't save money in
Phase I, particularly after year one of the demo is completed.
Answer. Phase I would establish payment at ASP plus 2.5 percent and
a flat fee per administration day as a budget neutral test. CMS
proposed to derive the flat fee, which is not included in the
President's budget proposal, from the difference in total payment
between total payments with a 6 percent add-on percentage across Part B
drugs in the most recently available calendar year claims and total
estimated payment for Part B drugs in the same set of claims with a 2.5
percent add-on percentage to the flat fee. We stated in the proposed
rule that we do not expect a sizable overall reduction in Part B
spending associated with phase I of the model, but we do anticipate an
incentive to use higher value drugs.
In the proposed rule, we articulated that we believe that removing
the financial incentive that may be associated with higher add-on
payments will lead to some reduction in expenditures during phase I of
the proposed model. We also noted that an exact estimate of the amount
of savings that might be achieved through behavioral responses is not
readily available, and that prior research on behavioral changes
following modifications to drug margins suggests that the modifications
we propose to the 6 percent add-on are likely to change prescribing
behavior.
Question. There are a number of payment changes taking place
currently and in the near future for both outpatient providers and
hospitals. Please provide a table detailing the changes that are
scheduled to take place that the demo will impact or interact with over
the next 3 years and estimate the accumulative total impact on payments
for Part B drugs for various provider types in both urban and rural
settings. These changes should include other demos taking place at
CMMI, alternative payment models that will increase under MACRA, as
well as the effects of sequestration, prompt pay, and others.
Answer. As noted in the Part B Drug Payment Model proposed rule,
there are possibilities of overlap between the proposed Part B Drug
Payment Model and the Medicare Shared Savings Program, the Medicare
Intravenous Immune Globulin (IVIG) Demonstration, and other Innovation
Center payment models, such as the oncology care model (OCM) and the
Bundled Payments for Care Improvement (BPCI) initiative. In general,
CMS proposed not to exclude beneficiaries, suppliers, physicians or
providers in the Part B Drug Payment Model from other Innovation Center
models or CMS programs, such as the Medicare Shared Savings Program.
For other models tested by the Innovation Center, we have worked to
prevent duplication and to monitor arrangements that minimize
duplication of effort. We expect limited overlap between this model and
bundled payment models such as BPCI and CJR, given that the incentives
to reduce spending in those bundled payment models are not generally
targeted at Part B drugs. As we also noted in the proposed rule, we
anticipate undertaking similar efforts for the Part B Drug Payment
Model.
We stated in the proposed rule that, overall, we believe that phase
I of this model will not change how Part B drugs are acquired by
providers or suppliers, or how drug manufacturers sell their products
to providers, suppliers, or intermediaries such as wholesalers. Because
total payments under this phase are not expected to change
considerably, we anticipate that providers or suppliers will continue
to buy and bill for Part B drugs that they furnish to their patients.
In general, we estimated that phase I has an overall effect of modestly
shifting money from hospitals and specialties that use higher cost
drugs to specialties that use lower cost drugs.
CMS sought comment on our proposed approach and the potential
interactions with existing models and payment provisions. We are
currently reviewing comments we received during the comment period.
______
Questions Submitted by Hon. Daniel Coats
Question. While CMS's proposed mandatory demonstration project on
Medicare Part B seeks to reduce cost, the unintended effect is likely
to limit access to care for vulnerable populations. This projected
impact is deeply concerning. I have heard from many Hoosiers who are
concerned that their access to lifesaving medications will be
compromised. Given the input from Congress and other interest groups,
do you have any recommendations for how CMS could modify this proposal
so all high-cost Part B medications are not adversely impacted?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. Under the proposed
Part B Drug Payment Model, beneficiaries would still have access to the
same drugs and would retain the complete freedom of choice of doctors,
hospitals, and other providers or suppliers. The proposed model would
not affect drug coverage or any other Medicare benefits.
CMS has proposed to closely evaluate beneficiary access and health
outcomes during the model. CMS's proposed evaluation, the Part B Drug
Payment Model, would also test the proposed innovative health care
payment model in this proposed rule to examine its potential to lower
program expenditures while maintaining or improving the quality of care
furnished to Medicare Program beneficiaries. One of the key evaluation
questions that CMS proposed for this purpose pertained to the proposed
model's impact on quality of care, access to care, timeliness of care,
and the patient experience of care.
As discussed in CMS testimony, CMS also would be closely monitoring
beneficiary access and health outcomes during the model. There would be
a real-time claims monitoring program to track utilization, spending,
and prescribing patterns as well as changes in site of service
delivery, mortality, hospital admissions, and several other high-level
claims-based measures. This would help ensure that Medicare
beneficiaries will continue to have access to Part B drugs under the
model.
In addition to the current Medicare claims appeals processes, which
would remain available, CMS is proposing for phase II to establish a
new pre-appeals payment exceptions process which would allow the
provider, supplier, or beneficiary to explain why an exception to the
model's value-based pricing policy is warranted in the beneficiary's
circumstances.
Question. Dr. Conway's testimony references that overall Medicare
Part B payments have consistently risen over time. However,
reimbursement based on ASP for Medicare Part B drugs is roughly around
3 percent of total Medicare spending. To break this down further, in
Medicare Part B, medicines accounted for 10 percent of overall Part B
spending in 2005. In 2013, medicines under Part B represented just over
9 percent of total Part B spending. Trends suggest that this proportion
will remain stable over the next decade. Is there any concern that this
demonstration project will create instability?
Answer. As we stated in the Part B Drug Payment Model proposed
rule, based on our claims data, we estimate total Part B payments for
separately paid drugs in 2015 were $22 billion. In 2007, the total
payments were $1 1 billion; the average annual increase since 2007 has
been 8.6 percent.\11\ This significant growth has been largely driven
by spending on separately paid drugs in the hospital outpatient
setting, which more than doubled between 2007 and 2015, from $3 billion
to $8 billion respectively.With the proposed model, CMS intended to
remove any excess financial incentive for physicians to prescribe high
cost drugs over lower cost ones when comparable low cost drugs are
available. We stated in the proposed rule that, overall, we believe
that phase I of this model will not change how Part B drugs are
acquired by providers or suppliers, or how drug manufacturers sell
their products to providers, suppliers, or intermediaries such as
wholesalers. Because total payments under this phase are not expected
to change considerably, we anticipate that providers or suppliers will
continue to buy and bill for Part B drugs that they furnish to their
patients.
---------------------------------------------------------------------------
\11\ GAO report, ``Medicare Part B Expenditures for New Drugs
Concentrated Among a Few Drugs, and Most Were Costly for
Beneficiaries'' (GAO-16-12), October 2015, http://www.gao.gov/products/
GAO-16-12.
We are carefully considering all the comments received from
stakeholders during the comment period to determine whether adjustments
---------------------------------------------------------------------------
are needed.
Question. In phase I of this proposal, these payment changes would
disproportionately impact the most innovative drugs that treat smaller
patient population--specifically cancer patients. With substantial
advancements in Part B medicines in the near future, what is the
rationale for creating uncertainty at a time when we need increased
innovations that bring new medicines to Medicare patients?
Answer. In phase I of the Part B Drug Payment Model, CMS proposed
to implement a variation to the add-on component of Part B drug payment
methodology in different geographic areas of the country. We proposed
to test whether an alternative approach for the ASP add-on payment
would strengthen financial incentive for physicians to choose higher
value drugs. While this approach would address the add-on to the
manufacturer's ASP, it would not directly address the manufacturer's
ASP, which is a more significant driver of drug expenditures than the
add-on payment for Part B drugs.
CMS's evaluation of the Part B Drug Payment Model would test the
proposed innovative health care payment model in this proposed rule to
examine its potential to lower program expenditures while maintaining
or improving the quality of care furnished to Medicare Program
beneficiaries. One of the key evaluation questions that CMS proposed
for this purpose pertained to the proposed model's impact on quality of
care, access to care, timeliness of care, and the patient experience of
care. In addition, in the Part B Drug Payment Model proposed rule, CMS
sought comments on other potential questions for inclusion in the
evaluation of the Part B Drug Payment Model.
Additionally, as discussed in CMS's testimony, CMS would also be
closely monitoring beneficiary access and health outcomes during the
model. There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model. We are carefully considering the comments received
during the comment period to determine whether adjustments to the model
are needed.
______
Questions Submitted by Hon. Dean Heller
Question. The proposed demonstration is very broad in scope--it is
a nationwide demonstration, covering virtually all Part B drugs for all
Medicare beneficiaries across all settings of care. At full
implementation, it appears that this demonstration will impact 75
percent of Part B providers nationally. This is larger than any
previous CMMI demonstration. How did CMS arrive at the decision to test
the Part B payment changes on this scale? Did CMS consider smaller
sample sizes for the program? Why was a smaller test size rejected?
Answer. CMS solicited feedback from stakeholders on the geographic
unit of the proposed model. In order to fully test this model, the
proposed rule set forth three criteria for selecting the geographic
unit. First, the areas would need to be sufficiently large so that most
providers and suppliers do not have practice locations in multiple
areas. Second, the areas would need to be sufficient in number to
ensure adequate statistical power for evaluation of the model. And
third the areas would need to have characteristics that are relatively
more similar when comparing one another so that observed changes can be
more clearly attributed to the intervention and not to other factors.
We are carefully considering all of the comments received during the
comment period.
Question. Other than the 5-year time limit for the proposed
demonstration, what are the other limits on the demonstration's scope?
Answer. CMS is proposing a two phase model to test whether
alternative payment approaches for Part B drugs improve value (relative
to current drug payment approaches under Part B), and improve outcomes,
while reducing expenditures for Part B drugs. CMS proposed two phases
for the Part B Drug Payment Model. In phase I of the model, CMS
proposed implementing a variation to the add-on component of Part B
drug payment methodology in different geographic areas of the country.
Phase I would establish payment at Average Sales Price (ASP) plus a 2.5
percent add-on percentage and a flat fee per administration day as a
budget neutral test.
In phase II of this proposed model, CMS proposed to implement
value-based purchasing (VBP) tools in conjunction with the phase I
variation of the ASP add-on payment amount for drugs paid under Part B.
Phase II would use tools currently employed by commercial health plans,
pharmacy benefit managers (PBMs), hospitals, and other entities that
manage health benefits and drug utilization. Specifically, CMS proposed
to apply one or more VBP tools, such as indications-based pricing,
reference pricing, and clinical decision support tools to Part B drugs.
We proposed that the model would run for 5 years; phase I would
begin in late 2016 (no earlier than 60 days after the rule is
finalized) and phase II would begin no sooner than January 1, 2017. We
expected initiation of the VBP tools could take several years to fully
implement. Our goal was to have both phases of the model in full
operation during the last 3 years to collect sufficient data and to
estimate the effect of the alternative payment designs on beneficiary
outcomes and Medicare expenditures.
We also proposed to exclude certain categories of Part B drugs from
the model because we did not believe that all Part B drugs are
appropriate candidates for including of the model. These include, but
are not limited to, the following categories: contractor-priced drugs;
influenza, pneumococcal and hepatitis B vaccines; drugs infused with a
covered item of durable medical equipment for phase I; certain end-
stage renal disease drugs; blood and blood products; and drugs in short
supply. We are carefully considering stakeholder comments received
during the comment period.
Question. Given the broad scope of the proposed demonstration, does
CMS consider the demonstration to be a ``test'' versus a new Part B
payment policy? If CMS does consider the proposed demonstration to be a
true ``test,'' please explain your conclusions in detail and the basis
for your conclusions. If not, please explain why the proposed model
does not conform to statutory requirement to test models.
Answer. Section 1115A of the Social Security Act (the Act)
authorizes the Innovation Center to test innovative payment and service
delivery models to reduce program expenditures while preserving or
enhancing the quality of care furnished to Medicare, Medicaid, and
Children's Health Insurance Program beneficiaries.
Models to be tested under section 1115A of the Act must address a
defined population for which there are either deficits in care leading
to poor clinical outcomes or potentially avoidable expenditures.
Section 1115A(b) of the Act describes a number of payment and service
delivery models that the Secretary may choose to test, but the
Secretary is not limited to those models. In addition, the statute
directs the Secretary to focus on models expected to reduce program
costs while preserving or enhancing the quality of care received by
beneficiaries. We proposed to exercise this authority to test whether
the alternative drug payment designs discussed in this proposed rule
would lead to spending our dollars more wisely for drugs paid under
Part B, that is, a reduction in Medicare expenditures, while preserving
or enhancing the quality of care provided to Medicare beneficiaries.
While we proposed to establish drug pricing under phase I of the
proposed model to be budget neutral to total expenditures in the CY
2014 claims, we expected changes in prescribing behavior that would
result in program savings.
Stakeholder input is very important to us, and is one key reason
why we utilized the notice and comment rulemaking process in developing
this model.
As permitted by section 1115A of the Act, we proposed testing the
Part B Drug Payment Model within specified geographic areas. In phase I
of the model, we proposed implementing a variation to the add-on
component of Part B drug payment methodology in different geographic
areas of the country. We would test whether the proposed alternative
approach for the ASP add on payment, which is discussed in this
proposed rule, would strengthen the financial incentive for physicians
to choose higher value drugs. To eliminate selection bias, we proposed
that all providers and suppliers furnishing any Part B drugs included
in the Part B Drug Payment Model who are located in the geographic
areas that are selected for inclusion in the model would participate.
We also proposed to use a control group to compare those regions
where there is a change in Part B drug payment under the proposed model
to regions where there is no change in Part B drug payment. We proposed
to exercise this authority to test whether the alternative drug payment
designs proposed in the proposed rule would lead to spending our
dollars more wisely for drugs paid under Part B, that is, a reduction
in Medicare expenditures, while preserving or enhancing the quality of
care provided to Medicare beneficiaries.
In phase II of this proposed model, CMS proposed to implement
value-based purchasing (VBP) tools in conjunction with the phase I
variation of the ASP add-on payment amount for drugs paid under Part B.
Phase II would use tools currently employed by commercial health plans,
pharmacy benefit managers (PBMs), hospitals, and other entities that
manage health benefits and drug utilization. Specifically, CMS proposed
to apply one or more VBP tools, such as indications-based pricing,
reference pricing, and clinical decision support tools to Part B drugs.
Question. Most models that have been tested by CMMI have been
voluntary for participants, and the few mandatory models that CMMI has
tested have been based on evidence from an initial, voluntary test. Why
in this case has CMMI chosen to move forward with a demonstration that
is mandatory at its initiation?
Answer. Section 1115A of the Social Security Act (the Act)
authorizes the Innovation Center to test innovative payment and service
delivery models to reduce program expenditures while preserving or
enhancing the quality of care furnished to Medicare, Medicaid, and
Children's Health Insurance Program beneficiaries. As stated in the
proposed rule, we believe a model in which all providers and suppliers
furnishing included Part B drugs in the selected geographic areas
participate in the model would be appropriate to ensure that observed
outcomes in each arm of the model would not suffer from selection bias
inherent in a voluntary participation model and that observed outcomes
could be generalized to all providers and suppliers billing Part B
drugs. In addition, this would allow us to observe the experiences of
an entire class of providers and suppliers with various
characteristics, such as different geographies, patient populations,
and specialty mixes, and to examine whether these characteristics would
impact the effect of the model on prescribing patterns and Medicare
Part B drug expenditures.
Question. In testing previous demonstrations, CMS has conducted
extensive modeling to assess the potential unintended consequences of
its design on providers and patients prior to initiating a model test.
These model simulations have been released publicly. Has CMS conducted
such modeling for this Part B demonstration? If CMS has not conducted
simulations, please explain why. If it has conducted simulations, what
do the results of this modeling show about the potential for unintended
consequences or provider behavior changes? Why hasn't CMS released its
findings?
Answer. The distributional impacts are presented in the proposed
rule and are the projected effects of phase I of the proposed Part B
Drug Payment Model. Phase I would establish payment at ASP plus 2.5
percent and a flat fee per administration day as a budget neutral test.
CMS proposed to derive the flat fee from the difference in total
payment between total payments with a 6 percent add-on percentage
across Part B drugs in the most recently available calendar year claims
and total estimated payment for Part B drugs in the same set of claims
with a 2.5 percent add-on percentage to the flat fee. We stated in the
proposed rule that we do not expect a sizable overall reduction in Part
B spending associated with phase I of the model, but we do anticipate
an incentive to use higher value drugs.
In the proposed rule, we articulated that we believe that removing
the financial incentive that may be associated with higher add-on
payments will lead to some reduction in expenditures during phase I of
the proposed model. We also noted that an exact estimate of the amount
of savings that might be achieved through behavioral responses is not
readily available, and that prior research on behavioral changes
following modifications to drug margins suggests that the modifications
we propose to the 6 percent add-on are likely to change prescribing
behavior.
We estimated the effects of the proposed change in payment policy
by examining the estimated change in payment on various categories of
providers and suppliers. In general, phase I would have the overall
effect of modestly shifting money from hospitals and specialties that
use higher cost drugs to specialties that use lower cost drugs. In
aggregate, rural practitioners were estimated to experience a net
benefit and rural hospitals were estimated to experience smaller
reductions than urban hospitals.
We did not model the impact of phase II because the proposed rule
invited extensive comment on which VBP tools would be appropriately
applied to the Part B and hospital outpatient drug benefit and we
cannot yet quantify the overall impact of VBP.
Question. How feasible will it be for CMS to prepare and build the
systems, processes, and other infrastructure necessary to test the
model within existing time and resource constraints? Will CMS be able
to appropriately monitor the model and the activities of its
participants to ensure program integrity?
Answer. CMS's proposed evaluation of the Part B Drug Payment Model
would also test the proposed innovative health care payment model in
this proposed rule to examine its potential to lower program
expenditures while maintaining or improving the quality of care
furnished to Medicare Program beneficiaries. One of the key evaluation
questions that CMS proposed for this purpose pertained to the proposed
model's impact on quality of care, access to care, timeliness of care,
and the patient experience of care. In addition, as discussed in CMS
testimony, CMS would be closely monitoring beneficiary access and
health outcomes during the model. There would be a real-time claims
monitoring program to track utilization, spending, and prescribing
patterns as well as changes in site of service delivery, mortality,
hospital admissions, and several other high-level claims-based
measures. This would help ensure that Medicare beneficiaries will
continue to have access to Part B drugs under the model.
Question. The primary care service areas that CMS will use to
randomize Part B providers into the demonstration are fairly small. As
a result, practices with multiple locations could have sites that fall
into different arms of the demonstration. How many practices will be
experiencing multiple arms of the model?
Answer. CMS proposed Primary Care Service Areas (PCSAs) as a unit
of analysis to meet the needs of the Part B Drug Payment proposed
model. The PCSAs were developed with funding from the Health Resources
and Services Administration (HRSA) to address health workforce planning
and policy, and the PCSA datasets available from HRSA include measures
of specialty physician capacity that can be used to examine their
distributions.\12\ PCSAs are areas defined by aggregating clusters of
ZIP codes with the goal of representing service areas for office based
primary health care services. As we outlined in our proposed rule, CMS
considered a number of options before proposing to define regions by
PCSAs. Based on our analysis, PCSAs were most appropriate when compared
to defining the regions by ZIP codes or other options. We are reviewing
all comments received during the comment period to determine whether
adjustments are needed.
---------------------------------------------------------------------------
\12\ http://bhpr.hrsa.gov/healthworkforce/data/
primarycareserviceareas/index.html.
Question. Given the significant changes under Medicare Part B
already passed by Congress, why did CMS decide to propose these changes
---------------------------------------------------------------------------
before any formal guidance regarding the implementation of MACRA?
With passage of MACRA, many Medicare providers are engaged or will
soon begin to engage in alternative payment models (APMs). Will this
model hinder the ability of physicians, particularly oncologists,
rheumatologists, ophthalmologists, and other specialists who provide
Part B medicines as part of their practice to participate and succeed
in APMs? How will changes under the demo impact physician practices'
ability to capture bonus payments earned under MACRA?
Answer. The proposed Part B Drug Payment Model is intended to lead
to better value for Part B by encouraging providers and suppliers to
choose higher value drugs. The proposed rule includes estimated impacts
of the proposed rule on physician specialties, including oncologists,
rheumatologists and ophthalmologists. The proposed rule set forth our
belief that the proposed payment rate of 102.5 percent of ASP plus
$16.80 should be sufficient to cover the provider's or supplier's
purchase price. In the proposed rule, we estimated that overall
spending on drugs furnished in the office setting would increase while
spending on drugs furnished in the hospital setting would decrease
under phase I of the model. While the proposed rule presented
information indicating that the model design would not favor hospitals
over physician practices, we have received feedback from stakeholders
on this issue. We are carefully considering the comments received
during the comment period to determine whether adjustments are needed.
We know that physicians and other clinicians may need assistance in
transitioning to the MIPS created in MACRA, and we want to make sure
that they have the tools they need to succeed in a redesigned system.
The Congress provided funding in MACRA for technical assistance to
small practices, rural practices, and practices in medically
underserved HPSAs.
CMS announced the availability of $20 million of this funding for
on-the-ground training and education for Medicare clinicians in
individual or small group practices of 15 clinicians or fewer. These
funds will help provide hands-on training tailored to small practices,
especially those that practice in historically under-resourced areas
including rural areas, HPSAs, and medically underserved areas. As
required by MACRA, HHS will award $20 million each year for 5 years,
providing $100 million in total to help these practices successfully
participate in the Quality Payment Program.
In addition to MACRA implementation efforts, CMS launched the
second round of the Support and Alignment Networks under the
Transforming Clinical Practice Initiative. TCPI is leveraging primary
and specialist care transformation work and learning that will catalyze
the adoption of APMs on a large scale. CMS is carefully considering the
comments received from stakeholders on the Part B Drug Payment Model
proposed rule and the proposed MACRA rule.
Question. With the ongoing demands of a changing health-care
system, has CMS considered the feasibility of physician practices being
able to successfully implement changes of this magnitude in such a
short period of time?
Answer. CMS is cognizant of challenges physicians face; we have
heard from numerous clinicians who tell us that they want to focus on
delivering the care that is best for their patients, not on reporting
or paperwork. Many of CMS's payment systems require annual updates. For
each of these updates CMS provides outreach to physicians to help them
better understand the changes.
We proposed that the model would run for 5 years; phase I would
begin in late 2016 (no earlier than 60 days after the rule is
finalized) and phase II would begin no sooner than January 1, 2017. CMS
will also notify the public by posting on the CMS website of
application of any VBP tools 45 days before implementation. We expected
initiation of the VBP tools could take several years to fully
implement. We received numerous comments from stakeholders regarding
the proposal and are working to review the comments received during the
comment period.
Question. Numerous studies have found that the cost of cancer care
is more expensive for beneficiaries and the Medicare program when it is
delivered in the hospital setting. To what extent do the changes
proposed by CMS create the risk of shifting more care into higher cost
settings, like hospital outpatient departments? What effect will this
have on beneficiary access to care in their communities and beneficiary
cost sharing for Part B services? Has CMS considered the potential for
site-of-service shifts in its analysis of the model's impact? If not,
why wasn't this considered?
Answer. The Part B Drug Payment Model was proposed to lead to
better value for Part B by encouraging providers and suppliers to
choose higher value drugs. There have been longstanding trends driving
changes in site of service driven by market forces unrelated to what
the Part B drug payment model is testing.\13\
---------------------------------------------------------------------------
\13\ MedPAC, March 2016 report, http://www.medpac.gov/docs/
default-source/reports/chapter-3-hospital-inpatient-and-outpatient-
services-march-2016-report-.pdf'?sfvrsn=0.
While the proposed rule presented information indicating that the
model design would not favor hospitals over physician practices, we
have received feedback from stakeholders on this issue. In the proposed
rule, we estimated overall spending on drugs furnished in the office
setting would increase while spending on drugs furnished in the
hospital setting would decrease under phase I of the model. We are
carefully considering the comments received during the comment period
---------------------------------------------------------------------------
to determine whether adjustments to the model are needed.
Question. Will CMS need to issue an amendment to the contracts with
Medicare Administrative Contractors (MACs) to implement this model for
either phase I or phase II or will all of the changes required under
the model be covered under their current scope of work?
Has CMS considered whether additional payments will be required
under revised MAC contracts?
Answer. Many of CMS's payment systems require annual updates, which
are implemented by the MACs. The Medicare Administrative Contractors
(MACs) would process claims under phase I of the model and would update
their systems to reflect the model pricing. For phase II, CMS proposed
that there would be a VBP contractor that CMS would contract with to
assist in implementation of the VBP tools included in this phase of the
model.
Question. With so many different parts of the country being subject
to different Part B reimbursement methodologies (particularly in phase
II), how will CMS monitor MAC implementation to ensure the model is
being conducted properly and without fraud or error?
Answer. CMS conducts vigorous oversight of its MACs. CMS routinely
collects various types of data from MACs, has regular calls with MACs,
makes MAC performance information publicly available, and meets with
providers and the industry as requested to discuss policy and
operational concerns. CMS also oversees MAC reviewer training and
conducts accuracy reviews.
Question. In phase II, does CMS envision a role for MACs in using
the tools proposed in the rule (e.g., reference based pricing,
indications based pricing, clinical decision tools)? Or will CMS be
making only national determinations? If the latter, will CMS continue
to follow local coverage determinations and policies or will CMS waive
these requirements?
Answer. Phase II of the Part B Drug Payment Model would use tools
currently employed by commercial health plans, pharmacy benefit
managers (PBMs), hospitals, and other entities that manage health
benefits and drug utilization. In the proposed rule, we articulated our
belief that some of these approaches, when appropriately structured,
may be adaptable to Part B.
In the proposed rule, we proposed several value-based pricing
tools: reference pricing, indications-based pricing, outcomes-based
risk sharing agreements, and discounting or eliminating patient
coinsurance amount. This group of tools would serve as a framework for
interventions for selected Part B drugs. We would not apply all these
tools to all Part B drugs but implement these tools in a limited manner
for certain HCPCS drug codes after considering these tools'
appropriateness to specific Part B drugs within these codes.
We proposed using indications-based pricing to vary prices for a
given drug based on its varying clinical effectiveness for different
indications that are covered under existing Medicare authority,
specifically section 1861(t) of the Act, and existing national and
local coverage determinations.
In the proposed rule, we solicited comments regarding the proposed
tools, including specific Part B drugs suitable for the application of
this group of tools.
______
Questions Submitted by Hon. Sherrod Brown
clarifying the intent of the part b demo
Question. The growth in the cost of Part B prescription drugs is
unsustainable. The rapidly increasing costs have created a status quo
where many seniors--who are often on fixed incomes--cannot afford these
lifesaving medicines. Every day I get a call or a letter from an Ohioan
who has trouble affording their prescription drugs. This is
unacceptable, and it must be addressed. We cannot continue to ignore
the rapidly rising cost of prescription drugs or prematurely halt any
proposal designed to address the problem.
As you wrote in your testimony, Dr. Conway, Part B drug payments
were estimated at $22 billion in 2015 alone. That is why CMS must act
to find this solutions to this problem. As your testimony makes clear,
the status quo--where increased Part B cost increases exceed inflation
year after year after year--is unsustainable for taxpayers and for
seniors.
The following three questions are clarifying questions to ensure my
colleagues and I understand the intent and the scope of the demo.
First, does this proposed model make any changes to a Medicare
beneficiary's benefit?
Second, does this proposed model make any changes to a
beneficiary's drug coverage?
Third, under this proposed model, would a Medicare beneficiary lose
access to any Part B drug?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. Under the proposed
model, beneficiaries would still have access to the same drugs and
would retain the complete freedom of choice of doctors, hospitals, and
other providers or suppliers. The proposed model would not affect drug
coverage or any other Medicare benefits.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted in the
beneficiary's circumstances. In addition, CMS has proposed to closely
evaluate beneficiary access and health outcomes during the model. CMS's
proposed evaluation of the Part B Drug Payment Model would also test
the proposed innovative health care payment model in this proposed rule
to examine its potential to lower program expenditures while
maintaining or improving the quality of care furnished to Medicare
Program beneficiaries. One of the key evaluation questions that CMS
proposed for this purpose pertained to the proposed model's impact on
quality of care, access to care, timeliness of care, and the patient
experience of care.
As discussed in CMS testimony, CMS also would be closely monitoring
beneficiary access and health outcomes during the model. There would be
a real-time claims monitoring program to track utilization, spending,
and prescribing patterns as well as changes in site of service
delivery, mortality, hospital admissions, and several other high-level
claims-based measures. This would help ensure that Medicare
beneficiaries will continue to have access to Part B drugs under the
model.
CMS values public input and looks forward to continuing to work
with stakeholders to ensure quality care and high value for Medicare
beneficiaries.
the addition of beneficiary protections
Question. Although the demonstration is designed to make
prescription drugs covered by Medicare Part B more affordable, there
are some improvements that could be made to the model to ensure its
success. For example, a series of suggestions submitted to the
committee in a letter by organizations focused providing consumers with
a voice, including AARP and the Medicare Rights Center, would help
protect consumers and ensure constant monitoring of the demo.
One of the policy proposals they have is to create a dedicated
ombudsman program for this model. An ombudsman could help monitor
beneficiary and provider experiences throughout implementation of the
model, publicly report on the findings, and act as a resource to help
quickly resolve any potential beneficiary issues.
Will you please describe some of the additional beneficiary
protections included in the demo, and if possible, share what
additional consumer protections--such as an ombudsman program--may be
incorporated in the final version?
Will CMS be monitoring claims data related to this demonstration
real-time?
Can you describe the pre-appeals process for the demo? How will CMS
educate providers and consumers on this process?
Answer. CMS values public input and looks forward to continuing to
work with stakeholders to ensure quality care and high value for
Medicare beneficiaries. Ensuring beneficiary access to high-quality
care and treatment is always at the forefront of CMS's work. We
solicited comment regarding beneficiary protections in the proposed
rule and are closely reviewing the comments we received during the
comment period.
Coverage of drugs and all other Medicare benefits would be
unaffected by the proposed model. CMS's proposed evaluation of the Part
B Drug Payment Model would test the proposed innovative health care
payment model in this proposed rule to examine its potential to lower
program expenditures while maintaining or improving the quality of care
furnished to Medicare Program beneficiaries. One of the key evaluation
questions that CMS proposed for this purpose pertained to the proposed
model's impact on quality of care, access to care, timeliness of care,
and the patient experience of care. CMS proposed to evaluate the
quality and costs associated with the proposal throughout the life of
the model, including to evaluate ensure patient experience of care.
Additionally, as discussed in CMS testimony, CMS would be closely
monitoring beneficiary access and health outcomes during the model.
There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
In addition to current Medicare claims appeals processes, which
would remain available, CMS proposed to establish a new pre-appeals
payment exceptions process which would allow the provider, supplier, or
beneficiary to explain why the model's VBP-tool based payment amount is
not appropriate for the beneficiary. This exceptions process would be
in addition to, not in lieu of, the current appeals process. Payment
exceptions decisions would be issued within 5 business days of receipt
of the request for a payment exception.
our growing medicare population
Question. Medicare currently covers more than 55 million seniors
and individuals with disabilities. That number is expected to grow
exponentially over the next several years as more and more baby boomers
age into the program.
Do you have a plan to address the fact that tens of thousands of
individuals will age into Medicare during this demo? How do you plan to
manage the influx of new patients? How will this compare to existing
Medicare beneficiaries?
Answer. Medicare enrollment has increased from 19 million in 1966
to 58 million beneficiaries expected in FY 2017. In the future, CMS
expects that the average monthly enrollment will expand from 57 million
beneficiaries in FY 2016 to 75 million by FY 2026.
Coverage of drugs and all other Medicare benefits would be
unaffected by the proposed model, including coverage of drugs and all
other Medicare benefits for beneficiaries newly eligible for Medicare.
Additionally, as discussed in CMS testimony, CMS would be closely
monitoring beneficiary access and health outcomes during the model.
There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
CMS has proposed to closely evaluate beneficiary access and health
outcomes during the model. CMS's proposed evaluation of the Part B Drug
Payment Model would also test the proposed innovative health care
payment model in this proposed rule to examine its potential to lower
program expenditures while maintaining or improving the quality of care
furnished to Medicare Program beneficiaries. One of the key evaluation
questions that CMS proposed for this purpose pertained to the proposed
model's impact on quality of care, access to care, timeliness of care,
and the patient experience of care.
______
Questions Submitted by Hon. Michael F. Bennet
Question. Dr. Conway, we have heard concerns that the acquisition
costs for rural practices exceed the Medicare payment amount for
certain cancer drugs, this could lead to patients needing to use
hospital-based outpatient departments. Some physicians have stated that
under the demo, they believe that they will not be reimbursed
adequately and would no longer be able to administer infusions to
patients, particularly in rural areas where patients already have to
travel significant distances to see their specialists including
oncologists and rheumatologists. As these specialists could stop
providing services, we hear concerns that care will shift to costlier
settings. Have you heard this concern, and is this potential access and
health care spending issue something you are taking into account as you
are going through comments?
Answer. The proposed Part B Drug Payment Model is intended to lead
to better value for Part B by encouraging providers and suppliers to
choose higher value drugs. The proposed rule includes estimated impacts
of the proposed rule on physician specialties, including oncologists,
rheumatologists and ophthalmologists. The proposed rule set forth our
belief that the proposed payment rate of 102.5 percent of ASP plus
$16.80 should be sufficient to cover the provider's or supplier's
purchase price. In the proposed rule, we estimated that overall
spending on drugs furnished in the office setting would increase while
spending on drugs furnished in the hospital setting would decrease
under phase I of the model. While the proposed rule presented
information indicating that the model design would not favor hospitals
over physician practices, we have received feedback from stakeholders
on this issue. We are carefully considering the comments received
during the comment period to determine whether adjustments are needed.
Question. Obviously, we here in Congress and you all at CMS have
gotten a great deal of feedback from many that want to move forward and
pay for value and quality but are concerned about access to both their
provider and the right course of treatment. Can you talk about CMS's
current engagement with the patient and provider community on this
demonstration?
Answer. We solicited and received comments on many different
aspects of the proposed model such as scope of the model and the
effects on small practices and practices in rural areas. Stakeholder
input is very important to us, and is one reason why we utilized the
notice and comment rulemaking process in developing this model. We are
carefully considering the comments we received during the comment
period. Our goal is to be responsive to the public comments received
during the comment period and input from the Congress.
In addition to the notice provided through the rulemaking process,
CMS has proposed to engage in certain educational activities.
Specifically, we proposed to develop an evidence-based clinical
decision support tool and make prescribing pattern reports available to
practitioners.
Question. As you are working on the final rule, are you considering
any specialized protocols for treatments that are used in oncology or
other specialty areas that do not have a lower cost therapeutic
alternative? Along the same lines, are there considerations for
patients with rare diseases that are limited to specific treatments?
Since most rare diseases do not have established treatment
guidelines and quality measures, will CMS have alternative safeguards
in place to ensure beneficiary access for those with a rare disease?
How do you plan to engage with the rare disease patient stakeholder
community as you work to address their concerns?
Answer. Ensuring beneficiary access to high-quality care and
treatment is always at the forefront of CMS's work. Under the proposed
model, beneficiaries would still have access to the same drugs and
would retain the complete freedom of choice of doctors, hospitals, and
other providers or suppliers. The proposed model would not affect drug
coverage or any other Medicare benefits.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted in the
beneficiary's circumstance.
In addition, CMS has proposed to closely evaluate beneficiary
access and health outcomes during the model. CMS's proposed evaluation
of the Part B Drug Payment Model would also test the proposed
innovative health care payment model in this proposed rule to examine
its potential to lower program expenditures while maintaining or
improving the quality of care furnished to Medicare Program
beneficiaries. One of the key evaluation questions that CMS proposed
for this purpose pertained to the proposed model's impact on quality of
care, access to care, timeliness of care, and the patient experience of
care.
As discussed in CMS testimony, CMS also would be closely monitoring
beneficiary access and health outcomes during the model. There would be
a real-time claims monitoring program to track utilization, spending,
and prescribing patterns as well as changes in site of service
delivery, mortality, hospital admissions, and several other high-level
claims-based measures. This would help ensure that Medicare
beneficiaries will continue to have access to Part B drugs under the
model.
CMS values public input and looks forward to continuing to work
with stakeholders to ensure quality care and high value for Medicare
beneficiaries.
Question. In your testimony you discussed maintaining the standard
Medicare appeals process throughout the demonstration and including a
new pre-appeals exceptions review process under phase II. Can you
describe how the appeals process will operate in real time so that
patients maintain access to needed medications? What can other Medicare
appeals processes tell us in terms of how long it might take for
patients to receive a response?
Answer. Under the Part B Drug Payment Model proposed rule, CMS
proposed to establish a pre-appeals payment exceptions review process
for pricing established under the value-based pricing section of phase
II. This process would allow the provider, supplier, or beneficiary an
opportunity to dispute payments made under phase II. This process would
be in addition to, not in lieu of, the current appeals process, and
would be available to any providers, suppliers, or beneficiaries
receiving services in PCSAs assigned to one of the VBP arms. Providers,
suppliers, and beneficiaries would have the opportunity to appeal any
payment determination via the appeals mechanisms that currently exist
outside of this model.
CMS has proposed that the payment exceptions decisions would be
issued, in writing, within 5 business days of receipt of the request
for a payment exception. Throughout this process, providers and
suppliers would be prohibited from charging a beneficiary more than the
applicable cost sharing, even if a payment exceptions request is not
approved by the contractor or the payment amount determined by the
contractor remains unchanged as a result of the appeals process.
______
Questions Submitted by Hon. Robert P. Casey, Jr.
Question. People with disabilities have opposed the use of a
measure called
``quality-adjusted-life-years'' or QALYs as a determinant of the value
of health care. Currently, there is a statutory safeguard that prevents
the agency from using this kind of cost effectiveness or QALY measure
as the basis for Medicare policy in an effort to prevent discrimination
against people with disabilities and other vulnerable populations.
What assurance can you give people with disabilities that CMS will
not waive this safeguard?
The statute referenced is:
Sec. 1182 (42 U.S.C. 1320e-1).
(e) The Patient-Centered Outcomes Research Institute
established under section 1181(b)(1) shall not develop or
employ a dollars-per-quality adjusted life year (or similar
measure that discounts the value of a life because of an
individual's disability) as a threshold to establish what type
of health care is cost effective or recommended. The Secretary
shall not utilize such an adjusted life year (or such a similar
measure) as a threshold to determine coverage, reimbursement,
or incentive programs under title XVIII.
Answer. CMMI did not propose to waive 1182(e), and this Model will
abide by the laws and regulations governing the Medicare program.
Section 1115A of the Act authorizes the Innovation Center to test
innovative payment and service delivery models to reduce program
expenditures while preserving or enhancing the quality of care
furnished to Medicare, Medicaid, and Children's Health Insurance
Program beneficiaries. Under the proposed Part B Drug Payment model,
beneficiaries would still have access to the same drugs and would
retain the complete freedom of choice of doctors, hospitals, and other
providers or suppliers. The proposed model would not affect drug
coverage or any other Medicare benefits.
Additional beneficiary protection in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the current Medicare claims appeals processes, that would
allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted in the
beneficiary's circumstance. CMS sought comment on this protection and
values public input. In addition, CMS proposed to evaluate quality of
care, access to care, timeliness of care, and patient experience of
care during the model.
We are carefully reviewing all the comments we received during the
comment period. CMS looks forward to continuing to work with
stakeholders to ensure quality care and high value for Medicare
beneficiaries.
Question. When it comes to pharmaceuticals, we have long recognized
the important role played by drugs that are the only available
therapies for their indications, which can include many drugs for rare
diseases. For example, during drug development, the FDA grants
promising therapies for rare diseases the ``orphan drug designation,''
which can confer extra exclusivity if the drug is ultimately approved,
and entitles the manufacturer to qualify for the Orphan Drug Tax Credit
to help offset development costs.
Similarly, we must consider how changes to drug payment policy will
impact patient access to drugs when there is no alternative therapy.
One of the main concepts this demonstration is looking to test is the
incentive to prescribe a more expensive drug to achieve higher
reimbursement, but what precautions has CMS taken to ensure access when
there is only one drug available for a rare condition? If a physician
is no longer able to afford to prescribe the drug, what is the
beneficiary supposed to do?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. Under the proposed
model, beneficiaries would still have access to the same drugs and will
retain the complete freedom of choice of doctors, hospitals, and other
providers or suppliers. The proposed Part B Drug Payment Model would
not affect drug coverage or any other Medicare benefits. We are
carefully reviewing the comments we received during the comment period.
CMS's proposed evaluation of the Part B Drug Payment Model would
test the proposed innovative health care payment model in this proposed
rule to examine its potential to lower program expenditures while
maintaining or improving the quality of care furnished to Medicare
Program beneficiaries. One of the key evaluation questions that CMS
proposed for this purpose pertained to the proposed model's impact on
quality of care, access to care, timeliness of care, and the patient
experience of care.
Additionally, as discussed in CMS testimony, CMS would be closely
monitoring beneficiary access and health outcomes during the model.
There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
Question. Mental health advocates including the National
Association for Mental Illness, the National Council for Behavioral
Health, Mental Health America, and the American Foundation for Suicide
Prevention have raised concerns about what these proposals mean for
patients with mental illness. Many of these patients use Part B
medications to treat their mental illness, but for others their mental
illness is a comorbidity that impacts their adherence and response to
treatments for cancer or other complex conditions.
How will CMS account for the role of mental illness, or other
comorbidities, in determining treatment value in phase II of the
demonstration?
Answer. Ensuring beneficiary access to high quality care and
treatment is always at the forefront of CMS's work. Under the proposed
Part B Drug Payment model, beneficiaries would still have access to the
same drugs and would retain the complete freedom of choice of doctors,
hospitals, and other providers or suppliers. The proposed model would
not affect drug coverage or any other Medicare benefits.
Additional beneficiary protections in phase II of the proposal
included a proposed pre-appeals payment exceptions review process, in
addition to the standard current Medicare claims appeals processes that
would allow the beneficiary, provider, or supplier to explain why an
exception to Medicare's value-based pricing policy is warranted in the
beneficiary's circumstance. In addition, CMS proposed to evaluate
quality of care, access to care, timeliness of care, and patient
experience of care during the model.
Additionally, as discussed in CMS testimony, CMS would be closely
monitoring beneficiary access and health outcomes during the model.
There would be a real-time claims monitoring program to track
utilization, spending, and prescribing patterns as well as changes in
site of service delivery, mortality, hospital admissions, and several
other high-level claims-based measures. This would help ensure that
Medicare beneficiaries will continue to have access to Part B drugs
under the model.
______
Questions Submitted by Hon. Mark R. Warner
Question. On June 22, 2016, the Board of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds released its annual report, showing that growth in the costs of
prescription drugs paid by Medicare continue to exceed growth in other
Medicare costs and overall health expenditures. As we move to a system
that pays for value, not volume, this growth threatens the gains our
country has made in helping to drive down health-care costs, after an
unprecedented run of 5 years of slow growth. There are numerous reasons
why patients and heath care payers are experiencing rising prescription
drug costs, and the solutions are not simple.
The Department has the intended goal of linking 80 percent of
Medicare payments to value by 2018, including 50 percent to alternative
payment models such as bundled payments. While there has been
substantial innovation in how health plans and government reimburse for
hospital and physician services, payment for prescription drugs is
often based on more traditional outcomes; for example, volume of
product purchased.
In light of these circumstances, please consider the following
questions:
Do risk-sharing agreements, in which payments are linked to agreed-
upon patient outcomes, hold promise in improving how government
reimburses for prescription drugs?
In the proposed demonstration, phase II will look at various models
to ``pay for value.'' What tools and resources do we have, whether from
CMMI or in the private market, that can help generate the evidence we
need to ensure that we pay for value?
Answer. CMS proposed and sought comment on a set of value based
pricing tools to be used in phase II of the model that are currently
employed by commercial health plans, pharmacy benefit managers,
hospitals, and other entities that manage health benefits and drug
utilization. In the proposed rule, we stated our belief that some of
these approaches, when appropriately structured, may be adaptable to
Part B.
There are a number of innovative tools being used in the private
sector. One example is risk-sharing arrangements that link the payment
for drugs to patient health outcomes. As we highlighted in the proposed
rule, the University of Washington's School of Pharmacy maintains the
Performance Based Risk Sharing Database,\14\ which currently lists
detailed information on the 311 risk-sharing arrangements subject to
participation fees and licensing agreements.
---------------------------------------------------------------------------
\14\ https://sop.washington.edu/department-of-pharmacy/performance-
based-risk-sharing-database/.
The private market also capitalizes on reference pricing, which
refers to setting a standard payment rate--a benchmark--for a group of
therapeutically similar drug products. Like all other models, CMS
analyzed practices from the private sector and sought public input
regarding the proposed tools. CMS is currently reviewing the public
---------------------------------------------------------------------------
comments we received during the comment period.
The Part B Drug Payment Model proposal is part of the
administration's broader strategy to encourage better care, smarter
spending, and healthier people by paying providers for what works,
unlocking health care data, and finding new ways to coordinate and
integrate care to improve quality.
Question. In your view, do we have enough objective data on
clinical effectiveness to move towards value purchasing agreements on a
large scale? If not, what investments are necessary to move in that
direction? Do you believe that there are other entities, public or
private, that should be conducting this research?
Answer. Phase II of the proposed Part B Drug Payment Model would
use tools currently employed by commercial health plans, pharmacy
benefit managers, hospitals, and other entities that manage health
benefits and drug utilization. These tools have been used for years
with positive results, and we believe that some of these successful
approaches may be adaptable to Part B. We will test whether the
implementation of the tools affects expenditures and outcomes.
In the proposed rule, we proposed several value-based pricing
tools: reference pricing, indications-based pricing, outcomes-based
risk sharing agreements, and discounting or eliminating patient
coinsurance amount. This group of tools would serve as a framework for
interventions for selected Part B drugs. We would not apply all these
tools to all Part B drugs but implement these tools in a limited manner
for certain HCPCS drug codes after considering these tools'
appropriateness to specific Part B drugs within these codes. In the
proposed rule, we solicited comment on the proposed tools, including
specific Part B drugs suitable for the application of this group of
tools.
Question. Phase II of the proposed demonstration will also include
clinical decision support tools for providers and suppliers. How does
HHS propose to ensure that patients and others are aware of this
information, as well as the results of value-based evaluations?
Answer. The proposed two component clinical decision support (CDS)
tool would be offered through a web-based format. This tool would allow
participating physicians in the VBP arm of the model to conveniently
access up-to-date literature and consensus guidelines, as well as
feedback reports.
Physicians who voluntarily accessed the proposed educational CDS
tool would be free to decide if and how they would apply information
from the tool to their practice. This educational component would
provide information on prescribing for specific indications that
reflects up-to-date literature and consensus guidelines focusing on
effective treatments as well as safe and appropriate drug use for
specific diagnoses. For example, we anticipated that information would
be listed and indexed to correspond to drugs and disease states or
conditions that are commonly treated in Part B. This tool is not
intended to act as or replace, in any way, the physician's medical
judgment for the treatment of patient-specific clinical conditions nor
is the tool intended to replace a practitioner's ability to order
reasonable and necessary Part B drugs as appropriate.
The proposed feedback report component of the CDS tool would
provide information on Part B claims payment patterns for specific
drugs and/or indications either nationally or within specific
geographic areas. These reports would provide feedback on how an
individual physician's drug claims patterns compare with local or
national data or even recommended guidelines. This information would be
intended for use solely to support a physician's interest in mindful
prescribing.
Question. To what extent has CMS considered addressing statutory or
regulatory impediments to the adoption of value-based contracts outside
of this demonstration model?
Answer. The Part B Drug Payment Model proposed rule is part of the
administration's broader strategy to encourage better care, smarter
spending, and healthier people by paying providers for what works,
unlocking health-care data, and finding new ways to coordinate and
integrate care to improve quality.
The Affordable Care Act established tools such as the Medicare
Shared Savings Program and the Center for Medicare and Medicaid
Innovation to use alternative payment models to achieve better care,
smarter spending, and healthier people. Alternative payment models are
ways for Medicare to reimburse providers based on the quality of care
rather than the number of services provided. Examples include
accountable care organizations, advanced primary care medical homes,
and models that bundle payments for episodes of care.
Before the Affordable Care Act, very few Medicare payments flowed
through alternative payment models. By 2014, approximately 20 percent
of payments were made through alternative payment models, and today
more than 30 percent of payments are made through alternative payment
models.\15\ In addition to Medicare, dozens of insurance companies,
health systems, employers, and organizations have joined CMS in setting
their own goals to move to alternative payment models. As part of this
effort, in 2015, HHS established the Health Care Payment Learning and
Action Network to align efforts between government, private sector
payers, employers, providers, and consumers to broadly scale these
gains in better care, smarter spending, and healthier people.
---------------------------------------------------------------------------
\15\ ``HHS Reaches Goal of Tying 30 Percent of Medicare Payments to
Quality Ahead of Schedule,'' http://www.hhs.gov/about/news/2016/03/03/
hhs-reaches-goal-tying-30-percent-medicare-payments-guality-ahead-
schedule.html.
______
Prepared Statement of Hon. Orrin G. Hatch,
a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a hearing to examine
the Centers for Medicare and Medicaid Services' (CMS) proposed drug
rule for Medicare Part B:
I'd like to welcome everyone to this morning's hearing that will
allow the committee to examine the Obama administration's proposed
Medicare Part B drug demonstration. I would like to thank Dr. Patrick
Conway from the Center for Medicare and Medicaid Services for
testifying.
Today's topic is very important. The proposed CMS demonstration
project would radically alter the ways in which Medicare pays for drugs
and biologics treatments that physicians prescribe and administer to
patients in the outpatient settings that are covered under Part B.
Typically, these are drugs and treatments that are used in a
physician's office or hospital. They are used to treat vulnerable
beneficiaries with serious medical conditions, such as cancer, macular
degeneration, rheumatoid arthritis, neurological disorders, primary
immunodeficiency diseases, and a number of rare illnesses.
From the day CMS made their proposed demonstration public this past
March, I have made my opinion very clear: I believe this experiment is
ill-conceived and likely to harm beneficiaries. It is an overreach on
the part of CMS that, in my opinion, goes beyond the agency's statutory
authority, extends nationwide, and requires all Medicare Part B
providers to participate.
As we all know, the experiment would change the Part B payment
system in two phases, both of which are very troubling--and that's
putting it kindly.
Given these inherent concerns, I'd like to hear an explanation from
CMS as to why they believe their new payment changes will not harm
Medicare beneficiaries. So far, what they've given us lacks any such
explanation or justification. And, that's not all that's missing from
the elements of the demonstration that have been made public.
Indeed, this proposal is troubling--and, again, I'm being kind with
that description--not only for what is in it, but what has been left
out.
For example, with its proposal, CMS has not indicated the
conditions in which a physician has the option to prescribe a high or
low cost drug that have the same patient benefit.
In addition, CMS has not provided an analysis of how many
physicians, including those in small and rural practices, would lose
money purchasing needed drugs.
They have not provided an analysis of how often physicians would
have to refer beneficiaries to the less-convenient, more costly
hospital outpatient setting.
And, CMS has not yet indicated how it will assess the impact on
beneficiary access and quality both during the course of the
demonstration and the formal evaluation of it.
Not surprisingly, the proposed experiment has been widely condemned
by experts and stakeholders.
Almost immediately after the proposed demonstration was released,
we received a letter from over 300 stakeholder organizations asking for
our help in getting CMS to withdraw the proposal. These organizations
included: the Arthritis Foundation, the Caregiver Action Network, the
Immune Deficiency Foundation, the Lung Cancer Alliance, and the
National Alliance for Mental Illness.
The organizations that have reached out with concerns about how
this proposal represents patients who suffer from the diseases treated
by these drugs, including cancer, arthritis, mental illness, and HIV.
They represent the physicians who treat the patients with these
devastating conditions, including oncologists, rheumatologists, and
ophthalmologists.
I have also heard many of these same concerns from my constituents.
Many Utahns feel that the proposed demonstration would deprive them of
the drugs that best treat their conditions and require them to have to
travel great distances and incur significant additional expenses to
receive needed care.
Obviously, Utah is not alone here. Patients and providers from
virtually every State have weighed in on this matter, which prompted
all of the Republican members of the Finance Committee to send a letter
to Acting CMS Administrator Slavitt urging the withdrawal of the
proposal.
That's right, 14 Senators from the only Senate committee with
oversight jurisdiction sent a detailed and thoughtful letter to CMS
about this proposal.
And, how did the agency respond? We received what essentially
amounts to a form letter, thanking the committee members for sharing
their views and noting that CMS will consider all public comments. It
could not have been more dismissive in its tone.
That is the level of attention and seriousness CMS ascribes
oversight from Congress. And, sadly, this is not an isolated incident.
For 7 years now, the entire Obama administration has patronized,
stonewalled, or flat-out ignored oversight efforts on the part of
Finance Committee Republicans. There are countless examples.
Sometimes the agencies show disregard for the law--like when they
refused to provide any meaningful response to numerous inquiries about
illegal reinsurance payments issued under the so-called Affordable Care
Act.
Other times, they discount our oversight role entirely--like when
they denied Finance Committee staff access to last week's Medicare and
Social Security Trustees Reports until the press conference putting the
administration's own misleading spin on the reports was well underway.
I have, on numerous occasions, in writing, during hearings like
this, and elsewhere, expressed my hope that the administration, as a
whole, would change its ways and become more cooperative and
transparent. I have asked countless nominees that have come before the
committee to commit to being responsive to senators' inquiries. Yet,
over 7 years, this unprecedented level of disregard has continued,
unabated.
Given the short time left with this administration, I won't renew
these calls for more cooperation and responsiveness today. I feel quite
certain that there are no new improvements on the immediate horizon.
However, given that we have a high-ranking administration official
before us today, I hope that, at the very least, we can finally get
some straight answers to the many questions raised by CMS's Part B
proposal.
I note that our witness, Dr. Conway, stated in an early May
interview on the proposed demonstration that CMS ``will interact with
Congress and take feedback and make adjustments as necessary.''
I do hope that our conversation today will be more consistent with
that sentiment than the dismissive response letter shortly after that
statement was made. The Senators on this committee--and more
importantly, the constituents we represent--deserve at least that much.
______
Letter Submitted by Hon. Orrin G. Hatch
March 17, 2016
The Honorable Mitch McConnell The Honorable Paul Ryan
Majority Leader Speaker of the House of
Representatives
U.S. Senate U.S. House of Representatives
Washington, DC 20510 Washington, DC 20515
The Honorable Harry Reid The Honorable Nancy Pelosi
Minority Leader Minority Leader
U.S. Senate U.S. House of Representatives
Washington, DC 20510 Washington, DC 20515
Dear Leader McConnell, Leader Reid, Speaker Ryan, and Leader Pelosi:
We, the 316 organizations listed below, are writing to express our
strong concern with the Centers for Medicare and Medicaid Services'
(CMS) March 8, 2016 proposed rule that would implement a new ``Medicare
Part B Payment Model.'' We believe that this type of initiative,
implemented without sufficient stakeholder input, will adversely affect
the care and treatment of Medicare patients with complex conditions,
such as cancer, macular degeneration, hypertension, rheumatoid
arthritis, Crohn's disease and ulcerative colitis, and primary
immunodeficiency diseases. We previously sent a letter to Department of
Health and Human Services (HHS) Secretary Sylvia Burwell asking her not
to move forward with this type of initiative, and we now respectfully
request that you ask CMS to withdraw the proposed rule.
Medicare beneficiaries--representing some of the nation's oldest and
sickest patients--must often try multiple prescription drugs and/or
biologics before finding the appropriate treatment for their complex
conditions. These patients need immediate access to the right
medication, which is already complicated by the fact that treatment
decisions may change on a frequent basis. These vulnerable Medicare
patients and the providers who care for them already face significant
complexities in their care and treatment options, and they should not
face mandatory participation in an initiative that may force them to
switch from their most appropriate treatment.
A Center for Medicare and Medicaid Innovation (CMMI) initiative that
focuses on costs rather than patients and health-care quality,
implemented based on primary care service areas, rather than the unique
challenges of patients, is misguided and ill-considered. Medicare
beneficiaries with life-threatening and/or disabling conditions would
be forced to navigate a CMS initiative that could potentially lead to
an abrupt halt in their treatment. This is not the right way to manage
the Medicare program for its beneficiaries.
As CMS contemplates payment and delivery system reforms, there is a
critical need for transparent, comprehensive communications with
stakeholders throughout the process. We were deeply disappointed that
CMS only provided a limited opportunity for stakeholder input before
announcing sweeping proposed changes to Medicare Part B drug payments.
In doing so, the agency largely failed to consider stakeholder concerns
that the initiative could adversely impact patients' access to life-
saving and life-changing Medicare Part B covered drugs.
We believe these types of initiatives should be initially implemented
in a targeted, patient-centered and transparent way that accounts for
the unique needs of Medicare beneficiaries. In fact, CMMI is
statutorily required to ensure that its initiatives target ``deficits
in care,'' and can only expand the scope and duration of a model after
careful assessment of the model's impact on quality of care, patient
access, and spending. We are very deeply concerned, therefore, that
CMS' proposed Part B Model would be applied on a nationwide basis--to
all states except Maryland, due to its all-payer model--and would
include the ``majority'' of Part B drugs. Furthermore, given the
success of the current Part B reimbursement methodology in ensuring
patient access to the most appropriate treatments, it is unclear what
``deficits in care'' CMS is attempting to address in this incredibly
wide-ranging initiative.
In the proposed rule, CMS expresses concern that the 6-percent ASP add-
on payment ``may encourage the use of more expensive drugs because the
6-percent add-on generates more revenue for more expensive drugs.''
This assumption fails to take into account the fact that providers'
prescribing decisions depend on a variety of factors, including
clinical characteristics and the complex needs of the Medicare
population. Most importantly, there is no evidence indicating that the
payment changes contemplated by the model will improve quality of care,
and may adversely impact those patients that lose access to their most
appropriate treatments. In fact, data suggests that the current Part B
drug payment system has been both cost effective and successful in
ensuring patient access to their most appropriate treatment, as Part B
expenditures remain relatively stable \1\ and Part B drugs account for
just 3% of total program costs.\2\
---------------------------------------------------------------------------
\1\ 2015 Medicare Trustees Report.
\2\ Medicare Payment Advisory Commission, ``Medicare Drug
Spending;'' presentation at September 2015 public meeting; available
at: http://www.medpac.gov/documents/september-2015-meeting-
presentation-medicare-drug-spending.pdf?sfvrsn=0.
Finally, it is important to understand that with the Budget Control
Act, CMS has already cut Medicare reimbursement for physician-
administered drugs by 2 percent, further impacting some providers'
ability to administer essential drugs at the current reimbursement
rate. It is imperative CMS acknowledges and evaluates the impact of the
current, real payment rate and engages multiple stakeholders, starting
with patients and providers, before implementing a new, severe
reimbursement cut that is effectively ASP + 0.86 percent (plus a small
flat fee). In closing, we urge you to ensure that our nation's oldest
and sickest patients continue to be able to access their most
appropriate drugs and services. We therefore request that you ask CMS
to permanently withdraw the Part B Drug Payment Model from
---------------------------------------------------------------------------
consideration.
Sincerely,
1 in 9: The Long Island Breast Action CF
Cancer Action Coalition
ADAP Advocacy Association (aaa+) Advocates for Responsible Care
(ARxC)
Aimed Alliance Alabama Academy of Ophthalmology
Alabama Cancer Congress Alabama Gastroenterological Society
Alaska Society of Eye Physicians Alliance for Patient Access (AfPA)
and Surgeons
Alliance of Specialty Medicine Alzheimer's and Dementia Alliance
of Wisconsin
American Academy of Allergy Asthma American Academy of Ophthalmology
and Immunology (AAAAI)
American Association of Diabetes American Bechet's Disease
Educators Association
American College of Mohs Surgery American College of Rheumatology
American Gastroenterological American Liver Foundation, Upper
Association Midwest Division
American Society of Clinical American Urological Association
Oncology (ASCO)
AmerisourceBergen Anticoagulation Forum
Arizona BioIndustry Association Arizona United Rheumatology
(AZBio) Alliance
Arkansas State Rheumatology Arthritis Foundation
Association
Asian Americans for Community Association of Black Cardiologists
Involvement
Association of Community Cancer Association of Idaho
Centers (ACCC) Rheumatologists
Association of Indian Physicians of Association of Northern California
Ohio Oncologists (ANCO)
Association of Women in Asthma and Allergy Foundation of
Rheumatology (AWIR) America, New England Chapter
Axis Advocacy Biocom
BioFlorida, Inc. BioForward
BioHouston BioKansas
BioNJ Bionorth TX
Bioscience Association of West Biotechnology Innovation
Virginia Organization (FKA Biotechnology
Industry Organization)
BioUtah Brain Injury Association of Georgia
California Academy of Eye California Hepatitis C Task Force
Physicians and Surgeons
California Life Sciences California Rheumatology Alliance
Association (CLSA) (CRA)
Cancer Support Community Cancer Support Community Central
Ohio
Cancer Support Community North CancerCare
Texas
Cardinal Health Caregiver Action Network
Caring Ambassadors Cascade AIDS Project
Center for Healthcare Innovation Central Texas Rheumatology Society
Chicago Life Sciences Consortium COA Patient Advocacy Network (CPAN)
(CLSC)
Coalition of Hematology Oncology Coalition of State Rheumatology
Practices (CHOP) Organizations (CSRO)
Coalition of Texans with Colon Cancer Alliance
Disabilities (CTD)
Colorado BioScience Association Colorado Gerontological Society
Colorado Rheumatology Association Colorado Society of Eye Physicians
and Surgeons (CSEPS)
Colorado State Grange Community Access National Network
(CANN)
Community Liver Alliance Community Oncology Alliance (COA)
Connecticut Oncology Association Connecticut Rheumatology
(CtOA) Association
Cutaneous Lymphoma Foundation Delaware Academy of Ophthalmology
Delaware BioScience Association Dia de la Mujer Latina
Digestive Disease National Digestive Health Physicians
Coalition (DDNC) Association (DHPA)
Easter Seals Massachusetts Eastern Pennsylvania Chapter,
National Hemophilia Foundation
EDSers United Foundation Elder Care Advocacy of Florida
Epilepsy Foundation of Greater Epilepsy Foundation of Western
Chicago Wisconsin
Fabry Support and Information Group Florida Allergy, Asthma and
Immunology Society (FAAIS)
Florida Gastroenterologic Society Florida Psychiatric Society
Florida Society of Clinical Florida Society of Neurology
Oncology (FLASCO)
Florida Society of Ophthalmology Florida Society of Rheumatology
Florida State Hispanic Chamber of GBS/CIDP Foundation International
Commerce
Georgia Bio Georgia Chapter of the American
College of Cardiology
Georgia Mental Health Consumer Georgia Society of Clinical
Network Oncology (GASCO)
Georgia Society of Rheumatology Global Colon Cancer Association
Global Healthy Living Foundation H.E.A.L.S of the South
Hawaii Society of Clinical Oncology Health Coalition, Inc.
Healthcare Distribution Management Healthcare Institute of New Jersey
Association (HINJ)
Healthcare Leadership Council HealthHIV
Hematology-Oncology Managers of New Hepatitis Foundation International
York (HOMNY)
iBio--Illinois Biotechnology Idaho Society of Clinical Oncology
Industry Organization
Idaho Society of Ophthalmology Illinois Medical Oncology Society
Illinois Society of Eye Physicians Immune Deficiency Foundation (IDF)
and Surgeons (ISEPS)
Indiana Academy of Ophthalmology Indiana Health Industry Forum
(IAO) (IHIF)
Indiana Oncology Society INDUNIV Research Consortium
International Cancer Advocacy International Foundation for
Network (ICAN) Autoimmune Arthritis (IFAA)
International Institute for Human ION Solutions
Empowerment, Inc.
Iowa Academy of Ophthalmology (IAO) Iowa Biotechnology Association
Iowa Oncology Society Iowa State Grange
Kansas City Area Life Sciences Kansas Rheumatology Alliance
Institute, Inc.
Kansas Society of Clinical Oncology Kansas Society of Eye Physicians
and Surgeons (KSEPS)
Kentuckiana Rheumatology Alliance Kentucky Association of Medical
Oncology (KAMO)
Kentucky Life Sciences Council Large Urology Group Practice
Association (LUGPA)
Life Science Washington Louisiana Oncology Society
Lung Cancer Alliance LUNGevity
Lupus Foundation of America (LFA), Lupus Foundation of Colorado
Indiana Chapter
Maryland DC Society of Clinical Maryland Society for the Rheumatic
Oncology Diseases (MSRD)
Massachusetts Association for Massachusetts Society of Eye
Mental Health Physicians and Surgeons (MSEPS)
Massachusetts, Maine and New MassBio
Hampshire Rheumatology Association
Mayors Committee on Life Sciences McKesson
Medical Oncology Association of Medical Partnership 4 MS
Southern California (MOASC)
Medical Society of the State of New Men's Health Network
York
Mental Health Systems, Inc. Metropolitan Atlanta Rheumatology
Society (MARS)
MichBio--Michigan Biosciences Michigan Lupus Foundation
Industry Association
Michigan Osteopathic Association Michigan Rheumatism Society
Michigan Society of Eye Physicians Michigan Society of Hematology and
and Surgeons (MiSEPS) Oncology (MSHO)
Midwest Oncology Practice Society Minnesota Academy of Ophthalmology
(MOPS)
Minnesota Society of Clinical Mississippi Academy of Eye
Oncology Physicians and Surgeons
Mississippi Arthritis and Mississippi Oncology Society
Rheumatology Society
Missouri Biotechnology Association Missouri Oncology Society
(MOBIO)
Missouri Society of Eye Physicians Montana BioScience Alliance
and Surgeons (MoSEPS)
Montana State Oncology Society NASW-NC (National Association of
Social Workers)
National Alliance on Mental Illness National Alliance on Mental Illness
(NAMI) Greater Des Moines (NAMI)
National Alliance on Mental Illness National Alliance on Mental Illness
Iowa (NAMI) Kentucky (NAMI)
National Alliance on Mental Illness National Association for Rural
Texas (NAMI) Mental Health
National Association of County National Association of Hepatitis
Behavioral Health and Task Forces
Developmental Disability Directors
(NACBHDD)
National Blood Clot Alliance (NBCA) National Cancer Care Alliance
National Hispanic Medical National Infusion Center
Association Association (NICA)
National Medical Association (NMA) National Minority Quality Forum
National MPS Society National Patient Advocate
Foundation
Nebraska Academy of Eye Physicians Nebraska Medical Association (NMA)
and Surgeons
Nebraska Oncology Society Neurofibromatosis Mid-Atlantic
Nevada Oncology Society New England Biotech Association
(NEBA)
New Jersey Academy of Ophthalmology New Jersey Association of Mental
Health and Addiction Agencies,
Inc. (NJAMHAA)
New Jersey Rheumatology Association New Jersey Society for Oncology
Managers (NJSOM)
New York State Ophthalmological New York State Rheumatology Society
Society
NewYorkBIO NMBio
NORM--National Organization of North American Thrombosis Forum
Rheumatology Managers
North Carolina Biosciences North Carolina Oncology Association
Organization (NCBIO)
North Carolina Psychiatric North Carolina Psychological
Association Association
North Carolina Rheumatology North Carolina Society of Eye
Association (NCRA) Physicians and Surgeons (NCSEPS)
Northern New England Clinical Ohio Association of Rheumatology
Oncology Society
Ohio Foot and Ankle Medical Ohio Gastroenterology Society
Association
Ohio Hematology Oncology Society Ohio Ophthalmological Society (OOS)
Oklahoma Academy of Ophthalmology Oklahoma Society of Clinical
Oncology
Oncology Managers of Florida Oncology Nursing Society
Oregon Bioscience Association Oregon Rheumatology Alliance
Oregon Society of Medical Oncology Oregon State Grange
(OSMO)
Oregon Urological Society Patients Rising
PCa Blue Inc. Pennsylvania Academy of
Ophthalmology
Pennsylvania Bio Pennsylvania Rheumatology Society
Pennsylvania State Grange Pharmaceutical Research and
Manufacturers of America (PhRMA)
Philadelphia Rheumatism Society Phoenix Rheumatology Association
Physicians Advocacy Institute (PAI) Premier Oncology Hematology
Management Society (POHMS)
Prevent Blindness Prevent Blindness, Ohio Affiliate
Prevent Cancer Foundation Prostate Conditions Education
Council (PCEC)
Puerto Rico Society of Pulmonary Hypertension Association
Ophthalmology
Quality Cancer Care Alliance (QCCA) RetireSafe
Rheumatism Society of the District Rheumatology Alliance of Louisiana
of Columbia
Rheumatology Association of Iowa Rocky Mountain Oncology Society
(RAI)
Rush To Live Salud USA
SCBIO Society for Women's Health Research
Society of Utah Medical Oncologists South Carolina Gastroenterology
Association
South Carolina Oncology Society South Carolina Rheumatism Society
South Carolina Society of South Dakota Biotech
Ophthalmology
South Florida Cancer Association Southern California Rheumatology
Society (SCRS)
Spina Bifida Association of State of Texas Association of
Kentucky Rheumatologists (STAR)
State of Texas Kidney Foundation StopAfib.org
Taking Control of Your Diabetes Tech Council of Maryland
(TCOYD)
Tennessee Oncology Practice Society Tennessee Rheumatology Society
(TOPS)
Texas Association of Business Texas Association of Manufacturers
Texas BioAlliance Texas Healthcare and Bioscience
Institute (THBI)
Texas Life Sciences Collaboration Texas Nurse Practitioners
Center
Texas Ophthalmological Association Texas Society of Clinical Oncology
Texas State Grange The American College of Surgeons/
PCommission on Cancer
The Arizona Clinical Oncology The Crohn's Colitis Effect
Society
The Medical Alley Association The Mended Hearts, Inc.
The Retina Society The U.S. Oncology Network
The Vasculitis Foundation U.S. Hereditary Angioedema
Association
United States Cutaneous Lymphoma Utah Ophthalmology Society
Consortium
Veterans Health Council Vietnam Veterans of America
Virginia Association of Virginia Biotechnology Association
Hematologists and Oncologists
Virginia Hematology Oncology Virginia Society of Eye Physicians
Association (VAHO) and Surgeons
Washington Academy of Eye Washington Rheumatology Alliance
Physicians and Surgeons
Washington State Medical Oncology Washington State Prostate Cancer
Society Coalition
Washington State Urology Society Wellness and Education Community
Action Health Network
West Virginia Oncology Society West Virginia Rheumatology State
Society
Wisconsin Academy of Ophthalmology Wisconsin Association of Hematology
and Oncology
Wisconsin Association of Wisconsin Rheumatology Association
Osteopathic Physicians and
Surgeons
Wyoming Epilepsy Association Wyoming Ophthalmological Society
cc: The Honorable Orrin Hatch The Honorable Ron Wyden
Chairman Ranking Member
Committee on Finance Committee on Finance
U.S. Senate U.S. Senate
The Honorable Fred Upton The Honorable Frank Pallone
Chairman Ranking Member
Committee on Energy and Commerce Committee on Energy and Commerce
U.S. House of Representatives U.S. House of Representatives
The Honorable Kevin Brady The Honorable Sander Levin
Chairman Ranking Member
Committee on Ways and Means Committee on Ways and Means
U.S. House of Representatives U.S. House of Representatives
______
Letter Submitted by Hon. Pat Roberts,
a U.S. Senator From Kansas
June 28, 2016
Hon. Orrin G. Hatch Hon. Ron Wyden
Chairman Ranking Member
Committee on Finance Committee on Finance
U.S. Senate U.S. Senate
Washington, DC 20510 Washington, DC 20510
Dear Chairman Hatch and Ranking Member Wyden:
The undersigned patient and disease advocacy organizations representing
a diverse array of Medicare beneficiaries are writing to thank you for
convening today's hearing on the proposed Medicare Part B Drug Payment
Demonstration. As organizations that represent Medicare beneficiaries
living with a broad range of chronic and disabling health conditions,
we have a number of concerns with the proposed Demonstration put
forward by the Centers for Medicare and Medicaid Innovation (CMMI) and
appreciate that the Finance Committee is willing to engage in oversight
regarding the design and potential impact of program on beneficiaries.
Many of our organizations have submitted comments to CMMI on this
proposed Demonstration expressing concerns on a range of issues,
including:
While this has been deemed a ``demonstration'' by CMMI,
participation will be mandatory for many physicians and their patients
and will affect 75% of the Medicare population, making it much larger
than a typical demonstration project.
The payment methodology outlined in Phase 1 of the Demonstration
has significant potential to limit access to the full range of
available treatments under Part B to treat serious illnesses and
conditions such as cancer, arthritis, multiple sclerosis, primary
immune deficiency, macular degeneration and schizophrenia.
Patients often have to try several different treatment options
before finding one that works for them. Under the Demonstration,
patients could be forced to switch from the most appropriate treatment
or discontinue treatment because of transportation hurdles.
CMMI's Phase 2 proposals to engage value assessments of
treatments based on the ``average'' patient fail to capture the
complexity of medical co-morbidities and the diverse complex needs of
individual patients. Many of the patients who will be affected have
rare and/or chronic diseases and are not the average patient.
There was a lack of stakeholder input from the beginning of this
process, and many of the problems with the Demonstration could have
been mitigated had patient groups been involved on the front end.
There is concern that this Demonstration could have an impact
beyond Part B, and ultimately affect patient access to Part D drugs.
While there are several consumer groups that have come out in support
of this Demonstration, it is important to note that consumers and
patients are two very different constituencies. Patients are the ones
utilizing the health care system on a regular, on-going basis, and
should be protected and considered most thoroughly throughout this
process.
We are grateful for the Committee's willingness to carefully examine
the proposed CMMI Demonstration with a particular focus on how it will
impact access to treatment for Medicare beneficiaries that live every
day with life threatening and chronic illnesses. We urge you to demand
answers form CMMI and would encourage your efforts to block full
implementation of this Demonstration until these questions are
answered.
Thank you for your leadership in ensuring that the concerns of patients
are addressed. Please contact Sandie Preiss, Vice President of Advocacy
and Access at the Arthritis Foundation with any questions at
[email protected], 202-887-2910.
Sincerely,
AIDS Institute Alliance for the Adoption of
Innovations in Medicine (Aimed
Alliance)
Alliance for Patient Access American Autoimmune Related
Diseases Association
Arthritis Foundation Asthma and Allergy Foundation of
America
Caregiver Action Network COPD Foundation
Epilepsy Foundation GBS/CIDP Foundation International
Global Healthy Living Foundation Health HIV
Hemophilia Federation of America Hepatitis Foundation International
Immune Deficiency Foundation International Foundation for
Autoimmune Arthritis
Lupus and Allied Diseases Lupus Foundation of America
Association
MLD Foundation National Alliance on Mental Illness
National Psoriasis Foundation NeedyMeds
Partnership to Improve Patient Care Prevent Blindness
Pulmonary Hypertension Association RetireSafe
Scleroderma Foundation Sjogren's Syndrome Foundation
U.S. Hereditary Angioedema Veterans Health Council
Association
Vietnam Veterans of America
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
What underlies this debate, in my view, is the fact that the United
States is in an era of miracle treatments and cures. There are drugs on
the market today and close on the horizon that were science fiction not
too long ago. The question now is whether Americans will be able to
afford them. These treatments threaten to become a major strain on our
health care programs, on insurers, and on family budgets across the
country.
That was one of the big takeaways from the 18-month investigation
Senator Grassley and I conducted on a bipartisan basis into the rollout
of one blockbuster drug. You could see in that one case, a drug that
treats Hepatitis C, the balancing act this country faces between
miracle cures and limited resources to pour into prescribing them. And
I believe this will be the pattern for years to come. Absent reforms,
this is going to continue--lots of cures, and a big question mark when
it comes to access and affordability.
Now, those Hepatitis C drugs are not the focus of this hearing.
Today the committee will examine a demonstration project set to begin
in Medicare Part B, which is the part of the program that covers
outpatient care. Part B pays for a small share of the drugs many
seniors are prescribed, and the demonstration would affect the way
those drugs are paid for. The demonstration has brought to the
forefront some big questions about how the United States is going to
address the trend of climbing drug prices.
The fact is, seniors are getting pounded by drug costs. And in my
view, there is an enormous amount of work that has to be done to
guarantee that seniors have affordable access to the medications they
need. In Medicare Part B, seniors' pocketbooks are often hit especially
hard because their share of drug costs is a co-insurance instead of a
co-pay. That means rather than a flat, manageable fee, some seniors are
facing a huge burden, stuck paying a percentage of a drug's total cost.
I look at that burden the same way I look at the rising out-of-pocket
cost for seniors in Medicare Part D. For part D I've proposed an out-
of-pocket cap to help protect seniors. And in my view, this committee
ought to take a close look at ways to make sure seniors aren't getting
clobbered in Part B as well.
There are also important questions to be addressed with respect to
this demonstration project. That's why all the Finance Committee
Democrats and I sent a letter in April to Andy Slavitt, the Acting
Administrator of the Centers for Medicare and Medicaid Services,
outlining key concerns we had about the impact this project would have
on patients.
At their core, our concerns are about making sure that vulnerable
seniors have access to life-saving medications. Protecting access is a
big issue in rural areas where seniors today are often facing fewer
choices and lower quality of care. And it's extremely important that
the project not result in patients being told that they have to go get
treatment at the hospital, where treatment is typically more costly and
less convenient.
Finally, our letter said that this demonstration project has to
sync up with the effort Medicare is making to move toward paying for
treatment based on its value, rather than its volume. When you're
focusing on the value and the efficiency of care, there's the potential
to raise the quality of care for seniors while saving money at the same
time.
I hope the committee is able to examine these issues carefully
today as it looks at the Medicare Part B demonstration. I want to thank
Dr. Conway for joining the committee here today, and I look forward to
hearing his testimony.
______
Communications
----------
Academy of Managed Care Pharmacy
100 North Pitt Street, Suite 400
Alexandria, VA 22314
800-827-2627 | 703-683-8416
Fax 703-683-8417
www.amcp.org
Hon. Orrin G. Hatch Hon. Ron Wyden
Chairman Ranking Member
Senate Finance Committee Senate Finance Committee
219 Dirksen Senate Office Building 219 Dirksen Senate Office Building
Washington, DC 20510 Washington, DC 20510
Dear Chairman Hatch and Ranking Member Wyden:
The Academy of Managed Care Pharmacy (AMCP) appreciates the opportunity
to submit comments for the record on the hearing titled ``Examining the
Proposed Medicare Part B Drug Demonstration'' held on June 28, 2016.
AMCP submitted detailed comments \1\ to the Centers for Medicare and
Medicaid Services (CMS) in response to the proposed rule titled
``Medicare Program; Part B Drug Payment Model (CMS-1670-P)'' published
in the Federal Register on March 11, 2016.
---------------------------------------------------------------------------
\1\ AMCP comments to CMS Re ``Medicare Program; Part B Drug Payment
Model (CMS-1670-P).'' Available at http://bit.ly/27biTT5. Accessed June
28, 2016.
AMCP is a professional association of pharmacists and other
practitioners who serve society by the application of sound medication
management principles and strategies to improve health care for all.
The Academy's 8,000 members develop and provide a diversified range of
clinical, educational, medication and business management services and
strategies on behalf of the more than 200 million Americans covered by
---------------------------------------------------------------------------
a managed care pharmacy benefit.
While AMCP was pleased to see a commitment by CMS to evaluate methods
to move from quantity and process-orientated payments for drugs under
Medicare Part B to payment policies focused on rewarding higher quality
and improved patient outcomes, AMCP expressed concern that the
proposal, as written, did not fully consider the unintended
consequences to beneficiaries that may result from the scope and design
of the model. AMCP offered comments on several elements that we believe
were either missing from the proposed rule, could be improved upon, or
required clarification. AMCP urged CMS to carefully consider comments
received and release a revised proposed rule with an opportunity for
additional stakeholder feedback prior to finalization and adoption to
ensure that the perspectives of managed care pharmacy and other
stakeholders are considered. AMCP recommended that after consideration
of comments, CMS reissue the proposal focused on areas that could
successfully achieve the objectives of improving outcomes and quality
and lowering costs without jeopardizing beneficiary access to
medications.
Specifically, AMCP commented that:
The Scope and Breadth of the Model Should be Narrowed--The
proposed rule would require significant and complex changes and could
ultimately result in a mandatory nationwide pilot that would impact up
to 75 percent of providers. CMS should narrow the scope in consultation
with providers and health plans and pharmacy benefit management
companies (PBMs) that have implemented value-based purchasing
initiatives in the commercial market to determine the potential for
success under Medicare Part B.
The Model Should Include Pharmacists as Key Members of the
Health Care Team--Pharmacists play a critical role as members of the
health care team by serving as the medication management experts to
help patients achieve clinical goals, reduce overall health care costs,
and improve patient satisfaction. CMS should include pharmacists as key
members of the health care team for phase II of the model to achieve
enhanced benefits to Medicare beneficiaries through a collaborative
approach to medication management.
The Model Should Create an Allowance for Formularies and
Utilization Management Tools--The proposed rule does not accommodate
the use of pharmacy and therapeutics (P&T) committees established by
health plans and PBMs to develop formularies for Medicare Part B or
allow for the use of utilization management tools, which are elements
that have been key to the success in decreasing costs, improving
quality, and increasing value in Medicare Part D and the commercial
market. CMS should consider the inclusion of a requirement to establish
a Part B formulary with appropriate utilization management tools
facilitated by health care providers, health plans, and PBMs under
phase II of the model.
The Model Should Detail How VBP Tools Will Be Monitored and
Evaluated--CMS should release detailed plans for how it will evaluate
the model's success, including specific clinical end points (such as
quality of life, patient-
reported outcomes, and survival rates).
The Model Should Focus on Targeted Disease States--AMCP is
concerned that the proposed rule is overly ambitious in including Part
B drugs for all disease states in the model. CMS should reevaluate the
scope of the model and focus on specific disease states that are
prevalent in the Medicare population that have multiple therapies
available with non-significant differences in clinical benefit but
significant differences in cost of therapy, such as the treatment of
age-related macular degeneration. In addition, CMS should also consider
disease states and drug categories where biosimilars are entering the
marketplace such as psoriasis, rheumatoid arthritis, and white blood
stimulants.
The Model Should Require Documentation of Part B Drug Claims
Using NDC Numbers--A barrier to evaluating the success of VBP tools in
Part B is the current method of documenting drugs under Part B using
Healthcare Common Procedure Coding System (HCPCS) codes and not
National Drug Code (NDC) numbers. The ability to track the drug
administered to the specific NDC number is critical to truly implement
VBP tools as they are used today in Medicare Part D and in the
commercial market. CMS should require documentation of NDCs on all
Medicare Part B claims.
The Model Should Evaluate the Impact on Specialty Care
Providers--Primary Care Service Areas (PCSAs) may not be the most
appropriate geographic unit for specialty care providers, as specialty
care providers are typically located in very different geographical
areas and practice settings than a traditional primary care provider,
and often entail networks that may span across multiple PCSAs. CMS
should evaluate the impact of using PCSAs on specialty care providers
and whether there is sufficient correlation between the two or whether
consideration of an alternate geographic unit for specialty care
providers is warranted.
The Model Should Use a Comprehensive Approach to Develop
Evidence-Based Clinical Practice Guidelines--CMS should support
medication product selection by P&T Committees and providers using the
totality of the evidence. Therefore, CMS should be comprehensive in the
type of information that is used to develop VBP frameworks, and to
avoid relying on a single source.
The Model Should Monitor for Unintended Consequences to
Beneficiaries--CMS should amend the proposed rule to include a
mechanism for monitoring unintended consequences to beneficiaries and a
strategy for suspending the model, in part or in its entirety, if
beneficiary harms are identified.
The Model Should Evaluate the Impact of Competing CMMI
Initiatives--AMCP is concerned about the impact and potential overlap
of the proposed Part B payment model with other CMMI initiatives, such
as the Oncology Care Model, and alternative payment models under the
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). CMS
should consider the potential overlap in test models and ensure a
mechanism is in place to encourage active participation in ongoing and
future test models to allow for meaningful assessment for improving
value in the U.S. health care system.
The Model Should Evaluate the Impact on Medicare Advantage
Benchmarks--The proposed rule does not reference Medicare Advantage,
which covers approximately one-third of Medicare beneficiaries. CMS
should clarify how Medicare Advantage plans are accounted for in the
proposed rule and whether Medicare Advantage plans will have access to
the same VBP tools to help offset reductions in benchmarks.
The Model Should Evaluate Potential Market Shifts--CMS should
consider how the proposed rule may result in a market shift of costs
from Medicare Part B to other payment areas and care settings with
greater costs.
AMCP appreciates your concern with the proposed rule and the
opportunity for stakeholders to be heard. If you have any questions
regarding AMCP's comments or would like further information, please
contact me at 703-683-8416 or [email protected].
Sincerely,
Susan A. Cantrell, RPh, CAE
Chief Executive Officer
______
American Society of Health-System Pharmacists (ASHP)
7272 Wisconsin Avenue
Bethesda, MD 20814
Email: [email protected]
Phone: 301-664-8710
ASHP (the American Society of Health-System Pharmacists) respectfully
submits the following statement for the record to the Senate Finance
Committee hearing on examining ``Examining the Proposed Medicare Part B
Drug Demonstration.''
ASHP represents pharmacists who serve as patient care providers in
acute and ambulatory settings. The organization's more than 43,000
members include pharmacists, student pharmacists, and pharmacy
technicians. For over 70 years, ASHP has been at the forefront of
efforts to improve medication use and enhance patient safety.
ASHP appreciates CMS's ongoing efforts to enhance healthcare quality
and value, and we support the Model's goal of reducing Medicare
spending, while improving care and maintaining patient access. After
careful review and analysis of the Model, we remain concerned that the
Model's scope, timeline, and methodology could negatively impact
patient access and quality of care. The Model's extremely aggressive
timeline alone raises red flags, and CMS's decision to not solicit any
input from key stakeholders--including physicians, pharmacists, and
patients--prior to proposing a mandatory demonstration program
magnifies the issue. Given the Model's potential to disrupt care,
coupled with what will surely be costly implementation and oversight,
ASHP in its comment letter to the agency urged CMS to rethink and
restructure the Model with input from stakeholders and patients. A
considered, collaborative approach has worked for other demonstration
programs; in departing from best practices in this case, CMS will miss
an opportunity to engage experts in crafting a demonstration project
that can meet our shared goals without undermining care or
destabilizing patient access. To better convey our concerns to the
Committee, we highlight the following risk areas in the Model and
propose alternative approaches.
I. The Model's timeline and scope threaten patient access.
As noted above, while we support the Model's goals, its proposed
timeline and scope could disrupt patient access and reduce quality of
care. Generally, we question the imposition of a large-scale mandatory
demonstration program without first testing its methodology in smaller,
more targeted pilot programs.
A. Timeline of Model
Although we appreciate the importance of data, the Model presents clear
risks for patients, including provider disruption and care delays,
which outweigh the value of comprehensive data on pricing of all Part B
medications. Further, due to the randomized nature of Phase I and a
rapidly approaching target start date, providers will have minimal time
to prepare for changes that can significantly impact their budgets as
well as their ability to continue certain patient care services. This
issue seems likely to intensify for Phase II, which includes only vague
descriptions of potential models, but which is slated to be rolled out
only a year after Phase I begins. With no previous opportunity to
engage with CMS on the Model, and without adequate time to plan for
these changes, it will be extremely difficult for providers to
implement programs in a way that protects patients from unintended
negative consequences. Therefore, as noted above, we advocate for
collaborative revision of the Model's scope and timeline.
B. Scope of Model
Broad Inclusion of Part B Drugs: ASHP suggests that the Model's broadly
inclusive approach fails to target medications appropriately and may
create negative consequences for patients. While we understand that CMS
is seeking to gather data on prescribing practices, the Model is
premised on two erroneous assumptions: (1) that prescribing decisions
are intrinsically linked to profit margins; and (2) that there are
always lower-cost alternatives to higher-cost medications. Regarding
the first assumption, due to medication purchasing practices,
prescribers are often unaware of the purchase price of medications,
which would also make them unaware of any prescribing incentives.
Prescribers choose the best therapeutic option for their patients--and
the best option may be a higher-cost medication. Further, for some
drugs, such as rituximab and CMV immune globulin, the best option is
also the only option. Given the time constraints of the comment period,
we could not fully survey our members regarding drugs with no lower-
cost alternatives, which raises concerns that there are similarly
situated medications that have not yet been identified. To safeguard
patients, we recommend limiting a demonstration of this type only to
medications that have known lower-cost equivalents.
Additionally, while we were pleased that CMS excluded drugs in ``short
supply,'' we are concerned that CMS defines this term too narrowly.
Relying solely on the FDA shortage list would offer only a piece of the
shortage picture.\1\ Coupled with the agency's proposal to require that
a drug appear on the FDA shortage list at the time the Model's
quarterly price report is produced, a narrow definition of shortage
could exacerbate access problems. Thus, the FDA list should be
supplemented with other recognized lists, including, but not limited
to, the ASHP shortage list.\2\
---------------------------------------------------------------------------
\1\ See, e.g., Sheri Fink, ``Drug Shortages Forcing Hard Decisions
on Rationing Treatments,'' NY Times (January 29, 2016), available at
http://www.nytimes.com/2016/01/29/us/drug-shortages-forcing-hard-
decisions-on-rationing-treatments.html?_r=O; and ASHP, ``Understanding
and Managing Drug Shortages'' (2002), available at http://www.ashp.org/
Doclibrary/Policy/Drug
Shortages/DShort-abbott-drug.aspx.
\2\ See ASHP Drug Shortages Resource Center, available at http://
www.ashp.org/shortages; and ASHP, ``Contrasting the FDA (CDER) and ASHP
Drug Shortage Websites: What Are the Differences?'' available at http:/
/www.ashp.org/Doclibrary/Policy/DrugShortages/FDA-versus-ASHP.pdf.
Impact on Existing Models and Demonstrations: ASHP supports expansion
of alternative payment models (APMs) linked to quality and value.
Although some of the proposed Phase II value-based payment models sound
promising, we question how CMS will overlay multiple models on systems
with ongoing APMs and demonstrations without interfering with them.
ASHP requests that the Committee ask CMS to clarify how both phases of
the Model will interact with new and existing APMs. Specifically, how
will CMS treat the Model under the new MIPS and MACRA proposals? Will
the Model be treated as an APM? Will CMS be able to control for Model
participation when evaluating providers through other APMs and
demonstrations--particularly after Phase II is rolled out? Based on
feedback from our members, if the Model is implemented as proposed, it
could create a chilling effect on provider participation in other APMs.
ASHP members indicated that logistical and administrative burdens
created by the Model, particularly for providers with practice sites in
different model arms, would make them less likely to participate in
other CMMI demonstrations or APMs simultaneously. Absent clear evidence
that CMS has considered the Model's impact on, and interaction with,
current APMs and demonstrations, we are concerned that it may distort
program results and undermine participation in value-based programs/
---------------------------------------------------------------------------
models.
II. The Model may disrupt patient access and care quality, while
failing to provide patients with immediate, measurable benefits.
Patient Costs: Optimal, safe, and effective medication use is
impossible without actual patient access to medications, and medication
costs can hinder patient access to vital medications. ASHP is committed
to finding workable solutions to this problem, but CMS provides no
evidence that Phase I of the Model will result in concrete patient
savings. CMS notes that it ``doesn't expect a sizable overall reduction
in Part B drug spending associated with Phase I of this model, but we
do anticipate an incentive to use higher-value drugs.'' \3\ CMS makes
no claim that any cost savings in the system will be passed on to
beneficiaries in the tangible form of reduced out-of-pocket costs.
Further, as discussed below, the Model carries serious unintended
negative consequences for patient access--yet these risks are not
balanced by reward in the form of unambiguous gains for patient access
and outcomes.
---------------------------------------------------------------------------
\3\ 81 Fed. Reg. 13239 (March 11, 2016).
Patient Access: Based on discussions with our members and other
clinician stakeholders, ASHP anticipates that payment changes in Phase
I will likely result in a significant shift of patients from community
settings to hospital outpatient departments. The proposed Model test
payment (2.5% of ASP + $16.80) does not cover the overhead and handling
costs for many medications in the hospital and health-
system setting \4\--and it seems likely that this would also be true in
community settings. Given the limited comment period, we were unable to
survey members regarding drugs that are ``under water,'' but
anecdotally our members indicate that there are examples at all price
points, including infliximab, a higher-cost biologic. Additionally,
ASHP members indicate that the reduced payment (particularly when the
cost of sequestration is factored in) may result in losses on a number
of other drugs, including ipilimumab and melphalan. Reimbursement
reduction may limit the ability of providers to offer certain services
(e.g., infusions), leaving hospital outpatient departments as the only
alternative. The resulting disruption of provider-patient relationships
would fragment care, complicate beneficiary access, and increase
pressure on hospital outpatient departments.
---------------------------------------------------------------------------
\4\ ASHP has consistently advocated for a reimbursement rate of ASP
+ 6% in its comments on CMS's annual Hospital Outpatient Prospective
Payment System rules. As noted in these comments, the 6% rate allows
hospitals to cover their costs. Factoring in sequestration's impact,
hospitals already face reimbursement rates lower than the minimum
required to cover the costs of core pharmacy services, and the Model
would further reduce those reimbursement rates.
We appreciate CMS's attempt to address patient safety by offering a
prior approval process for Model drugs and proposing to implement a
``real-time claims monitoring'' system to monitor beneficiary access.
However, as proposed, neither fully safeguards patient access. Prior
approvals come at the cost of increased administrative burden and
delays for patients. We believe prior approvals should be a last
resort, not a solution for the larger medication-access issues that the
Model may generate. As noted above, not all medications have acceptable
lower-cost equivalents--for providers who prescribe those drugs, prior
approvals will be the rule rather than the exception. Similarly, CMS's
proposal to implement a ``real-time claims monitoring process'' to
protect patient access lacks sufficient detail. Our understanding is
that developing this system would require, at minimum, extensive
technology upgrades plus personnel support and oversight. Further, it
is unclear how access problems would be identified and resolved. Given
how essential effective monitoring is to ensuring patient access, we
ask that the Committee request CMS clarify how the monitoring process
---------------------------------------------------------------------------
will work in practice.
Conclusion
ASHP greatly appreciates the opportunity to provide a statement for the
record and commends the Senate Finance Committee for holding this
hearing on the CMS's Part B Model Demonstration project. Again, we
reiterate our support for the Model's underlying goals; however, based
on the concerns highlighted above, ASHP is advocating for significant
revisions to the Model's scope and timeline after comprehensive,
meaningful consultation with stakeholders, including physicians,
pharmacists, and patients. We have already signaled our eagerness to
assist CMS in any way possible as it revises the Model, and we offer
the same assistance to the Committee as you collaborate with other
industry stakeholders.
______
American Society of Retina Specialists (ASRS)
20 North Wacker Drive, Suite 2030
Chicago, IL 60606
Phone 312-578-8760
Fax 312-578-8763
http://www.asrs.org/
May 9, 2016
Andrew Slavitt
Acting Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Hubert H. Humphrey Building, Room 445-G
200 Independence Avenue, SW
Washington, DC 20201
Re: Medicare Program Part B Drug Payment Model [CMS-1670-P]
Dear Acting Administrator Slavitt:
On behalf of the American Society of Retina Specialists (ASRS), its
members and their patients, we submit the following comments on the
Centers for Medicare and Medicaid Services (CMS) Medicare Program Part
B Drug Payment Model [CMS-1670-P]. The ASRS is the largest retinal
organization in the world, representing over 2,700 fellowship-trained
members. Retina specialists are board-certified ophthalmologists who
have completed fellowship training in the medical and surgical
treatment of retinal diseases.
ASRS SUPPORTS CMS'S GOALS BUT NOT THE CURRENT PROPOSAL
The ASRS supports CMS's stated goals of ``improving incentives for the
best clinical care'' and desire to ``drive the prescribing of the most
effective drugs.'' \1\ We also wholeheartedly support the alternative
payment model framework offered by the Medicare Payment Advisory
Commission (MedPAC) Commissioners at its December 2014 meeting and
agree a successful alternative payment system must:
---------------------------------------------------------------------------
\1\ https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/
2016-Fact-sheets-items
/2016-03-08.html.
Provide sufficient incentive for providers to maximize health
---------------------------------------------------------------------------
outcomes and value while reducing costs;
Ensure that payment policies do not compromise quality of care
or limit patients' treatment options;
Assess the impact of such payment policies on low-income
patients; and
Implement a sufficiently transparent and adequate exceptions
process to allow providers to prescribe more-expensive products when
medically necessary.
Unfortunately, the current proposal falls short in not meeting: (1) the
stated goals of the proposal itself, and (2) the standards set forth
for MedPAC. As a result, the payment proposal has the potential to
negatively impact patient care and outcomes when Medicare beneficiaries
are treated with injectable drugs in the office setting.
IMPLICATIONS OF PAYMENT POLICY ON TREATMENT PATTERNS AND PRACTICE
FINANCIALS
The proposal has several limitations due to the following:
The existing ASP-based fee schedule payment methodology of 106%
(104.3% after sequestration) does not yield profit for physicians and
thereby does not provide an inappropriate incentive for them to choose
high-cost treatment;
Interchangeable treatment options are not necessarily available;
therefore, less costly alternatives may not be an option to treat
patients; and
Across retinal diseases, we have no data demonstrating that
changes in current treatment patterns would improve the quality of
patient care.
What Do We Know About Physician Practice Expenses for Drug Acquisition
and Other Overhead?
The House Ways and Means Committee has requested from the GAO a cost
study to examine how Medicare's payment for drugs covered under
Medicare Part B compares to actual acquisition and overhead costs. We
feel that any proposal from CMS should be formulated after the GAO
results are available.
ASRS membership, in response to the CMS proposal and to reply to
requests from Deputy Administrator Conway, commissioned a study of 8
practices that were able to pull detailed cost accounting data for
calendar year 2015 in the short time allotted in the comment period.
The study found that drug acquisition and overhead expenses for
injectable drugs that have their own unique HCPCS J codes was, on
average, 98.9% (range 96.5% to 103.2%) of total payments across the 8
practices. (For more information, see appendix A.)
It is worth noting that given the limited time available to collect
these data, only high volume practices with capable financial staffs
were able to respond to the survey in this short period of time. Even
under these circumstances, not all high volume practices generated net
revenue from office administered drugs. In fact, our belief is that
lower volume practices, which provide the majority of patient care in
retina around the country, would have less purchasing power and higher
overhead costs compared to the practices in the study from which we
were able to collect data.
Based on the analysis of real retina practice data, we believe the ASP
+ 2.5% and a flat fee even without sequestration do not recognize the
true costs of purchasing and handling the more complex biologics, and
will limit the ability of some providers to administer essential sight-
saving drugs. For physicians to be able to continue to purchase Part B
drugs on behalf of their patients, the payment rate must at least cover
all overhead costs. If not, patients will be forced to travel to the
more expensive hospital outpatient departments to receive monthly
treatments. Driving more care to an often less convenient, more costly
setting will make it more challenging for beneficiaries to access
needed care and will increase overall Medicare costs. This will lead to
further consolidation and less choice for seniors.
Therefore, before proposing any payment policy that is not based on ASP
+ 6% it would be helpful if CMS would explain why it has changed its
position that ``ASP + 6% payment is an appropriate payment rate for
separately payable drugs and biologicals.'' \2\
---------------------------------------------------------------------------
\2\ 77 Fed. Reg. at 8,387.
Financial Incentives Do Not Influence Drug Choice
The ASRS takes issue with the assumption that physicians may choose
their patients' drug therapy based on which drug provides them the
highest reimbursement. MedPAC considered this issue and concluded that
there is little evidence to support such a claim. Moreover, our
research also suggests this is not the case. In the ASRS 2015
Preferences and Trends survey, 64% of respondents indicated that they
currently use the least-costly alternative, Avastin, as the first-line
treatment for new patients with wet AMO. However, when asked which
anti-VEGF agent they would choose if Avastin, Lucentis and Eylea
were the same price, respondents dropped Avastin to the last choice.
Avastin was also the last choice of our members when asked ``which
anti-VEGF do you believe most effectively treats the broadest range of
wet AMO patients.'' For those familiar with the results of recent
clinical trials, these survey results are not surprising.
Treatment Options Are Not Interchangeable
In its June 2015 report, MedPAC recognized that a number of clinical
factors, including variations in effectiveness of drugs in treating
patients with specific conditions and comorbidities, potential side
effects, on or off label use of a drug, as well as whether or not a
drug is compounded, may influence a provider's choice among therapeutic
alternatives. For retina specialists, all of these factors are in fact
considered.
Currently, of the 3 utilized anti-VEGF agents, only Lucentis and
Eylea have specific FDA approval for treatment of age-related macular
degeneration, diabetic macular edema, and retinal vein occlusion.
Avastin not only does not have FDA approval for the treatment of these
retinal diseases, but it must also be used in a compounded form. Many
patients are reluctant to choose a compounded drug being used off-label
and should not be forced to do so when several FDA-approved options
exist.
Clinical response varies among the 3 anti-VEGF agents in individual
patients. While all 3 anti-VEGF agents have similar efficacy in many
patients, various trials have demonstrated differences in subsets of
patients. Retina specialists must evaluate each patient individually,
and select the appropriate agent accordingly. Ultimately, the retina
specialist utilizes clinical judgment and the patient's response to a
particular drug to select the best course of therapy. As the recently
released results of the National Eye Institute funded study Comparison
of Age-related Macular Degeneration Treatments Trials (CATT) 5-year
follow up found, patients often switch anti-VEGF agents and dosages.
This ability of a physician to individualize treatment and select the
most efficacious agent for each patient is critical to safely
maximizing recovery and maintaining visual function in patients with
blinding diseases of the retina.
Since anti-VEGF agents are not interchangeable, ASRS is seriously
concerned that for many retina specialists the phase I new payment
methodology will no longer cover the costs to deliver FDA-approved
drugs to their patients. If retina specialists are unable to cover the
costs of the medically necessary Part B drug, patients will be forced
to go elsewhere (likely farther away and/or to a more costly care
setting) to receive their injections.
THE RETINA COMMUNITY IS AND WILL CONTINUE TO BE VESTED IN IMPROVING
PATIENT OUTCOMES AND BEING FINANCIALLY RESPONSIBLE
The ASRS is concerned that the CMS has not provided guidance on how it
defines ``most effective drugs.'' It is a physician's duty to base
clinical decisions on clinical evidence, not just cost. Retina
specialists work in a specialty that requires the administration of
expensive Medicare Part B drugs--Lucentis and Eylea--to save vision,
and the ASRS and its members have devoted tremendous resources to
supporting efficacy, comparative effectiveness clinical research, and
the dissemination of clinical trial results.
Through this research, cost savings have already been achieved. For
example, the treat-and-extend protocol, now widely used in the
treatment of macular degeneration and diabetic retinopathy, allows
retina specialists to treat less often than done in pivotal phase III
clinical trials, yielding significant savings in terms of treatment
burden and cost while maintaining excellent vision outcomes. In other
cases, comparative effectiveness studies have found statistical
differences in treatment options that support use of the more expensive
treatment option.
Protocol T, for example, found that the relative benefit of Eylea was
clinically and statistically significant for the subset of eyes that
had 20/50 or worse vision at baseline. If phase I moves forward
unchanged, this subset of diabetic retinopathy patients may not be able
to receive the most effective treatment. Given this, and the fact that
more than 300 clinical trials are currently underway to explore
additional ways to treat AMO and diabetic retinopathy with fewer
injections and achieve even better outcomes, we believe CMS needs to
establish a mechanism for defining ``most effective drugs.'' Since the
National Institutes of Health (NIH) fund many of the comparative
effectiveness studies, we believe CMS should consider collaborating
with NIH to develop this mechanism. Moreover, since some patients
simply respond better to one treatment over another, ASRS recommends
that CMS create a sufficiently transparent and adequate exceptions
process to allow providers to prescribe medically necessary drugs
irrespective of cost.
CONCLUSION AND RECOMMENDATIONS
Given the concerns expressed above, the ASRS recommends that CMS not
continue with phase I of the demonstration project as written, and
reevaluate the development of alternative payment models that can
achieve the same goal without increasing risks for patient outcomes
after real-world practice data is available to guide this process.
ASRS appreciates the opportunity to provide comments on the proposed
Medicare Program Part B Drug Payment Model. If we may provide any
additional information, please contact Jill Blim, ASRS Executive Vice
President, at [email protected].
Sincerely,
Tarek S. Hassan, M.D. Mark S. Humayun, M.D., Ph.D.
President President-Elect
John S. Pollack, M.D. Timothy G. Murray, M.D., M.B.A.
Vice President Governance Treasurer
Carl C. Awh, M.D. Philip J. Ferrone, M.D.
Secretary Vice President Education
Geoffrey G. Emerson, M.D., Ph.D. Jill F. Blim, M.S.
Chair, Federal Affairs Committee Executive Vice-President
______
APPENDIX A
ANALYSIS OF PRACTICE REVENUES AND EXPENSES FOR DRUGS ADMINISTERED IN
RETINA PHYSICIAN OFFICES
BACKGROUND
On March 8, 2016, the Centers for Medicare and Medicaid Services (CMS)
announced a proposed rule to test new models to improve how Medicare
Part B pays for prescription drugs and supports physicians and other
clinicians in delivering higher quality care.
Currently, Medicare Part B covers prescription drugs that are
administered in a physician's office or hospital outpatient department,
such as cancer medications, injectables like antibiotics, or eye care
treatments. Drugs paid under Medicare Part B generally fall into three
categories:
(1) Drugs furnished incident to a physician's service in the
office or hospital outpatient settings,
(2) Drugs administered via a covered item of durable medical
equipment, and
(3) Other categories of drugs explicitly identified in the law.
PROPOSED RULE AND CHANGES IN PAYMENT THAT WOULD APPLY TO OPHTHALMIC
DRUGS ADMINISTERED BY RETINA PHYSICIANS
Medicare Part B generally pays physicians and hospital outpatient
departments the average sales price of a drug, plus a 6 percent add-on.
The proposed model would test whether changing the add-on payment to
2.5 percent plus a flat fee payment of $16.80 per drug per day changes
prescribing incentives and leads to improved quality and value. CMS
goes on to say that:
``CMS expects that the add-on payment of 2.5 percent plus a
flat $16.80 fee will cover the cost of any drug paid under
Medicare Part B. The flat fee is calculated such that it is
budget neutral in aggregate.''
While the proposal may be budget neutral in aggregate, the fact is that
CMS does not know the impact of specific subspecialties based on
provider financials, treatment mix, and so forth.
Therefore, the American Society of Retina Specialists (ASRS)
commissioned an independent study by an economics and accounting firm,
Quorum Consulting, Inc. (San Francisco, CA) to gather data from retina
practices to: (1) determine revenue for injectable drugs; (2) account
for direct and indirect costs associated with injectable drugs; in
order to: (3) report profit or loss for physician administered drugs
that may be affected by the proposed rule.
ABSTRACT OF STUDY METHODS AND RESULTS
Methods
We solicited members of the ASRS to provide detailed financial and cost
accounting data. We requested data on revenues (total collections) and
costs (expenses) for calendar year 2015. We obtained data on all
injectable drugs administered retina physician practices offices
(hospital and ASC facilities were not included). The scope of the
analysis was specific to FDA approved drugs with product specific HCPCS
``J'' codes, which are addressed within the scope of the CMS proposal.
Cost Accounting Data Collection
For direct and indirect expenses, we obtained site-specific data on:
Drug Acquisition Costs (by HCPCS code)
A. Acquisition price per unit
B. Added costs
a. Shipping and handling
b. Sales tax
c. Other cost increases
C. Cost offsets
a. Discounts
b. Chargebacks
c. Rebates
d. Other cost offsets
Other Practice Expenses
A. Practice Expenses
B. Staff Time
Salaries and benefits for staff time responsible for
acquiring, storing, preparing, transporting, and disposing of drugs and
drug revenue collections (this differs from GAO allocated based on time
spent on these activities).
C. Other indirect expenses
Space--Physical space used for storing and preparing
drugs.
Equipment--Equipment used for storing, preparing,
transporting, disposing of drugs and claims management (office
equipment, PODIS, EHR, other IT, etc.).
Supplies--Supplies used for storing, preparing,
transporting, and disposing of drugs.
Support Contracts--Contracts for other organizations to
provide services supporting acquiring, storing, preparing,
transporting, and disposing of drugs (e.g., waste disposal).
State provider taxes.
Results and Discussion
We obtained detailed revenue (collections) and expenses (direct and
indirect costs) for calendar year 2015 from 8 retina practices from
around the country. While sites were from regions throughout the
country, participating sites all tended to be high volume practices.
This is likely due to the fact that sites had to provide data in a
short amount of time (to accommodate the CMS comment period), and only
high volume sites had accounting and other administrative staff
available to provide the requested information. Participating sites
also varied in their payer mix and utilization of different types of
drugs.
We found that drug acquisition and overhead expenses for injectable
drugs included in the analysis were on average 98.9% (range 96.5% to
103.2%) of total collections across the 8 practices. In some cases,
practices made a profit on injectable drugs while in other cases had a
net loss. There was variation in drug profit or loss by drug and by
practice.
It is worth noting that given the limited time available to collect
these data, only high volume practices with capable financial staff
were able to respond to the survey in this short period of time. Even
under these circumstances, not all high volume practices generated
profits on office administered drugs. In fact, our belief is that lower
volume practices, which provide the majority of patient care in retina
around the country would have less purchasing power and higher overhead
compared to the study for which we were able to collect data.
______
BioRx, LLC
Senate Committee on Finance
Dirksen Senate Office Bldg.
Washington, DC 20510-6200
Dear Honorable Chairman Orrin Hatch:
BioRx, LLC, a Diplomat company (``BioRx''), is a specialty and home
infusion pharmacy which provides pharmacy services to patients dealing
with chronic and/or rare diseases, such as cancer, autoimmune
disorders, and hemophilia. The patients we treat are often prescribed
expensive medications which have complex therapy requirements. At
BioRx, we strive to provide quality pharmacy services to our patients,
and to ease patients' burdens and worries while they manage their
conditions.
BioRx appreciates the opportunity to comment on the proposed Part B
drug payment model. While BioRx understands the Centers for Medicare
and Medicaid's (CMS) desire to lower the cost of Part B medications,
BioRx is concerned that the proposed revisions will limit the ability
of specialty and home infusion pharmacies to provide services to
Medicare patients and will ultimately block patient access to life-
saving medications. BioRx has the following concerns regarding the
proposed rule:
1. The proposed rule should exclude IVIG, hemophilia products,
orphan drugs, and drugs that are in short supply from the
proposed payment model.
When implementing the final rule, CMS should take into
consideration the fact that there are not always comparable lower
priced drug alternatives. The main rationale for the proposed rule,
besides reducing Medicare expenditures, is to discourage providers from
prescribing expensive medications when there are lower priced
alternatives available. IVIG, hemophilia products, and new or short
supply drugs often do not have comparable lower priced drugs available,
and the proposed pricing methodology may hinder a pharmacy's or
doctor's ability to prescribe or provide to patients those medications.
IVIG, orphan and short supply drugs tend to have very little price
variation between the different medications, meaning prescribers have
little to no incentive to prescribe one product versus the other. Most
hemophilia products are in a similar position to IVIG, orphan and short
supply drugs, even though there are four categories of hemophilia
products, (in order from least expensive to most: plasma derived,
recombinants, recombinants with a longer half-life, and inhibitors),
which do have different prices. While plasma derived products are the
least expensive, they are not the same as inhibitors. Hemophilia
patients who develop inhibitors, have an allergic reaction, or need a
quicker clotting response time to stop a serious bleed (such as one in
the brain) will need to use the higher priced inhibitor medication, and
trying to force clinicians to use the lowest cost hemophilia products,
which, while comparable, do not provide the same medical benefit or
fast acting solution, could seriously harm the patients. Trying to
discourage caregivers from prescribing or providing needed high cost
medications could have a negative impact on patient health outcomes.
Because IVIG, hemophilia, and orphan and short supply drugs do not
provide ``any excessive financial incentive to prescribe high cost
drugs over lower cost drugs,'' \1\ as lower priced comparable
alternatives are typically unavailable, these products should be
excluded from the proposed Part B payment model.
---------------------------------------------------------------------------
\1\ CMS Medicare Part B Proposed Rule, pg. 16.
2. Specialty pharmacies should also be excluded from the
proposed rule, as specialty pharmacies do not prescribe the
medication, nor do they have access to the service fees paid to
physicians and hospitals for infusion services and can provide
---------------------------------------------------------------------------
significant cost savings to CMS.
The proposed rule does not address the role of pharmacies in
providing care to patients, nor does it consider the affect the rule
will have on pharmacies that provide home infusion services to
patients. Specialty pharmacies do not prescribe or select the
medication; therefore, the proposed rule's rationale for needing to
discourage providers from prescribing the more expensive medications
would not apply to pharmacies. Additionally, pharmacies provide high
quality, cost effective care to beneficiaries, and the proposed payment
model could limit their ability to participate in the Medicare
programs.
When a pharmacy provides home infusion services to the patient, the
pharmacy bills CMS under Part B, and the pharmacy does not receive
payment from CMS for the injection or infusion. The current price of
ASP + 6% helps specialty pharmacies cover the cost of the medication,
and the cost of services performed. If specialty pharmacies are only
able to receive ASP + 2.5% and a flat fee of $16.80 for the medication,
then the specialty pharmacies will not be able to cover their operating
or infusion costs.\2\ Attached in Exhibit A is an example of how the
payment change reduces the pharmacies ability to pay overhead costs. A
healthcare provider cannot provide services under an arrangement which
causes them to consistently lose money.
---------------------------------------------------------------------------
\2\ See, ``Pharmacy Dispensing Cost Analysis for the State of
Maryland,'' December 7, 2011 (the survey concluded that the average
dispensing cost for specialty pharmacies was $185.24 per prescription).
See also, Exhibit B, which provides a list of common specialty pharmacy
services, which create the high overhead cost, https://
mmcp.dhmh.maryland.gov/pap/docs/md_2011_
pdca_report.pdf.
Beyond filing the prescriptions and performing back-end benefits
investigations and adherence monitoring, most specialty pharmacies also
arrange for the home administration of IVIG and other infusion
products. Home infusion is not only easily accessible to the patients;
it also saves plans at least $20,000 per year per patient. However,
specialty pharmacies cannot provide those cost savings under the
proposed rule, as they would be unable to cover their medication and
---------------------------------------------------------------------------
operation costs with the new fee.
If specialty pharmacies are unable to provide the medication and
home infusion services, then more and more patients will have to go to
emergency or out-patient settings to receive their medication. This
arrangement would increase the costs of care, and make it more
burdensome for patients to receive their medications. Therefore,
specialty pharmacies should be excluded from the proposed rule.
3. The demonstration for the proposed rule is overly broad,
and a small scale pilot version of the proposed rule should be
conducted first, before the proposed rule, if effective, is
expanded to cover all providers.
The demonstration is overly broad, and it seems ill-advised to
implement such a wide reaching rule when CMS has failed to conduct a
small scale test pilot of the proposed rule to determine possible
affect. The potential impact on providers and beneficiaries is too
great to roll out on such a large scale when there is little to no
concrete knowledge or data on how the rule will affect all interested
parties. Traditionally, CMS uses smaller scales to test new payment
models, and BioRx respectfully requests CMS to test the proposed
payment model out on a small population before implementing the method
on a larger scale.
4. The proposed rule needs greater clarification on the
methodology of assigning PCSAs and the variation add-on
methodology for different geographic locations.
The stratified randomized selection methodology of assigned PCSAs
requires further clarification; the verbiage is very technical and we
need the methodology defined so it makes more sense to the
participating entities. Additionally, because the proposed model is a 5
year demonstration, CMS needs to provide clarity on whether or not
providers experiencing financial hardship may opt out of the experiment
or not.
5. Competing CMS proposals and demonstrations should not be
overlapped with the Part B proposed model.
CMS acknowledges the potential for overlap with other CMS proposed
pricing models, such as the Oncology Care Model or the alternative
payment models incentivized by the Medicare Access and CHIP
Reauthorization Act of 2015, but offers no way to handle the matter.
CMS needs to provide some controls to its proposed model to ensure that
providers are not participating in more than one proposed rule
demonstration. Furthermore, CMS ignores the potential for skewed data
they may receive from providers who are operating under more than one
of the proposed Part B payment models. It is crucial that CMS finds
some way to control the demonstration so that providers are only
affected by one demonstration.
6. CMS needs to provide greater detail and narrow the scope on
Phase II of the proposed payment model before it can be used.
CMS stated on page 14 that in Phase II, it proposes to ``test the
application of a group of value-based purchasing (``VBP'') tools that
commercial and Medicare Part D plans use to improve patient outcomes
and manage drug costs.'' While BioRx is fully supportive of
implementing new systems that will provide cost effective quality care,
CMS should carefully consider which tools to utilize before testing,
and should considering excluding DME infusion drugs and specialty
pharmacies from Phase II.
DME infusion drugs should be excluded, because Medicare already
limits the use of infusion drugs through Local Coverage Determinations
(LCDs). These LCDs already narrowly define which infusion drug can be
used for each indication, and ensures the appropriate use of infusion
medications. Additionally, some patients require multiple medications
which may need to be carefully vetted to prevent complications or
negative drug interactions, and the VBP tools may not adequately take
those circumstances into consideration.
Specialty pharmacies should either be excluded from Phase II or the
VBP tools should be narrowly tailored to apply to the applicable
organization. VBP tools used for a clinician or hospital setting is
often inappropriate for a specialty pharmacy, as specialty pharmacies
do not prescribe or order the medications and can provide valuable cost
savings to plans that may not be accessible in other healthcare
settings.
For example, specialty pharmacies play a crucial role in providing
home infusion services, which saves plans an estimate of $20,000 per
patient a year.\3\ Specialty pharmacies also offer patients access to
pharmacists and/or nurses 24/7, which can reduce the amount of
emergency room trips a patient takes in a year. Savings can also be
found through increased medication adherence rates in patients and
partial fill programs, which allows patients to fill half of a
prescription in order to determine medication tolerance prior to
purchasing the full amount.
---------------------------------------------------------------------------
\3\ ESI/Accredo, Specialty Pharmacy Times, February 2014.
7. Several lawmakers have expressed great concerns or even
---------------------------------------------------------------------------
direct opposition to the CMS proposal.
Both Republican and Democrat representatives have written and
signed letters to CMS regarding the proposed rule, and the response has
been negative. The bipartisan reaction to the proposed rule shows that
there are clear flaws in the proposed rule.
In a letter signed by about 65 representatives sent to CMS on May
16, 2016 regarding the proposed rule, the representatives expressed
concerns regarding the potential effects the rule may have on
beneficiaries and physicians.\4\ The representatives in this letter
even urged CMS to work with stakeholders while revising the rule ``to
ensure that this model does not undermine the quality of and access to
care that Medicare beneficiaries expect and deserve.'' \5\ In another
letter sent on May 2, 2016 to CMS, the representatives asked CMS to
withdraw the proposed rule, as they believed the proposed rule would
limit senior citizens access to care.\6\ Around 250 representatives
signed this letter.
---------------------------------------------------------------------------
\4\ http://www.citizen.org/documents/66-ds-may-16-2016-cms-demo-
letter.pdf.
\5\ http://www.citizen.org/documents/66-ds-may-16-2016-cms-demo-
letter.pdf.
\6\ http://www.citizen.org/documents/240-rs-4-ds-may-2-2016-cms-
demo-letter.pdf.
While the two letters differ in their level of opposition to the
proposed rule, both letters express the same concern that the proposed
rule will limit patient access to medication. There is also concern
among representatives that the proposed rule will force patients to
receive care in emergency rooms or at hospitals, where the cost of
treatment is much higher and less convenient.\7\ BioRx, as previously
mentioned, has the same concern that this proposed rule will limit
seniors access and ability to receive home health services or be able
to infusion their medications at home.
---------------------------------------------------------------------------
\7\ Pear, Robert, ``Plan to Cut Medicare Drug Payments Leaves
Senators Skeptical,'' The New York Times, June 28, 2016 (http://
www.nytimes.c/2016/06/29/us/plan-to-cut-medicare-drug-payments-leaves-
senators-skeptical.html?_r=O).
For the above reasons, BioRx respectfully requests that the Senate
Committee on Finance continues to ask CMS to withdraw the Medicare Part
B Drug Demonstration, or exclude DME infusion drugs and specialty
pharmacies from VBP tools, or to narrowly tailor the tools to fit the
---------------------------------------------------------------------------
appropriate health care provider.
BioRx appreciates the opportunity to comment on this proposal and
hopes that the Senate Committee on Finances passes these comments onto
CMS, for serious consideration.
Sincerely,
Scott Sorenson
Director, Medicaid and Government Services
BioRx, LLC--A Diplomat Company
Exhibit A
Price Effect Example
--------------------------------------------------------------------------------------------------------------------------------------------------------
BioRx Cost as CMS Allowable
Product J-CODE of January Effective GM% today CMS Proposed GM% with new Reduction %
2016 January 2016 Allowable proposal
--------------------------------------------------------------------------------------------------------------------------------------------------------
A J7192 $1.0200 $1.1770 12.74% $1.1378 10.35% 18% GM loss
--------------------------------------------------------------------------------------------------------------------------------------------------------
GM = Gross Margin
Exhibit B
Specialty pharmacies often provide the following services:
Clinical Pharmacist and Pharmacy Tech
b Consulting with prescribers
b Monitoring for potential drug interactions
b Dispensing
b Assay management
b Pharmacist time in validating an individual's coverage prior to
dispensing
b Preferred drug list review activities
b Monthly/quarterly reporting to state Medicaid agency
b Medication profile set up and drug utilization review
b Emergency telephone support
b On call (24/7 nurse and pharmacist) clinical and delivery
support for patients
Warehouse, Shipping and Delivery Personnel
b Couriers
b Emergency deliveries
b Tracking of deliveries
b Packaging
b Manufacturer communication
b Ensuring stock rotation
Reimbursement Personnel
b Prior authorizations/receipt of approval
b Billing per insurer's guidelines and providing required
documentation
Nursing
b Initial patient assessment/education
b Home infusion training
b Ongoing patient assessment/education
b Consumer/patient counseling
b Staff education and training
b Disease management
b Developing and coordinating emergency plans with schools,
caregivers, work, etc.
Materials (Supplies) and Dispensing
b Needles
b Syringes
b Alcohol wipes/sanitizer
b Bandages
b Medical tape
b Sterile gloves
b Tourniquets
b Needle disposing containers
b Temperature controlled boxes
b Heat/cold packs
b Masks/coolers/IV supplies, swab sticks
b Sterile drapes
b Coolants
b Shipping insurance
b Prescription dispensing materials (packages, labels)
b Postage
Advocate
b Home inventory check of factor and supplies
b Factor utilization and infusion log
b Patient communication and therapy monitoring
______
The Center for Fiscal Equity
14448 Parkvale Road
Rockville, Maryland 20853
Statement by Michael Bindner
Chairman Hatch and Ranking Member Wyden, thank you for the opportunity
to submit our comments on this topic. We will leave the description of
the experiment to the Administration witnesses and concentrate on why
the experiment may or may not be necessary. As usual, our comments are
based on our four-part tax reform plan, which is as follows:
A Value Added Tax (VAT) to fund domestic military spending and
domestic discretionary spending with a rate between 10% and 13%, which
makes sure every American pays something.
Personal income surtaxes on joint and widowed filers with net
annual incomes of $100,000 and single filers earning $50,000 per year
to fund net interest payments, debt retirement and overseas and
strategic military spending and other international spending, with
graduated rates between 5% and 25% in either 5% or 10% increments.
Heirs would also pay taxes on distributions from estates, but not the
assets themselves, with distributions from sales to a qualified ESOP
continuing to be exempt.
Employee contributions to Old-Age and Survivors Insurance (OASI)
with a lower income cap, which allows for lower payment levels to
wealthier retirees without making bend points more progressive.
A VAT-like Net Business Receipts Tax (NBRT), essentially a
subtraction VAT with additional tax expenditures for family support,
health care and the private delivery of governmental services, to fund
entitlement spending and replace income tax filing for most people
(including people who file without paying), the corporate income tax,
business tax filing through individual income taxes and the employer
contribution to OASI, all payroll taxes for hospital insurance,
disability insurance, unemployment insurance and survivors under age
60.
While the Administration may be correct in siting this experiment as a
way to both improve cost and care, the underlying reason has to be cost
minimization. As we saw with Medicare Part C in the mid-90s,
minimization on its own leads to decreased care and providers who exit
the system and need premium pay to return.
Aside from throwing up our hands and agreeing to deficit spending, as
Congress did in establishing such incentives for Part C when it
established Part D, some form of revenue increase is required.
Both the Simpson-Bowles Commission and the Rivlin-Domenici Commission
recommended an increase in Part B and D premiums. That is all well and
good, but seniors and the disabled don't simply have spare cash to
throw around without decreasing other spending, like housing or food.
For most people, that European vacation only comes as a gift from
grateful children or merciful siblings. Therefore, the only way to
increase premiums is to also increase the basic Social Security and
Disability benefit (which will need to happen anyway if the drive to a
$15 minimum wage keeps gaining success).
Increasing the benefit is usually seen as a matter of raising the
income cap and making the bend points in benefit calculation more
severe so that the contribution increase does not simply lead to higher
benefits for wealthier retirees. There is, however, another option.
Our proposal is to lower the employee income cap on contributions to
decrease the entitlement for richer retirees while the employer income
cap is eliminated, the employer and employee payroll taxes are
decoupled and the employer contribution credited equally to each
employee at some average which takes in all income. If a payroll tax is
abandoned in favor of some kind of consumption tax, all income, both
wage and non-wage, would be taxed and the tax rate may actually be
lowered.
Ultimately, fixing health care reform will require more funding,
probably some kind of employer payroll or net business receipts tax--
which would also fund the shortfall in Medicare and Medicaid (and take
over most of their public revenue funding), regardless of whether Part
B and D premiums are adjusted.
Our Net Business Receipts Tax/Subtraction VAT proposal above is the
recommended consumption tax. It would not show up on the receipt
because it can be offset by employer provided substitutes.
The NBRT can provide an incentive for cost savings if we allow
employers to offer services privately to both employees and retirees in
exchange for a substantial tax benefit, either by providing insurance
or hiring health care workers directly and building their own
facilities. Employers who fund catastrophic care or operate nursing
care facilities would get an even higher benefit, with the proviso that
any care so provided be superior to the care available through
Medicaid. Making employers responsible for most costs and for all cost
savings allows them to use some market power to get lower rates, but no
so much that the free market is destroyed.
This proposal is probably the most promising way to arrest health care
costs from their current upward spiral--as employers who would be
financially responsible for this care through taxes would have a real
incentive to limit spending in a way that individual taxpayers simply
do not have the means or incentive to exercise. While not all employers
would participate, those who do would dramatically alter the market.
A kind of beneficiary exchange could be established so that
participating employers might trade credits for the funding of former
employees who retired elsewhere, so that no one must pay unduly for the
medical costs of workers who spent the majority of their careers in the
service of other employers.
Thank you for this opportunity to share these ideas with the committee.
As always, we are available to meet with members and staff or to
provide direct testimony on any topic you wish.
______
National Association of Chain Drug Stores (NACDS)
1776 Wilson Blvd., Suite 200
Arlington, VA 22209
703-549-3001
https://www.nacds.org/
Introduction
The National Association of Chain Drug Stores (NACDS) thanks Chairman
Hatch, Ranking Member Wyden, and members of the Committee on Finance
for the opportunity to submit a statement for the hearing on
``Examining the Proposed Medicare Part B Drug Demonstration.''
NACDS and the chain pharmacy industry are committed to partnering with
the Department of Health and Human Services, policymakers, and others
to work on finding ways to lower prescription drug costs in the
Medicare Part B program. NACDS supports sensible efforts to control
spending while preserving patient health and access to the services
they need. As the face of neighborhood healthcare, chain pharmacies and
pharmacists work on a daily basis to provide the best possible care and
the greatest value to their patients with respect to access to critical
medications and pharmacy services. We help to assure that patients both
are able to access their medications and take them properly.
Pharmacists work with patients to find ways to lower prescriptions
costs through the use of generic drugs, helping to navigate insurance
plans, and encouraging participation in pharmacy drug discount
programs. We encourage patients to empower themselves by building and
maintaining relationships with their physician, specialists, and
pharmacist to help improve the quality, accessibility, and
affordability of their care.
As this committee examines the Part B Drug Payment Demonstration, we
offer the following for its consideration.
Value of Pharmacy
In Phase II of the model, the agency plans on incorporating new and
innovative approaches to reducing prescription drug costs through the
use of Value-Based Purchasing tools. Today, pharmacists play an
increasingly important role in the delivery of services, including key
roles in new models of care beyond the traditional fee-for service
structure. Pharmacists are engaging with other professionals and
participating in models of care based on quality of services and
outcomes, such as accountable care organizations. Pharmacies, in their
role as leaders in medication management services such as medication
therapy management (MTM) and promotion of generic utilizations, could
play an important role in Phase II of the model by improving and
ensuring medication adherence and reducing prescription drug costs for
the Medicare program.
Poor medication adherence costs the U.S. healthcare system $290 billion
annually. Pharmacist-provided services such as MTM are important tools
in the effort to improve medication adherence, patient health, and
healthcare affordability. Improved medication adherence and MTM not
only reduce costs, but improve patient care, enhance communication
between providers and patients, improve collaboration among providers,
optimize medication use for improved patient outcomes, contribute to
medication error prevention, improve hospital and readmission cost
avoidance, and enable patients to be more actively involved in
medication self-management.
Pharmacies have also long promoted generic drugs as safe, cost-
effective alternatives for many patients. Increasing the use of generic
drugs in a public program is one of the most effective ways to reduce
prescription drug costs. For every 1 percent increase in generic
utilization, the Medicaid program could save $558 million. For example,
if all other states could match the generic utilization rate of Hawaii
(82.7%), the Medicaid program could save $6.56 billion annually.
Because community pharmacies have a higher generic dispensing rate--
71%--than any other practice setting, it is important to recognize the
role of community pharmacies in promoting generic drug utilization.
We believe options should be explored to better utilize pharmacists in
the Medicare program. One option we urge you to consider is recognizing
pharmacists as providers in the Medicare program. Pharmacists provide
access to health tests, help to manage chronic conditions such as
diabetes and heart disease, and provide expanded immunization services.
However, the lack of pharmacist recognition as a provider by third-
party payors, including Medicare and Medicaid, limits the number and
types of services pharmacists can provide, even though fully qualified
to do so. Retail pharmacies are often the most readily accessible
healthcare provider. Research shows that nearly all Americans (86%)
live within 5 miles of a retail pharmacy. Such access is vital in
reaching the medically underserved.
We urge you to increase access to much-needed services for underserved
Medicare beneficiaries by supporting H.R. 592/S. 314, the Pharmacy and
Medically Underserved Areas Enhancement Act, which will allow Medicare
Part B to utilize pharmacists to their full capability by providing
those underserved beneficiaries with services (subject to state scope
of practice laws) not currently reaching them. This important
legislation would lead not only to reduced overall healthcare costs,
but also to increased access to healthcare services and improved
healthcare quality.
Misplaced Incentives for the Part B Drug Payment Model
The goal of the model is to incentivize the use of lower costs
prescription drugs in Phase I through the use of a reduced average
sales price (ASP) plus add-on fee of $16.80 may lead to unintended
consequences and hardships for providers and suppliers who merely
dispense medications. Under the model, the dispensing of higher cost
medications will result in a significant reduction in reimbursement.
While this is the goal of the new payment methodology, it unfairly
penalizes pharmacies that are only able to dispense medications as
prescribed by the physician. Pharmacies have little control over the
medications prescribed to beneficiaries under Medicare Part B, forcing
them to dispense the prescription for a reduced payment amount.
Because the pharmacy would be the one dispensing and getting reimbursed
for the medications, there would be no impact on the prescribing
practices of providers for those medications dispensed outside of the
office setting. Prescribers would have no incentive to change their
prescribing practices. In the alternative, policies should focus on
testing payment methodologies that impact the incentives and the buying
and billing practices of prescribers. This includes payment policies
that incent the dispensing of generic drugs and biosimilars that would
increase the uptake of generic drugs and biosimilars as a means of
providing lower cost medications and reducing beneficiary cost sharing,
which contribute to overall Medicare drug spending. This includes
examining an enhanced reimbursement for these medications, such as an
ASP + 8% or ASP + 6% and a flat fee each time a generic drug or
biosimilar is prescribed. Unfortunately, the proposed Part B Drug
Payment Model misses the opportunity to encourage the use of these
lower cost medications that could ultimately lower drug spending for
the Medicare program.
Waiver of Statutory Requirements for Infusion Drugs
Payment for drugs infused with a covered item of durable medical
equipment (DME), such as insulin used with a covered insulin pump, are
statutorily reimbursed based on the average wholesale price (AWP) in
effect on October 1, 2003. As the Office of Inspector General noted in
a 2013 report:
These payment-related issues could significantly affect drug
utilization and acquisition. For example, excessive payments
could present incentives for providers to overutilize a
particular product, while payments that are below cost could
contribute to an inability or unwillingness to provide a
particular drug.
While the goal of the proposed payment model is to reduce incentives
for overutilization of higher cost products, NACDS is pleased that CMS
recognized the issues related to underpayment for certain medications
by proposing to waive the statutory requirement and include infusion
drugs that are furnished through covered DME items in the model.
However, in doing so, CMS is proposing to:
. . . exclude this category of drugs from phase I of the model
so that DME policy can focus on issues related to DME and so
that the model does not interfere with decisions related to the
inclusion or exclusion of these drugs in DME competitive
bidding.
NACDS believes infusion drugs that are furnished through covered DME
should be included in Phase I of the payment model. The lack of updates
to reimbursement amounts for more than a decade has serious
implications for Medicare beneficiaries. This is particularly true in
the case of insulin.
Insulin that is self-administered by a beneficiary with an injection is
covered under Part D, whereas the same insulin administered through an
insulin pump is covered under Part B. However, reimbursement to a
pharmacy for dispensing insulin under Part D is almost twice as much as
Medicare reimbursement for the same insulin under Part B. The disparity
has increased to the point that a pharmacy dispensing insulin under
Part B is doing so below their acquisition cost.
As a result, this may mean that beneficiaries with an insulin pump find
it harder and harder to find locations able to fill their Part B
insulin. This likely would lead to poorer beneficiary health through
decreased adherence and increased Medicare costs through increased
hospitalizations and utilization of other more expensive services.
CMS's proposal to exclude infusion drugs, such as insulin administered
via an insulin pump, from Phase I of the model may contribute to access
issues for Part B beneficiaries. For this reason, NACDS recommends the
inclusion of these drugs in both phases of the model.
Administration, Supplying, and Dispensing Fees in Phase II
NACDS is concerned with CMS's proposal that Phase II of the model may
incorporate changes to the furnishing, supplying, and dispensing fees
that are associated with dispensing drugs under the payment model.
These include inhalation drug dispensing fees and supplying fees to
pharmacies for certain immunosuppressive, oral anticancer, and oral
antiemetic drugs.
It appears the proposal for Phase II of the model envisions decreasing
or eliminating dispensing and supplying fees for drugs included in the
model. NACDS believes such a step would be very troubling. NACDS
believes steps should be taken to ensure dispensing and supplying fees
are fair and adequate, and providers and suppliers are paid at rates
that are sufficient to cover the cost of dispensing prescriptions drugs
to Medicare beneficiaries. This is particularly true in the Part B
program where increasing supplying or dispensing fees for Part B drugs
would help offset burdensome administrative costs incurred in Medicare
Part B claims submission.
CMS has not updated supplying and dispensing fees since 2005, even
though the cost of providing services to Medicare patients continues to
increase. CMS's failure to increase supplying and dispensing fees
results in community pharmacies' reimbursement falling below the actual
cost to dispense Part B prescriptions. Fair and adequate Medicare
dispensing fees help to ensure that pharmacy providers are paid at
rates that are sufficient to cover the cost of dispensing prescriptions
drugs to Medicare beneficiaries. Such rates could allow for a
reasonable return above the pharmacies' costs of acquiring and
dispensing prescription drugs, encouraging pharmacies to agree to
participate in the Medicare program and thereby promoting patient
access to their Part B medications.
In fact, CMS has recently acknowledged the important role fair and
adequate dispensing fees play in maintaining patient access. In
releasing the Final Medicaid Program Covered Outpatient Drugs Rule
earlier this year, CMS stated that:
We agree that pharmacy providers should be reimbursed
adequately for their professional services. . . .
Furthermore, CMS stated that the proposal to revise the term from
``dispensing fee'' to ``professional dispensing fee'' was:
. . . designed to reinforce our position that the dispensing
fee should reflect the pharmacist's professional services and
costs to dispense the drug product to a Medicaid beneficiary.
In recognizing the negative impact inadequate dispensing fees can have
on beneficiary access, CMS required that:
. . . states must provide information supporting any proposed
change to either the ingredient cost or dispensing fee
reimbursement which demonstrates that the change reflects
actual costs and does not negatively impact access.
NACDS believes the importance of supplying and dispensing fees in the
Medicare Part B payment model should be recognized and increased to
properly reflect the costs to providers and suppliers in dispensing and
administering Part B drugs.
Conclusion
NACDS thanks the committee for consideration of our comments. We look
forward to working with policymakers and stakeholders on these
important issues.
______
National Rural Health Association (NRHA)
Headquarters
4501 College Blvd., #225
Leawood, KS 66211-1921
816-756-3140
Fax: 816-756-3144
http://www.ruralhealthweb.org/
Government Affairs Office
1025 Vermont Avenue, Suite 1100
Washington, DC 20005
202-639-0550
Fax: 202-639-0559
May 9, 2016
Andy Slavitt
Acting Administrator
Centers for Medicare and Medicaid Services
Hubert H. Humphrey Building
200 Independence Avenue, SW, Room 445-G
Washington, DC 20201
RIN 0938-ASSS: Medicare Program; Part B Drug Payment Model Proposed
Rule
Dear Administrator Slavitt,
The National Rural Health Association (NRHA) is pleased to offer
comments on the Medicare Part B Drug Payment Model Proposed Rule. We
appreciate your continued commitment to the needs of the 62 million
Americans residing in rural and underserved areas, and look forward to
our continued collaboration to improve health care access and quality.
While we support the inclusion of rural providers in the proposed part
B drug payment model, rural hospitals must be excluded to avoid
exacerbating the existing rural hospital closure crisis.
NRHA is a non-profit membership organization with more than 21,000
members nationwide that provides leadership on rural health issues. Our
membership includes nearly every component of rural America's health
care infrastructure, including rural community hospitals, critical
access hospitals, doctors, nurses and patients. We work to improve
rural America's health needs through government advocacy,
communications, education and research.
Access to quality, affordable health care is essential for the 62
million Americans living in rural and remote communities. Rural
Americans are more likely to be older, sicker and poorer then their
urban counterparts. Specifically, they are more likely to suffer with a
chronic disease that requires monitoring and follow up care, making
convenient, local access to care necessary to ensuring patient
compliance with the services that are necessary to reduce the overall
cost of care and improve the patients' outcomes and quality of life.
Yet, many rural Americans live in areas with limited health care
resources, restricting their available options for care, including
primary care.
Rural hospitals provide beneficiaries a local access point for
health care close to home. Though rural seniors are often forced to
travel significant distances for care, especially specialty services,
rural hospitals are able to accommodate a variety of patient needs
through the use of telemedicine and local follow up care for specialty
care received elsewhere. Rural physicians and hospitals work around a
plethora of challenges to provide high quality personalized care to
their patients. Services such as providing local infusions of
medications ordered by distant specialists to ensure patients are able
to adhere to medication schedules that would be prohibitive if the
patient was required to travel, often hours in each direction, to a
distant specialist.
Rural hospitals are closing. Seventy-one rural hospitals have
closed since 2010. Right now, 673 additional facilities are vulnerable
and could close--this represents over \1/3\ of rural hospitals in the
U.S. In fact, the rate of closure has steadily increased since
sequester and bad debt cuts began to hit rural hospitals; resulting in
a closure rate six times higher in 2015 compared to 2010. Continued
cuts in hospital payments have taken their toll, forcing far too many
closures. Medical deserts are appearing across rural America, leaving
many of our nation's most vulnerable populations without timely access
to care.
While the Sole Community Hospitals (SCH), Low Volume Hospital (LVH)
and Medicare Dependent Hospital (MDH) programs have helped stabilize
some rural hospitals, rural hospitals paid at a Prospective Payment
System (PPS) rate are more vulnerable to closure. Sixty-five percent of
the closures have been of PPS hospitals, though these hospitals are
less than one-third of all rural hospitals. A recent study out of the
Sheps Center at University of North Carolina found that overall
``profitability of rural hospitals decreased while the profitability of
urban hospitals has increased since FY 2012.'' \1\ Specifically of
concern is that ``R[ural] PPS hospitals with 26-50 beds and MDHs had
the lowest profitability compared to other hospitals,'' both had
negative median operating margins. MDHs had median operating margins
less than negative 2 percent. This result is unsurprising considering
the MedPAC March 2016 report indicating that ``average Medicare margins
are negative, and under current law they are expected to decline in
2016.'' For rural hospitals that on average serve an older, sicker, and
poorer population, negative Medicare margins often mean negative
overall margins. These vulnerable hospitals are unable to absorb
further cuts without exacerbating the closure crisis.
---------------------------------------------------------------------------
\1\ Thomas, Sharita R.; Holmes, G. Mark; and Pink, George H. (March
2016). 2012-14 Profitability of Urban and Rural Hospitals by Medicare
Payment Classification. Available at https://
www.ruralhealthresearch.org/alerts/113.
Rural hospitals must be excluded from the proposed Part B Drug
Payment model to avoid additional rural hospital closures and maintain
continued access by vulnerable populations. The proposed rule estimates
a net negative impact for rural hospitals (-0.3% overall, 2.2% of drug
payments for a total loss of $322 million). While this cut may appear
small on its own, it must be taken in context of other Medicare cuts
already leading to the closure crisis, including sequester, bad debt
reductions, and Disproportionate Share Hospital (DSH) cuts. At a time
where extensive Medicare cuts are already causing far too many rural
hospitals to close, this additional cut would be one additional cut
causing more hospital closures. These rural hospitals often provide
safety-net services for vulnerable populations that have little or no
---------------------------------------------------------------------------
capacity to travel great distances for care.
NRHA appreciates that the proposed rule specifically requested
comment on ``the potential effect that this model may have on rural
practices, how rural practices may differ from non-rural practices and
whether rural practices should be considered separately from other
practice locations,'' as well as the recognition that ``this proposed
rule may have a significant impact on small rural hospitals [located
outside of a metropolitan statistical area and has 100 or fewer beds]
selected for the model.'' The regulatory impact analysis on the effects
on small rural hospitals provided in the proposed rule coupled with the
uncontroverted evidence of the hospital closure crisis caused by the
already enacted Medicare cuts which disproportionately impact rural PPS
hospitals supports the exclusion of these vulnerable hospitals from
this proposed model.
Thank you for the chance to offer comments on this proposed rule,
and for your consideration on our comments. We very much look forward
to continuing our work together to ensure our mutual goal of improving
quality of and access to care. If you would like additional
information, please contact Diane Calmus at [email protected], or
202-639-0550.
Sincerely,
Alan Morgan
Chief Executive Officer
National Rural Health Association
[all]