[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

                               __________

                                     








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            Printed for the use of the Committee on Finance
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                          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 
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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

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