[Federal Register Volume 83, Number 210 (Tuesday, October 30, 2018)]
[Proposed Rules]
[Pages 54546-54561]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-23688]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Chapter IV
[CMS-5528-ANPRM]
RIN 0938-AT91
Medicare Program; International Pricing Index Model for Medicare
Part B Drugs
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Advance notice of proposed rulemaking with comment.
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SUMMARY: We are issuing this advance notice of proposed rulemaking
(ANPRM) to solicit public comments on potential options we may consider
for testing changes to payment for certain separately payable Part B
drugs and biologicals (hereafter called ``drugs''). Specifically, CMS
intends to test whether phasing down the Medicare payment amount for
selected Part B drugs to more closely align with international prices;
allowing private-sector vendors to negotiate prices for drugs, take
title to drugs, and compete for physician and hospital business; and
changing the 4.3 percent (post-sequester) drug add-on payment in the
model to reflect 6 percent of historical drug costs translated into a
set payment amount, would lead to higher quality of care for
beneficiaries and reduced expenditures to the Medicare program.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on December 31,
2018.
ADDRESSES: In commenting, please refer to file code CMS-5528-ANPRM.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-5528-ANPRM, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-5528-ANPRM,
Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Hillary Cavanagh, 410-786-6574 or the
IPI Model Team at [email protected].
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to
view public comments.
[[Page 54547]]
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Executive Summary
A. Purpose
The Medicare program and its beneficiaries currently pay more for
many high-cost drugs than many other countries.\1\ The Centers for
Medicare & Medicaid Services' (CMS) Center for Medicare and Medicaid
Innovation (``Innovation Center'') is taking action on President
Trump's goal to lower drug costs for Medicare beneficiaries by
exploring a potential model that seeks to ensure the Medicare program
pays comparable prices for Part B drugs relative to other economically-
similar countries. The potential International Pricing Index (IPI)
model would have several goals, including: reducing Medicare program
selected expenditures and beneficiary cost-sharing for separately
payable Part B drugs (for example, drug administered in physician
offices and hospital outpatient departments), preserving or enhancing
quality of care for beneficiaries, offering comparable pricing relative
to international markets, removing providers' financial incentive to
prescribe higher-cost drugs while creating revenue stability,
minimizing disruption to the current supply chain, and increasing
Medicare efficiency and value to reduce federal spending and taxpayer
dollars. With this advance notice of proposed rulemaking (ANPRM), the
CMS is soliciting public feedback on key design considerations for
developing the IPI Model.
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\1\ ``Comparison of U.S. and International Prices for Top
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-spending-medicare-part-b-drugs.
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The IPI Model aims to drive better quality for Medicare
beneficiaries and reduce Medicare drug spending by offering comparable
pricing relative to other countries and addressing flawed incentives in
the current payment system. Currently, Medicare pays substantially more
than other countries for the highest-cost physician administered
drugs.\2\ In addition, the current Medicare payment system has several
features that may be causing greater utilization of higher priced
drugs.\3\ Under the current system, Medicare pays doctors and hospitals
a fee set at 6 percent of the price of the drug so that the dollar
amount of the add-on increases with the price of the drug rather than a
set payment reflecting the service being performed. The current buy-
and-bill system also requires physicians to purchase high-cost Part B
drugs and wait for Medicare reimbursement, exposing practices to
financial risk and jeopardizing their ability to operate and provide
care in their communities.
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\2\ ``Comparison of U.S. and International Prices for Top
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-spending-medicare-part-b-drugs.
\3\ ``Comparison of U.S. and International Prices for Top
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-spending-medicare-part-b-drugs.
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We are proposing to design the IPI Model to achieve the following:
(1) Reduce expenditures while preserving or enhancing the quality of
care for beneficiaries; (2) ensure the United States (U.S.) is paying
comparable prices for Part B drugs relative to other countries by
phasing in reduced Medicare payment for selected drugs based on a
composite of international prices; (3) reduce out-of-pocket costs for
included drugs for Medicare beneficiaries, and thereby increase access
and adherence due to decreased drug costs; (4) maintain relative
stability in provider revenue through an alternative drug add-on
payment for furnishing drugs that removes the current percentage-based
drug add-on payments, which creates incentives for higher list prices
and to prescribe higher cost drugs; (5) reduce participating health
care providers' burden and financial risk associated with furnishing
included drugs by using private-sector vendors to purchase and take
title to included drugs; and (6) introduce greater competition into the
acquisition process for separately payable Part B drugs.
B. Summary of Major Provisions
In section III. of this ANPRM, we discuss the model concept design
for the IPI Model. This IPI Model would focus on selected separately
payable Part B drugs and biologicals (hereafter called ``drugs'').
Specifically, the IPI Model would initially focus on Part B single
source drugs, biologicals, and biosimilars that encompass a high
percentage of Part B drug utilization and spending. The Innovation
Center would test this model under section 1115A of the Social Security
Act (the Act), which authorizes testing models expected to reduce
program expenditures, while preserving or enhancing the quality of care
furnished to beneficiaries. The model under consideration would include
physicians, hospitals, and potentially other providers and suppliers in
selected geographic areas. The IPI Model test would include the
following components:
Set the Medicare payment amount for selected Part B drugs
to be phased down to more closely align with international prices;
Allow private-sector vendors to negotiate prices for
drugs, take title to drugs, and compete for physician and hospital
business; and
Increase the drug add-on payment in the model to reflect 6
percent of historical drug costs.
Pay physicians and hospitals the add-on based on a set
payment amount structure; CMS would calculate what CMS would have paid
in the absence of the model, before sequestration, and redistribute
this amount to model participants based on a set payment amount.
These and other components of the potential model are described in
greater detail in this ANPRM.
We are considering issuing a proposed rule in the Spring of 2019
with the potential model to start in Spring 2020. The potential model
would operate for five years, from Spring 2020 to Spring 2025. Of note,
as discussed in section III.I. of this ANPRM, the IPI Model may have an
impact on Medicaid drug rebates and payments, which we continue to
explore.
With the release of this ANRPM, we solicit public input on our
intended model design to inform our ongoing work to develop the IPI
Model.
II. Background
A. Overview of Supply Chain
1. Current Distribution System
In the U.S., Part B drugs that are administered in the outpatient
setting usually flow from the manufacturer through drug wholesalers (or
specialty distributors) to the provider or supplier. At each step of
the process, the drugs are sold to the next entity in the supply chain
and that entity takes title to the drug. Distribution management
systems are employed to order drugs, track sales and shipments, manage
price and customer lists, record financial transactions, and support
other industry processes. Figure 1 provides a high-level
[[Page 54548]]
view of this ``buy and bill'' system \4\ and existing relationships
between the various entities, including product movement, financial
flow, and contract relationships.\5\
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\4\ The ``buy and bill'' system refers to health care providers
purchasing drugs for administration to patients followed by the
submission of claims to a payer.
\5\ Reprinted with permission. Drug Channels, ``Follow the Vial:
The Buy-and-Bill System for Distribution and Reimbursement of
Provider-Administered Outpatient Drugs,'' October 14 2016, accessed
via: https://www.drugchannels.net/2016/10/follow-vial-buy-and-bill-system-for.html.
[GRAPHIC] [TIFF OMITTED] TP30OC18.001
The role of the health care provider within the buy-and-bill system
is to seek out low cost drug suppliers and purchasing mechanisms (for
example, by joining a group purchasing organization (GPO)), order, buy
(or use financing), receive, and store drugs, administer drugs to
patients, file claims to bill insurers for payment, and collect patient
cost-sharing. There are many different buying strategies that enable
physicians and hospitals to obtain lower drug prices. These strategies
include using GPOs, group purchasing arrangements, wholesaler/
distributor price lists, the 340B Prime Vendor,\6\ and directly
negotiated agreements with manufacturers. Similarly, the current drug
distribution system accommodates a variety of purchasing mechanisms and
specialized distribution processes, for example, cold chain and product
tracing compliance.\7\
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\6\ The Health Resources and Services Administration (HRSA)
administers the 340B Drug Pricing Program that allows certain
hospitals and other health care providers (``covered entities'') to
obtain discounted prices on ``covered outpatient drugs'' (as defined
at section 1927(k)(2) of the Act) from drug manufacturers. The 340B
Prime Vendor is responsible for securing subceiling discounts on
outpatient drug purchases and discounts on other pharmacy-related
products and services for participating public hospitals, community
health centers, and other safety-net health care providers electing
to join the 340B program.
\7\ A cold chain ensures that a product maintains a desired
temperature all the way through the supply chain from manufacturing
to delivery/administration. Product tracing allows a user to track
every step of the supply chain.
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Physicians generally purchase Part B drugs from a wholesaler,
distributor, or specialty pharmacy. Hospitals generally purchase for
their outpatient departments through their hospital pharmacy's
arrangement with a drug wholesaler. Physicians and hospitals also have
arrangements with manufacturers, individually or through their GPOs,
for discounts that are tied to prescribing, for example volume
discounts based on purchases of drugs for all patients that are
treated. Drug wholesalers, distributors, and specialty pharmacies
negotiate with manufacturers on the price they will pay to acquire
drugs. When applicable, contract pricing controls the price that the
health care provider will pay to the wholesaler, distributor, or
specialty pharmacy, while shipping and handling and other terms may
vary. Through a process called the ``chargeback process,''
manufacturers reduce the final drug prices to wholesalers and other
[[Page 54549]]
distributors to reflect the contract prices that were applied to health
care providers' drug purchases. Increasingly, specialty pharmacies are
supplying oncology drugs to health care providers that have chosen to
remove themselves from the buy and bill system--or private payers are
mandating use of ``white bagging'' or ``brown bagging'' (that is,
pharmacy dispensed drugs delivered to the practitioner by the pharmacy
or patient) to control drug costs.\8\ However, Medicare does not
mandate use of or encourage white bagging or brown bagging.\9\
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\8\ Robinson and Howell. Specialty Pharmaceuticals: Policy
Initiatives to Improve Assessment, Pricing, Prescription, and Use.
Health Affairs 2014:33(10);1745-50.
\9\ ``Brown bagging'' is a term used when the patient obtains
the drug at a pharmacy and then brings it to the physician for
administration. ``White bagging'' is a term used when the specialty
pharmacy ships directly to the physician office or hospital
outpatient department for administration.
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2. Prior Competitive Acquisition Program
Under the Medicare Prescription Drug, Improvement and Modernization
Act of 2003, which established section 1847B of the Act, we have
authority to implement the ``Competitive Acquisition Program'' or
``CAP'' for Part B drugs that are not paid on a cost or prospective
payment basis. The CAP was implemented in the mid-2000s.
The CAP was an alternative to the average sales price (ASP)
methodology that is used to pay for the majority of Part B drugs,
particularly drugs that are administered during a physician's office
visit. Instead of buying drugs for their offices, physicians who chose
to participate in the CAP would place a patient-specific drug order
with an approved CAP vendor; the vendor would provide the drug to the
office and then bill Medicare and collect cost-sharing amounts from the
patient. Drugs were supplied in unopened containers (not pharmacy-
prepared individualized doses like syringes containing a patient's
prescribed dose). When the CAP was in place, most Part B drugs used in
participating physicians' offices were supplied by the approved CAP
vendor. Unlike the buy and bill process that is still used to obtain
many Part B drugs, physicians who participated in the CAP did not buy
or take title to the drug. Physician participation in the CAP was
voluntary, but physicians had to elect to participate in the CAP. CAP
drug claims were processed by a designated carrier.
CMS conducted bidding for CAP vendors in 2005. The first CAP
contract period ran from July 1, 2006 until December 31, 2008. One drug
vendor participated in the program, providing drugs within
approximately 180 Healthcare Common Procedure Coding System (HCPCS)
billing codes (including heavily utilized drugs in Part B) to
physicians across the United States and its territories. The parameters
for the second round of the vendor contract were essentially the same
as those for the first round. While CMS received several qualified bids
for the subsequent contract period, shortly before the second contract
period began, contractual issues with the successful bidders led to the
postponement of the program, and the CAP has been suspended since
January 1, 2009.
3. Challenges With the Statutory CAP
As described previously, the CAP operated for a brief time from
2006 to 2008. The Part B drug market has changed since that time.
Higher cost drugs, particularly biologicals manufactured by sole
sources, are driving increasing Part B drug expenditures.\10\ Many of
the highest price drugs and biologicals available today were not
contemplated when the CAP program was established. While distribution
channels have remained concentrated, today's providers and suppliers
have access to more sophisticated technologies such as electronic
ordering systems and virtual inventory management systems.
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\10\ Medicare Part B Drug Spending Dashboard accessed via:
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs/MedicarePartB.html.
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Since 2009, physicians have faced growing financial risks under the
buy and bill approach, as the prices of Part B drugs have increased.
Hospitals have varying ability to negotiate discounts, so some
hospitals face similar financial challenges for the outpatient drugs
they provide. Further, the rising costs of prescription drugs in the
Medicare Part B program strain federal resources as well as
beneficiaries' wallets.
As envisioned, the CAP had the potential to reduce risk for
enrolled physicians and Medicare expenditures. As implemented, the CAP
was tied to the ASP payment under section 1847A of the Act and did not
achieve savings.\11\ In the aggregate, the submitted bids could not
exceed a threshold that was based on ``point in time'' ASP data
combined with historical utilization data. The submitted bids fed into
the composite bid analysis and vendor selection process. These time
consuming, imprecise mechanisms, along with other features of the CAP,
limited the appeal of the program for vendors. There was no guarantee
for the CAP vendors that the CAP payments would cover their drug
acquisition and operating costs. Participating physicians reported that
CAP requirements were challenging to integrate into efficient practice
patterns and treatment regimes, especially for oncologists who
prescribe dosages that may change on the day of treatment, and
physicians who need to administer antibiotics urgently.
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\11\ Evaluation of the Competitive Acquisition Program for Part
B Drugs: Final Report, December 2009, accessed via: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/downloads/CAPPartB_Final_2010.pdf.
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Recently, we have heard from stakeholders, including physician and
hospital groups, and beneficiary advocates, that a CAP-like approach
with improvements, particularly in regards to onsite availability of
drugs, could potentially address concerns about the financial burdens
associated with furnishing Part B drugs and their rising costs, and
address challenges experienced in the CAP. Stakeholder feedback on the
CAP has been considered in the development of the potential IPI Model
described in this ANPRM. In addition, comments received on a Request
for Information on a potential model to leverage the authority under
the CAP for Part B drugs and biologicals that was included in the
Calendar Year 2019 Hospital Outpatient Prospective Payment System
(OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed
rule (83 FR 37046) and comments received on the HHS Blueprint to Lower
Drug Prices and Reduce Out-of-Pocket Costs (83 FR 22692) were
considered.
B. Rising Cost of Prescription Drugs
1. Medicare Spending
Medicare Part B drug expenditures have increased significantly over
time. From 2011 to 2016, Medicare FFS drug spending increased from
$17.6 billion to $28 billion under Medicare Part B, representing a
compound annual growth rate (CAGR) of 9.8 percent, with per capita
spending increasing 54 percent, from $532 to $818.\12\ The number of
Medicare Part B FFS beneficiaries and the number of these beneficiaries
who received a Part B drug increased over the 5-year period (2011
through 2016). However, the increase in total Medicare drug spending
during this period is more fully explained by increases in the prices
of drugs and mix of drugs for those beneficiaries who received them
than by increases in Medicare enrollment and drug utilization. The
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CAGR in number of Medicare Part B FFS beneficiaries is less than 1
percent between 2011 and 2016.
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\12\ Spending and Enrollment Data from Centers for Medicare and
Medicaid Services Office of Enterprise Data and Analytics.
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2. International Prices Relative to U.S. Prices
Drug acquisition costs in the United States exceed those in Europe,
Canada, and Japan, according to a Department of Health and Human
Services (HHS) analysis \13\ of drug acquisition costs for Medicare
Part B physician-administered drugs. The HHS analysis compared United
States drug acquisition costs for a set of Medicare Part B physician-
administered drugs to acquisition costs in 16 other developed
economies--Austria, Belgium, Canada, Czech Republic, Finland, France,
Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain,
Sweden, and the United Kingdom (UK).
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\13\ ``Comparison of U.S. and International Prices for Top
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-spending-medicare-part-b-drugs.
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Among the 27 products included in the analysis, acquisition costs
in the U.S. were 1.8 times higher than in comparator countries.\14\
Acquisition cost ratios ranged from U.S. prices being on par with
international prices for one drug, to U.S. prices being up to 7 times
higher than the international prices. There is variability across the
16 countries in the study as well, with no one country consistently
acquiring drugs at the lowest prices. The U.S. has the highest ex-
manufacturer prices for 19 of the 27 products.
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\14\ Acquisition cost ratios ranged from U.S. prices being on
par with international prices for one drug, to U.S. prices being up
to 7 times higher than the international prices. There is
variability across the 16 countries in the study as well, with no
one country consistently acquiring drugs at the lowest prices. The
U.S. has the highest acquisition costs for the vast majority of the
27 products.
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As a result, Medicare beneficiaries and the Medicare program are
bearing unnecessary, potentially avoidable costs for Part B drugs.
III. Model Concept Design
The potential IPI Model would leverage and improve upon the CAP
approach by paying physicians and hospitals for drug-related costs,
providing more flexibility for drug ordering and distribution, and by
having model vendors compete for business from physicians and
hospitals. Through the potential IPI Model, we seek to test ways to
remove physicians and hospitals outpatient departments from the buy and
bill process, without creating undue disruption to the distribution
system.
CMS is considering contracting with a number of private-sector
vendors that would supply physicians, hospital outpatient departments,
and other included providers and suppliers with the drugs and
biologicals that CMS would include in the model in all of the model's
selected geographic areas. Similar to the CAP, the model vendors,
rather than the health care providers, would take on the financial risk
of acquiring the drugs and billing Medicare. Instead of paying the
model vendors based on bid amounts, as section 1847B of the Act
prescribes for the CAP, under the IPI Model Medicare would pay the
vendor for the included drugs based on international prices discussed
in section III.D. of this ANPRM, which would be intended to lower the
amount Medicare pays for included drugs and beneficiary cost-sharing.
The model vendors would have flexibility to offer innovative delivery
mechanisms to encourage physicians and hospitals to obtain drugs
through the vendor's distribution arrangements, such as electronic
ordering, frequent delivery, onsite stock replacement programs, and
other technologies. Physicians and hospitals in the model test would
select the vendors that best provide customer service and support
beneficiary choice of treatments, and would be able to engage with
multiple vendors for different drugs and to change vendors. In addition
to the Medicare drug administration payment that would still be made to
physicians and hospitals, the model would pay physicians and hospitals
a ``drug add-on amount'' that would be different from the current drug
add-on amount.
Outside of the designated model test areas and for drugs not
included in the model, health care providers would continue to use the
buy and bill approach and the current Medicare FFS payment policies
would apply.
This ANPRM describes features of a potential model in more detail,
such as how an international pricing index could be developed and
tested. We intend to waive program requirements to the extent necessary
to test the model design that we would implement through notice and
comment rulemaking. We seek feedback on a number of potential model
elements described in the following sections of this ANPRM. These
include:
What limitations would be in place on the entities that
could participate as vendors (e.g. pharmacies, manufacturers, providers
themselves)?
Which countries should be included in calculating an
international pricing index? How frequently should international data
be updated?
What should be the schedule for phasing in the spending
target?
Should we introduce health care provider bonuses to
incentivize reductions in cost or utilization relative to a benchmark?
A. Model Vendors
1. Testing Alternative to CAP Requirements
As CMS develops the IPI Model, we seek to minimize disruption
within the drug distribution system while increasing competition,
lowering U.S. drug prices, and removing the incentive for higher list
prices. Under the CAP, the CAP vendor had to acquire the CAP drug and
ship the drug to the ordering physician after receiving a beneficiary-
specific order. Under the IPI Model we are considering, vendors would
have the flexibility to offer a variety of delivery options, including
beneficiary-specific prescriptions, pre-ordering approaches such as
onsite inventory management solutions, and other arrangements that
would not require physicians and hospitals to purchase the drugs or
face greater buying costs. Physicians and hospitals would select the
vendors that offer delivery mechanisms that best meet their patient
care needs, practice size and location(s), and support needs.
Agreements between the vendors and physicians/hospitals would establish
the terms of their arrangements and would include appropriate
guardrails to protect all parties, including beneficiaries and the
Medicare program. CMS seeks feedback on whether CMS should be a party
to and/or regulate these agreements, and whether the agreements should
specify obligations to ensure the physical safety and integrity of the
included drugs until they are administered to an included beneficiary,
how drug disposition would be handled, and data sharing methods,
confidentiality requirements, and potentially other requirements.
2. Eligible Vendors
Under the potential IPI Model, we would intend to allow greater
flexibility than under the CAP in the types of entities that could be
selected as a model vendor (in accordance with applicable laws), and to
minimize the impacts on drug distribution processes. Under the CAP,
specialty pharmacies were the only entities that met the CAP vendor
criteria, and only one such vendor participated in the program. To
increase competition, the IPI Model would potentially allow entities
such as GPOs, wholesalers, distributors, specialty pharmacies,
individual or groups of physicians and hospitals, manufacturers, Part D
sponsors, and/or other entities to perform the role of
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model vendor as long as they could satisfy the vendor qualification
requirements. We are interested in ways to minimize any potential
concerns that could arise by allowing a broader set of entities to be
vendors, and how health care providers operating as vendors might be
able to operate in all geographic areas included in the model. We seek
input on the types of entities that would be allowed to be model
vendors, the potential for perverse incentives that could be introduced
by potentially allowing health care providers to be model vendors and/
or allowing model vendors to charge health care providers for
distribution-related activities, and whether there should be guardrails
in place to prevent perverse incentives.
We would require that model vendors purchase and take title to the
included drugs, but to allow for innovative distribution approaches,
model vendors would not be required to take physical possession of the
drugs. For example, if a manufacturer establishes a limited
distribution program, model vendors could negotiate with the
manufacturer ways to purchase the drug while the established limited
distribution entity would continue to ship the drug to the physician or
hospital for administration.
We would expect that all model vendors would operate on a national
basis; that is, model vendors potentially would be required to serve
all of the selected model geographic areas and supply all included
drugs to the physicians and hospitals that enroll with the vendor. The
model would promote competition among multiple national vendors;
vendors would compete for agreements with physicians and hospitals and
other health care providers that would be included in the model.
Physicians and hospitals would not be required to use only one vendor;
we would encourage model participants to obtain drugs from the most
cost effective model vendors. Enrolling with more than one vendor would
allow physicians and hospitals more options for obtaining drugs timely,
although the minimum requirement would be that model participants
maintain enrollment with at least one vendor in order to furnish
included drugs to the beneficiaries they serve timely.
Model vendors would operate enrollment for physicians and hospitals
and would send periodic enrollment reports and other documentation to
CMS to support model operations. In addition, model vendors would be
prohibited from paying rebates or volume-based incentive payments to
physicians and hospitals.
3. Model Vendor Responsibilities
The model vendors' responsibilities would be based on the
responsibilities of the CAP contractor under section 1847B of the Act
and would be specified in a model vendor agreement. The model vendors
would be responsible for such activities as--
Negotiating with manufacturers for the vendor's drug
acquisition prices for included drugs;
Establishing mechanisms for the model vendor to take title
to, but not necessarily physical possession of, included drugs, and
arranging for the distribution of included drugs to participant health
care providers for administration to included beneficiaries;
Establishing mechanisms within the vendor's arrangements
with manufacturers, physicians, hospitals, and other included providers
and suppliers to receive compensation for vendor services;
Implementing processes for participant health care
providers to enroll with the vendor and to obtain included drugs;
Meeting applicable licensure requirements in each State in
which the vendor would supply included drugs and be enrolled in
Medicare as a participating supplier, unless the model vendor
distributes included drugs under contract with one or more entities, in
which case the vendor must require that such entities meet applicable
licensure requirements and be enrolled in Medicare as a participating
supplier;
Establishing mechanisms for physicians and hospitals to
notify the vendor of the disposition of an included drug;
Submitting claims for included drugs in accordance to
model billing instructions established by CMS;
Paying manufacturers for included drugs that were
administered;
Operating vendor-administered payment arrangements, such
as indication based pricing, or outcomes-based agreements;
Developing and implementing program integrity safeguards
to ensure that all model requirements and applicable Medicare
requirements are followed;
Participating in model activities, including monitoring
and evaluation activities;
Providing support and technical assistance to participant
health care providers; and
Performing other functions and requirements as specified
in the model vendor agreement, such as administrative requirements.
4. Model Vendor Payment
Physicians and hospitals would pay the model vendor for
distribution costs and would collect beneficiary cost-sharing,
including billing supplemental insurers.\15\ Informational drug claims
would be submitted to the Medicare Administrative Contractor (MAC)
along with claims for drug administration.
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\15\ We envision that existing Medicare crossover claims
processing steps could be leveraged to support billing supplemental
insurers.
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In addition, similar to how the CAP operated, under the model,
vendors would submit claims to Medicare and would be paid an applicable
amount for the Part B drug that was administered to an included
beneficiary. The model payment amounts to vendors for included drugs
would be updated quarterly. The payment amount is described in section
III.D. of this ANPRM. Unlike the CAP, under the potential model CMS
would not solicit bid amounts for drugs. To the extent it would be
legally allowable, vendors' agreements with physicians and hospitals
could include provisions for delivery fees and other vendor costs.\16\
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\16\ We envision that model vendors would compete, in part, for
physicians and hospitals based on low fees.
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On a periodic basis, for example quarterly, CMS would ensure that
payment to the model vendors for administered drugs is substantiated by
the physician and hospital submitted claims.
We seek feedback on other options for model vendor payment,
including whether payment should include an administration fee from CMS
and whether vendors' agreements with physicians and hospitals could
include provisions for delivery fees and other vendor costs.
We are considering whether, given the flexibilities that model
vendors and physicians and hospitals would have under the model, the
model should include dispute resolution support, and if so, what such
support should include.
5. Model Vendor Selection
We intend to operate a competitive selection process to identify
the model vendors that would participate in the IPI Model. As we
solicit applications for potential model vendors, we would encourage a
variety of qualified entities to apply, including new business
arrangements that could fulfill the vendor role on a national basis. We
intend to select three or more model vendors so that physicians and
hospitals have a number of vendors from which to obtain drugs and so
that model vendors compete on the basis of
[[Page 54552]]
customer service and cost, but solicit comment as to whether three
vendors is an appropriate floor. The solicitation for model vendors
would specify in more detail the model vendor requirements.
The model vendor solicitation would also specify the selection
factors, which may include: The ability to negotiate with
manufacturers; the ability to ensure product integrity; The ability to
establish a customer service/grievance process; financial performance
and solvency; record of integrity and the implementation of internal
integrity measures; internal financial controls; maintenance of
appropriate licensure to purchase drugs and biologicals; and ability to
meet the model vendor agreement requirements within 6 months.
We would refuse to establish a model vendor agreement with an
entity for reasons including--
Exclusion of the entity under section 1128 of the Act from
participation in Medicare or other Federal health care programs; or
Past or present violations or misconduct related to the
pricing, marketing, distribution, or handling of drugs covered under
the Medicare program.
We would similarly include reasons to terminate a model vendor in
the model vendor agreement. In addition, to ensure that selected model
vendors would be able to perform their responsibilities under the model
vendor agreement without influence from parties that have a financial
interest related to included drugs or participating health care
providers, we are considering including conflict of interest
requirements similar to those established for the CAP in 42 CFR
414.912.
6. Requests for Feedback and Information
We are inviting public comment on the factors that would be
necessary to allow CMS to identify entities that would most likely
perform the responsibilities of a model vendor efficiently and
effectively with minimal start up time.
We seek information about the types of entities that could
serve as national vendors for the model. Should CMS require model
vendors to enroll any included health care provider? If included
physicians and hospitals could be model vendors, should they be
required to be a vendor for other health care providers, and should
they have to operate on a national basis? Should any vendor be required
to provide services on a national basis?
We are also interested in public comment on the potential
guardrails that would be appropriate if manufacturers and/or health
care providers could serve as model vendors. Also should CMS receive
shared savings based on the difference between a model vendor's
negotiated price and CMS' payment amount? If so, how would CMS
operationalize this shared savings approach?
What should be the potential responsibilities of model
vendors and model participants (included physicians, hospitals, and
potentially other providers and suppliers) under the model.
Specifically, are there ways that vendors and model participants could
collaborate to enhance quality and reduce costs?
What would be the ability of the potential types of
entities that could be model vendors to negotiate for drug prices that
would be at or below the IPI Model payment? Would certain types of
entities have advantages or face additional challenges?
Are there processes that model vendors could use to
increase their price negotiation leverage with manufacturers and lower
their potential loss exposure without increasing burdens on
beneficiaries, physicians, and hospitals?
Are there unsurmountable challenges related to physicians
and hospitals paying for distribution costs and to continue to collect
beneficiary cost-sharing, including billing supplemental insurers?
Should physicians and hospitals receive bad debt payments
if beneficiaries fail to satisfy cost-sharing obligations?
Is there a need for the model to include billing and
dispute resolution support, and if so, what should such support
include?
Should CMS pay the model vendors or should providers pay
the model vendors for the responsibilities associated with taking title
to drugs and distributing drugs? What incentives are established if CMS
pays the model vendors?
What should be the reasons for excluding entities from
serving as a model vendor or terminating a model vendor agreement, as
well as appropriate conflict of interest requirements?
Should the role for the model vendors include entering
into value-based payment arrangements (for example, indication-based
pricing or outcomes-based agreements)? And if so, should there be
requirements around these arrangements?
B. Model Participants, Compensation and Selected Geographic Areas
1. Model Participants
IPI Model participants would include all physician practices and
hospital outpatient departments (HOPDs) that furnish the model's
included drugs in the selected model geographic areas. CMS is
considering whether to also include durable medical equipment (DME)
suppliers, Ambulatory Surgical Centers (ASCs), or other Part B
providers and suppliers that furnish the included drugs. Model
participation would be mandatory for the physician practices, HOPDs,
and potentially other providers and suppliers, in each of the selected
geographic areas.
We intend to provide a more comprehensive list of health care
providers included under the model if a proposed rulemaking moves
forward.
For purposes of the potential IPI Model, beneficiaries would be
included in the model if they are furnished any of the included drugs
by a model participant in one of the selected geographic areas. More
specifically, the following beneficiary eligibility criteria would be
used based on the date that the included drug was furnished--
The beneficiary is enrolled in Medicare Part B;
The beneficiary is not enrolled in any group health plan
or United Mine Workers of America health plan; \17\ and
---------------------------------------------------------------------------
\17\ The United Mine Workers of America Health and Retirement
Funds (``The Funds'') is a Medicare Health Care Prepayment Plan
(HCPP) and is the Medicare payer for non-facility Part B services.
As such, providers bill the Funds for Medicare Part B services. The
Funds' payment to the provider includes the Medicare amount plus the
Medicare coinsurance and deductible amount, making it unnecessary
for the provider to submit claims to two payers.
---------------------------------------------------------------------------
Medicare FFS is the primary payer.
Medicare FFS beneficiaries who are not eligible for inclusion in
the model would continue to receive drugs that were obtained by their
health care provider using the buy and bill approach.
Under the IPI Model, model participants in the selected geographic
areas would have to enroll with at least one model vendor and obtain
included drugs from a model vendor for administration to included
Medicare FFS beneficiaries. Model participants would have to follow
model-specific billing instructions to submit informational drug claims
and the model add-on payment. To reduce beneficiary impact, model
participants would continue to collect beneficiary cost-sharing. We are
considering ways to ensure the reconciling of beneficiary cost-sharing
that model participants
[[Page 54553]]
would be collecting. An administrative approach that deducts the cost-
sharing amounts from Medicare payments made for other services to the
model participants could be feasible and would be less disruptive for
beneficiaries.
2. Model Geographic Areas
The model would require the participation of physician practices
and HOPDs (and potentially other providers and suppliers) in selected
geographic areas across the U.S. and its territories, which would allow
the Innovation Center to gain experience and insight into using an
alternative payment methodology for drugs included in the model. We
anticipate the selected geographic areas would include 50 percent of
Medicare Part B spending on separately payable Part B drugs. The
mandatory participation of physician practices and HOPDs (and
potentially other health care providers that furnish included drugs) in
the selected geographic areas would avoid having expected financial
performance in the model influence the physician practice/HOPD's
decision to participate or not. It also would ensure we capture the
experiences of various types of physician practices and HOPDs in
different geographic areas with varying characteristics and historic
utilization patterns.
For the IPI Model, we are considering a randomized design with the
randomization to intervention and comparison groups occurring at the
geographic unit of analysis. There are two main factors that need to be
considered when selecting geographies for the model: (1) The most
appropriate geographic unit (ZIP code, county, core based statistical
area, state, etc.) that reflects how care is delivered in markets, and
(2) the geographic scope of the model, or the number of geographic
units needed to generate statistically credible findings. Typically,
the more geographic units available for random assignment to the
model's intervention and comparison groups the better.
However, there is a tradeoff between the size of the geographic
unit and the number of units available for assignment. We are
considering using CBSAs (Core Based Statistical Areas) as the primary
unit of analysis in the model. CMS is further considering whether it
would be necessary to use larger geographic units such as aggregations
of CBSAs (metropolitan statistical areas or combined statistical areas)
to avoid the potential for routine shifts in the site of care to a
practice location with a different assignment under the model.
Geographic areas located outside CBSAs would not be included in the
randomization to intervention or comparison groups. Health care
providers outside of the randomized geographies could potentially have
the opportunity to opt into the model. However, health care providers
that are not part of the randomized treatment and control groups, but
that opt into the model, would not be included in the evaluation
sample.
3. Potential Drug Add-on Payment
Medicare Part B covers drugs administered by physicians in
physician offices and hospital outpatient departments and certain drugs
in other settings. In addition to payment for drug administration,
Medicare Part B typically pays for separately payable Part B drugs at
the average sales price (ASP) of a given drug, plus 6 percent of the
ASP as an add-on (with sequestration, the actual payment allowance is
ASP + 4.3 percent). This add-on payment can help to cover the costs of
drug ordering, storage and handling borne by physicians and hospitals,
payments to join group purchasing organizations (GPOs) or other
entities with similar purchasing arrangements, as well as a portion of
the drug costs themselves, in instances when the drug is acquired at a
price more than ASP. However, the drug add-on payment may encourage
increased utilization, particularly of higher-cost drugs, since doing
so increases revenue for the physician or hospital when the add-on is
higher than drug acquisition-related costs.
This section describes our thinking on alternative methods for
making the drug add-on payment a set payment amount rather than as a
percentage of ASP. We intend to structure the potential IPI model such
that physicians and hospitals would be incentivized to seek out lower
cost drugs for their beneficiaries, reduce inappropriate utilization,
continue to pay for certain distribution costs, continue to bill
Medicare for drug administration, albeit following model-specific
instructions, and continue to collect beneficiary cost-sharing for
included drugs. The goals for the model add-on payments would be to
hold health care providers harmless to current revenue to the greatest
extent possible; create an incentive to encourage appropriate drug
utilization; remove the incentive to prescribe higher-cost drugs; and
create incentives to prescribe lower-cost drugs in order to reduce
beneficiary cost sharing. We have considered several different
structures for the set payment amount.
a. Potential Alternative to the ASP Add-On
CMS would base payment calculations for the alternative
compensation on six percent (+6 percent) of the included Part B drugs'
ASP, which would represent an increase from the +4.3 percent add-on
that currently is paid due to sequestration, and would support
appropriate drug utilization under the model structure. That is, in
total the alternative compensation for model participants would
approximate the expected add-on amount for included drugs in the
absence of the model, before sequestration. Because the alternative
compensation would not be paid in a manner that is tied directly to the
ASP of an administered drug, there would not be an incentive for use of
higher cost drugs when an alternative is available. As described in
section III.D. of this ANPRM, Medicare payment for the drugs themselves
would be to the model vendors; model participants would no longer ``buy
and bill'' Medicare for included Part B drugs administered to included
beneficiaries. Payment for drug administration services, when
applicable, would continue to be separately billed by model
participants to Medicare; there would be no change in the payment for
drug administration services under the model. Beneficiary cost-sharing
would apply to the model-specific alternative compensation payments and
for model payments for included drugs.
b. Description of Alternative Add-on Payment Amount
Model participants would be paid a set payment amount per encounter
or per month (based on beneficiary panel size) for an administered
drug, which would not vary based on the model payment for the drug
itself. We are considering whether to set a unique payment amount for
each class of drugs, physician specialty, or physician practice (or
hospital). That is, there would be a set payment amount per
administered drug that would be based on--(1) which class of drugs the
administered drug belongs to; (2) the physician's specialty; or (3) the
physician's practice. If used, specialties would likely be defined
broadly rather than at a subspecialty level (for example, ophthalmology
rather than neuro-ophthalmology) given the difficulty of doing this
through claims data, although CMS may identify an alternative approach.
We would calculate the final payment amount, by drug class, physician
specialty, or physician practice, annually based on
[[Page 54554]]
the +6 percent of ASP revenue that model participants would have
garnered without sequestration in the most recent year of claims data.
Total model payments to a model participant would vary based on
utilization under an encounter-based model. To incentivize reduced
utilization where appropriate, CMS is considering creating a bonus
pool, where model participants would achieve bonus payments for
prescribing lower-cost drugs or practicing evidence-based utilization.
Importantly, as described in section III.F.3. of this ANPRM, we would
monitor drug utilization carefully throughout the model to ensure
beneficiary access to drugs is not compromised.
4. Requests for Feedback and Information
We welcome input from stakeholders on the potential approach for
defining model participants, selecting geographic areas, and
calculating an alternative to the ASP add-on for the IPI Model.
Specifically, we would like to receive information on which alternative
add-on option is preferable and how the specific payment methodology
might be designed. For example:
The exclusion of certain types of physician practices and/
or HOPDs from the model. For example, should we consider excluding
small physician practices/HOPDs (for example, those with 3 or fewer
physicians) from the model or establish a low-volume threshold that
would exclude those physician practices and HOPDs that fall below the
threshold from participating in the model? How could CMS analyze an
appropriate threshold?
The inclusion of additional Part B providers and suppliers
that furnish and bill for any of the model's included drugs as well as
the inclusion of providers that are paid on a cost basis, such as PPS-
exempt cancer hospitals, children's hospitals, or critical access
hospitals.
The potential approach to selecting geographic areas for
the intervention and comparison groups in the model. Are there
particular regions of the country that would need adjustments or
exclusions from the model (for example, rural areas)?
How should we operationalize the model for large provider
networks that cover some regions that are included and some that are
excluded?
Should class of drugs, physician specialty, or physician
practice determine the payment amount? Are there other characteristics
that should determine the alternative add-on payment amount?
How should a per month alternative add-on payment be
determined? How and how often should a beneficiary panel size be
determined?
The potential inclusion of a bonus pool. Should a bonus
pool be included in the model? If so, how should the model participant
bonus pool be constructed to meet the goals of the model to incentivize
the use of lower-cost drugs and clinically appropriate utilization? How
could a bonus pool be constructed to best protect and enhance quality
under the model? How should CMS handle variable low-volume estimates
and missing data values when assessing performance for purposes of a
bonus pool?
The potential phase in of an alternate provider
compensation. Should CMS phase in a change from percentage-based add-on
payments to set payment amounts, or should set payment amounts be
implemented in Year 1 of the potential IPI Model?
How should CMS implement an administrative process to
account for beneficiary cost-sharing for drugs that is collected by
model participants?
C. Included Drugs
1. Background
The Part B drug benefit includes many types of drugs and
encompasses a variety of care settings and payment methodologies. Of
the approximately $28 billion per year of FFS Part B drug spending in
2016, about $23.6 billion or 84 percent, is for drugs administered
incident to a physician's services. Among the ``incident to'' drugs,
over 90 percent of spending is for single source drugs and biologicals
(including biosimilars) as defined in section 1847A of the Act.\18\ We
plan to begin the model with these two broad groups of drugs both
because they encompass most of the Part B spending, and as a result of
their status as drugs with a single manufacturer, they allow for a more
straightforward comparison to an international pricing metric. Examples
of included drugs would be cancer drugs and adjunct therapy for cancer
and related conditions, biologicals used for the treatment of
rheumatoid arthritis and other immune mediated conditions, and drugs
used to treat macular degeneration. For purposes of the model, we also
would include HCPCS codes that contain only products with a single
manufacturer, even if they are multiple source drugs as defined in
section 1847A of the Act.
---------------------------------------------------------------------------
\18\ Office of Enterprise Data and Analytics analysis of CMS,
Chronic Conditions Data Warehouse, a database with 100 percent of
Medicare enrollment and fee-for-service claims data, available at:
http://ccwdata.org/.
---------------------------------------------------------------------------
2. Potential Included Drugs
In Years 1 and 2 of the potential IPI Model, we would include
single source drugs, biologicals, biosimilars, and multiple source
drugs with a single manufacturer that we identify from what we believe
are reliable sources of international pricing data, prior to direct
data collection, as discussed in section III.D. of this ANPRM. In Years
3, 4 and 5, we would broaden the scope of included drugs to incorporate
more of these single source drugs and biologicals as more sources of
international pricing data become available, and we are considering
further increasing the number of Part B drugs included in the model as
discussed later in this section. We would begin with these two broad
groups of drugs--single source drugs and biologicals--as they encompass
most drugs used by most physician specialties that bill under Part B.
At a minimum, we believe that we could begin the model by including
most of the HCPCS codes that appear in the recent HHS report; \19\
these drugs represent over 50 percent of Part B drug allowed charges in
2017. As we consider including more drugs over time, we would
prioritize single source drugs and biologicals. We are also considering
including HCPCS codes for drugs and biologicals that are clinically
comparable, but not interchangeable, to those initially included in the
model, particularly drugs and biologicals (including biosimilars) used
incident to a physician's services, for example adding additional
biologicals use to treat rheumatoid arthritis and other inflammatory
diseases, including biosimilars if they are marketed.
---------------------------------------------------------------------------
\19\ ``Comparison of U.S. and International Prices for Top
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-spending-medicare-part-b-drugs.
---------------------------------------------------------------------------
The OPPS packages certain drugs with costs below a certain
threshold and for policy reasons. This model would only include drugs
that are separately paid under the OPPS, including drugs on pass-
through payment status, and for which the drug's HCPCS code is assigned
a distinct Ambulatory Payment Classification (APC) group for use when
the drug is furnished in a HOPD. The model would include any separately
payable drug or biological furnished in an HOPD, including any of the
HOPD's off-campus provider-based departments (PBDs), regardless of
whether those PBDs are excepted or nonexcepted under section
1833(t)(21)(B)(ii) of the
[[Page 54555]]
Act, as added by section 603 of the Bipartisan Budget Act of 2015 (Pub.
L. 114-74).
For purposes of included drugs, we would remove any HCPCS codes
that become inactive if they are not replaced by a successor code, and
we would not include HCPCS codes for which a product becomes
unavailable. If pricing data were available for other heavily utilized
incident to drugs, we would consider adding them to the model. Over the
course of the model, we seek to include HCPCS codes that encompass at
least 75 percent of allowed charges in Part B. We note that HCPCS codes
for products that are used across multiple settings, such as clotting
factors or immunoglobulin G, would be included based on overall Part B
use, but the model would only include those drugs when they are
administered incident to a physician's service.
In addition, we are considering including multiple source drugs and
drugs provided in other settings. Specifically, we are considering
including multiple source drugs because we are concerned that price
increases among generic drugs are also contributing to the rising
payments for Part B drugs. Increasing the number of drugs included in
the model over time could also be accomplished by setting; however,
drug acquisition and billing within Part B settings outside of the
physician office and outpatient hospital may not be conducive to a CAP
vendor-like approach.
We are also considering the best ways to include newly approved and
marketed drugs in the model. We anticipate that international pricing
data for some but not all of these drugs would be available. We include
a discussion of the potential alternatives for payments for new
therapies in section III.D.5. of this ANPRM.
We anticipate that newly effective HCPCS codes could be added to
the model on a quarterly or annual basis. Based on experiences with the
CAP, we are concerned about issues such as the lag time resulting from
the provider having to obtain drugs from regular channels before the
drug is available from the vendor, the lead time for the development of
vendors' acquisition arrangements, and the potential unavailability of
pricing benchmarks for new drugs immediately after a drug is marketed.
Although we are not currently able to estimate exactly what the
distribution of drugs over the course of the model may look like, Table
1 presents the percentage of the total allowed Part B charges for 2017
for Part B drugs. Table 1 lists the percentage of the total spending
for the following two groups of HCPCS codes: The top 50 drugs by
allowed charges in the office and hospital outpatient departments for
2017 and the top 100 such drugs. Spending for biologicals (including
biosimilars), single source drugs, multiple source drugs and
potentially excluded drugs within each of the three groups is also
shown. We believe that this information is a reasonable preliminary
estimate of the potential scope of this model and its possible
incorporation of additional Part B drugs during the 5-year model
duration.
Table 1--Groups of Drugs as a Percentage of Total Part B Spending
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single source Potential
Percentage of Biologicals: drugs: \20\ Multiple source excluded drugs:
Number of drugs total allowed percentage of percentage of drugs: percentage percentage of
charges total allowed total allowed of total allowed total allowed
charges charges charges charges
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top 50 Drugs............................................. 81 65 12 0-<1 4
Top 100 Drugs............................................ 94 73 15 1 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
The potential inclusion of a large subset of Part B drugs should
not be interpreted to mean model participants would be required to
obtain all products that are subject to inclusion from a specific model
vendor. We would anticipate several model vendors to be available and
that model participants could enroll with one or more model vendors.
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\20\ Excluding biologicals.
---------------------------------------------------------------------------
3. Potential Excluded Drugs
We are considering excluding the following: drugs that are
identified by the FDA to be in short supply (similar to the exclusion
from the AMP price substitution policy for drugs in short supply (77 FR
69141)); and drugs paid under miscellaneous or ``not otherwise
classified'' (NOC) codes, such as J3490, due to the operational
complexity of identifying if drugs paid under the NOC codes are
included model drugs. Thus, compounded drugs would be excluded from the
model. We also plan to exclude radiopharmaceuticals and ESRD drugs paid
under the authority in section 1881 of the Act. Finally, we also would
exclude drugs that are packaged under the OPPS when they are furnished
by a hospital outpatient department. If these drugs met other criteria,
they would be included in the model when furnished by physician
offices.
4. Requests for Feedback and Information
We are seeking information on the following:
Whether the data that CMS uses to determine the inclusion
of drugs and biologicals should be limited to claims from the
physician's office and hospital outpatient department settings, or
whether other settings should be included.
The drugs to include in the model. Specifically, we are
seeking information on how to incorporate multiple source drugs.
Whether to include Part B drugs in all settings in which
they are separately payable or only in certain settings.
Whether quarterly updates for HCPCS codes included in the
model are feasible. Feedback from the perspective of potential model
participants and vendors are especially encouraged.
The best way to include new drugs in the model as they
become available.
Whether to determine inclusion of drugs based on on-label
(FDA approved) indications only, or whether CMS should consider on-
label and off-label use (if supported by clinical guidelines and/or
compendia).
We seek comment as to whether aspects of mandatory participation
would require physicians and hospitals to have an agreement with a
single vendor or would require physicians and hospitals to obtain all
drugs included in the model via a single vendor.
D. Model Payment Methodology for Vendor Supplied Drugs
1. Calculating the Model's Medicare Part B Drug Payment
The Medicare payment for separately payable Part B drugs is
typically based on ASP of a given Part B drug, plus 6 percent of the
ASP as an add-on payment. For the potential IPI Model,
[[Page 54556]]
CMS is considering testing an alternative payment for included drugs
based on the international pricing, except where the ASP is lower. CMS
would calculate the model payment to model vendors for included drugs
through a multi-step process. Given current estimates of the
differential between U.S. and international pricing, the model payment
may be close to parity with international comparators. Additionally,
Manufacturer sales through the IPI model would be included in current
ASP reporting.
The potential calculation steps would include the following:
CMS would calculate an average international price for
each Part B drug included in the model based on a standard unit that is
comparable to that in the drug HCPCS code.
CMS would then calculate the ratio of Medicare spending
using ASP prices for all Part B Drugs included in the model to
estimated spending using international prices for the same number and
set of drugs. In order to do this calculation, CMS would multiply Part
B volumes by the ASP prices and then by the international prices. The
resulting ratio of Medicare spending under ASP versus Medicare spending
under the international prices holding volume and mix of drugs constant
would represent the International Price Index (IPI).
CMS would also establish the model Target Price for each
drug by multiplying the IPI by a factor that achieves the model goal of
more closely aligning Medicare payment with international prices, which
would be about a 30 percent reduction in Medicare spending for included
Part B drugs over time, and then multiplying that revised index (IPI
adjusted for spending reduction) by the international price for each
included drug. CMS would calibrate the revised index to account for any
drugs with ASP below the Target Price. The percentage reduction between
ASP and Target Price would vary for each drug. We would monitor price
changes and recalibrate as needed.
CMS would phase-in the Target Price over the 5 years of
the model, as a blend of ASP and the Target Price. For each
calculation, if ASP is lower than the Target Price for an included
drug, the model would set the payment amount to ASP for that drug.
The potential phase-in would use the following blend of ASP and
Target Price:
------------------------------------------------------------------------
Year Percentage of ASP and target price
------------------------------------------------------------------------
Year 1............................ 80 percent ASP and 20 percent Target
Price.
Year 2............................ 60 percent ASP and 40 percent Target
Price.
Year 3............................ 40 percent ASP and 60 percent Target
Price.
Year 4............................ 20 percent ASP and 80 percent Target
Price.
Year 5............................ 100 percent Target Price.
------------------------------------------------------------------------
As with current Part B drug payments, we would plan to
update the model payment amount for each drug periodically based on new
ASP and international pricing data.
2. Data Sources on International Drug Sales
CMS is considering including collection of international drug sales
data for purposes of the IPI Model. In the interim, before these data
could be available, CMS is considering relying on existing data sources
for calculating the model payment to model vendors for included drugs.
a. Existing Data Sources
CMS has evaluated several existing data sources to determine the
availability of international drug price information. Based on our
review, we believe there are appropriate sources that could be used for
purposes of the potential IPI Model. These data sets include those
provided by private companies or data obtained through review of
publicly filed materials by manufacturers in other countries. Examples
may include IQVIA's MIDAS dataset, the dataset used in the recent HHS
analysis.\21\ Alternatively, CMS can try to construct price comparisons
from public sources from each country. One example of a public source
is the UK's Drug Tariff, which lists the National Health Service (NHS)
reimbursement rates for prescription drugs.\22\ We believe that
existing data sources may include all the information necessary to
calculate the IPI and Target Prices. We are interested in better
understanding the extent to which existing data sources for
international sales completely capture drug information in every
international market that we are considering for inclusion in our
payment methodology and how private market drug sales are included in
countries that provide drugs through public insurance.
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\21\ ``Comparison of U.S. and International Prices for Top
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-spending-medicare-part-b-drugs.
\22\ See https://www.nhsbsa.nhs.uk/pharmacies-gp-practices-and-appliance-contractors/drug-tariff.
---------------------------------------------------------------------------
b. CMS Data Collection
We are considering including a data collection system for
manufacturers to report to CMS their international drug sales data to
support the calculation of the IPI and the Target Price for each drug.
We acknowledge that manufacturers have numerous and varying
arrangements in other countries as well as in the U.S., so we are
considering how we would determine the definition of manufacturer to
ensure that U.S. manufacturers would robustly report this information
to CMS. Under the Medicaid Drug Rebate Program in section 1927 of the
Act, manufacturers are required to provide information to CMS on a
quarterly basis to support the ASP calculations (as well as to support
calculations for WAC and AMP \23\) for Part B drugs. Using the same
framework, for the purposes of the potential IPI Model, we could
require manufacturers to provide international drug sales data for
prices and units sold.
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\23\ WAC means wholesaler acquisition cost and AMP means average
manufacturer price.
---------------------------------------------------------------------------
We envision that we would require quarterly reporting on the
international sales information and CMS would provide reporting
instructions. The instructions would include information such as
instructions for the unit level at which the manufacturer would report
the sales information, which countries to include and how to account
for the exchange rate, and use of reasonable assumptions. We anticipate
that the units of measure for the international drug sales data would
be the same as the units in a corresponding drug product's HCPCS code.
For example, products reported in milligrams of drug in the U.S. would
be reported in milligrams, and products reported in international units
of biological activity would be reported in the same units of
corresponding biological activity.
We acknowledge that this potential approach could create situations
where very large numbers of units would be reported, and we seek
information on alternative units of measure to consider. We recognize
that it would take some time to establish the infrastructure and
reporting instructions to collect and validate international sales
information directly from manufacturers for purposes of a model. In
light of this, we are considering whether existing data sources could
be used to establish the IPI and Target Price in the short term and
transition to using manufacturer reported data when available. We seek
comment on the potential use of
[[Page 54557]]
existing data sources and new data sources to establish the IPI and the
Target Price.
3. Frequency of Data and Model Payment Updates
We are considering examining the IPI and model payments on a
quarterly basis, on the same schedule and using the same quarterly
sales period duration as ASP data. We believe that we could use
quarterly updates of existing data sources in the short term while we
set up the infrastructure to collect and validate international drug
sales information from the manufacturers on a quarterly basis (the data
would be reported to CMS within 30 days of the close of the quarter).
We seek comment on whether to examine the international pricing data,
and recalculate the IPI and Target Prices on a quarterly, annual or
other basis. We also seek feedback on the mechanism for reporting of
international sales, and on any additional requirements that would be
needed to ensure a feasible process to collect valid international
sales information for the countries that would be included in the IPI,
as discussed in the following section of this ANPRM. We also seek
comment on ways to ensure confidentiality of reporting of international
drug pricing to CMS.
4. Potential Included Countries
We are considering using pricing data from the following countries:
Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Japan, Netherlands, and the United
Kingdom.
We are considering including these countries as they are either
economies comparable to the United States or they are included in
Germany's market basket for reference pricing for their drug prices,
and existing data sources contain pricing information for these
countries. Some of the countries above have far lower per-capita
incomes than the U.S. However, these countries were not consistently
the lowest-priced countries according to the HHS analysis.\24\ We seek
comment on the countries included in our analysis to establish the IPI,
Target Price, and model payment amounts.
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\24\ ``Comparison of U.S. and International Prices for Top
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-spending-medicare-part-b-drugs.
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5. Establishing Model Payments for New Drugs Entering the Market
For newly approved and marketed Part B drugs that would be included
in the model, there could be some time lag or other issues associated
with capturing international sales information. In the absence of
international pricing data, CMS could still calculate a model payment
amount by applying a standard factor. CMS could, for example, assume
the same ratio for the new drug as the IPI, which would be the average
volume-weighted payment amount across all Part B drugs included in the
model. We seek comment on options for calculating the model payment for
new drugs that may not yet have international sales.
6. Requests for Feedback and Information
We welcome input from stakeholders on the potential approach for
establishing model payments for included drugs based on international
pricing. For example:
What sources of international pricing data capture drug
information for the international markets that should be included in
our payment methodology?
Are there particular data sources to establish payment
amounts based on international pricing that would best support this
effort?
How should private market drug sales included in countries
that provide drugs through public insurance be included? How should CMS
protect manufacturer reported international pricing information?
What is the appropriate frequency for updating the
international pricing information that we use in calculating the Part B
payment under the model?
How should manufacturers report international pricing
information? Are there specific issues with data reporting processes
that stakeholders would like the agency to consider, especially
mechanisms that could reduce burden?
How should we define manufacturer to ensure that all
relevant entities that sell single source drug products, biologics,
biosimilars and, if applicable, multiple source drugs report under the
model?
Are there areas of concern in data collection and
reporting that could lead to inaccurate price calculations?
Which countries should be included in our international
price index calculations? Should the countries vary? What
characteristics should CMS consider to analyze these countries?
Are there specific considerations in the comparison of
international and ASP prices that CMS should address?
How should CMS standardize data collection and reporting?
What should be the target reduction to ASP payment (that is, Target
Price), and what should be the schedule for phasing down to the target
savings amount?
How would such a change in payment policy, as described in
this section, affect incentives in the market? How could using
international reference pricing affect innovation incentives in the
biopharmaceutical market?
E. Potential Foreign Market Considerations
Using international sales data in the potential IPI Model could
raise considerations for drug prices, drug availability, and sales data
in foreign markets. For example, manufacturers may seek to raise prices
or limit foreign sales. However, existing, multiyear pricing
relationships in foreign markets may minimize this response. There are
also potential model implications in considering manufacturers'
responses in foreign markets. For example, there may be a decrease or
lack of international sales to serve as inputs to the model's IPI
calculation, if manufacturers withdraw or do not launch included drugs
in foreign markets. Similarly, manufacturers may also adjust their
product launch strategies within the U.S.
Requests for feedback and information:
CMS welcomes input from stakeholders on the potential
considerations related to foreign markets and the potential model
payment approach that would rely on international sales data. For
example the following:
What foreign market considerations should CMS consider in
developing the potential IPI Model?
How should CMS monitor for changes in foreign markets that
could impact the IPI Model?
What are ways to address changes in foreign sales that
could impact model payment calculations?
F. Beneficiary Impact and Model Monitoring
In addition to existing beneficiary protections, we would plan to
actively monitor the IPI Model test to ensure it is operating
effectively and meeting the needs of beneficiaries, health care
providers, and the Medicare program.
1. Impact on Beneficiary Cost-Sharing
We would expect beneficiary cost-sharing for included drugs under
the potential IPI Model would either be the same or lower than the non-
model cost-sharing. Medicare payment policy for beneficiary cost-
sharing would remain the same but since the IPI Model should reduce
Medicare payment for some Part B drugs, the 20 percent beneficiary
[[Page 54558]]
coinsurance would be similarly proportionately reduced. For those
beneficiaries dually eligible for Medicare and Medicaid, the
coinsurance paid for by the beneficiary or state would similarly be
reduced. If the Part B payment remains unchanged under the IPI Model,
for example, for those drugs where Medicare payment is similar to
international prices, cost-sharing would remain the same.
To minimize impact on beneficiaries, their health care provider
would continue to collect cost-sharing for included drugs.
2. Medicare Ombudsman
We plan to coordinate with the Medicare Beneficiary Ombudsman to
ensure that any Model-related beneficiary complaints, grievances, or
requests for information submitted would be responded to in a timely
manner.
3. Monitoring
Consistent with other Innovation Center Models, we would also
implement a monitoring program for the IPI Model to ensure the model is
meeting the needs of Medicare beneficiaries, health care providers and
the Medicare program. These monitoring activities would enable CMS to
access timely information about the effects of the Model on
beneficiaries, providers, suppliers, and on the Medicare program and to
facilitate real time identification and response to potential issues.
We envision using Medicare claims and other available program data to
analyze and monitor the Model's implementation, including actively
looking at real-time data to identify potential impacts on
beneficiaries, health care providers, model vendors, and the Medicare
program. We would use these findings to inform Model oversight and the
potential need for action to address findings.
As an example, CMS may conduct real-time analyses of claims and
administrative data, such as monthly updates and historic comparisons
of trends, including ensuring appropriate drug utilization and program
spending, as well as changes in site-of-service delivery, mortality,
hospital admissions, and other indicators present in claims and
administrative data to identify any potential issues related to access
and utilization. CMS would also consider how to best understand
beneficiary experience in the model. We would consider surveys but
would also be interested in other potential strategies to include
beneficiary experience in our monitoring activities.
We are inviting public feedback on the appropriate beneficiary
outcomes to monitor and how to monitor and measure such outcomes, as
well as patient experience, in a way that minimizes burden on included
health care providers and beneficiaries.
G. Interaction With Other Models
In designing each Innovation Center model, CMS considers potential
overlap between a new model and other ongoing and potential models and
programs. Based on the type of overlap, such as provider or
beneficiary, operating rules are established for whether or not
providers and beneficiaries can be part of both models as well as how
to handle overlap when it is allowed to occur. These policies help to
ensure that the evaluation of model impact is not compromised by issues
of model overlap and that the calculation of Medicare savings is not
overestimated due to double counting of beneficiaries and dollars
across different models. In this vein, CMS has begun to review which
models would have significant overlap with the potential IPI Model. One
example is the Oncology Care Model (OCM) which runs through mid-2021.
The OCM would require new policies that address model overlap due to
the potential inclusion of some of OCM's initiating cancer therapies in
the IPI Model and the probable overlap of some geographic areas with
OCM practices included in the IPI Model. The IPI Model would
potentially overlap with other Innovation Center models that operate in
the same geographic areas and include Part B drug spending in the
calculation of model payments, incentive payments or shared savings,
and the Medicare Shared Savings Programs. We plan to carefully explore
these potential overlaps and consider ways address overlap issues as we
further develop the IPI Model.
H. Interaction With Other Federal Programs
With respect to single source or innovator multiple source drugs
(which Medicaid recognizes to include biologicals and biosimilars), the
term ``Medicaid Best Price'' is the lowest price available from the
manufacturer during the rebate period to any wholesaler, retailer,
provider, health maintenance organization, non-profit entity or
governmental entity within the U.S. with certain exclusions. We seek
comment on how to avoid unintended consequences on the interaction of
the IPI Model with other federal programs.
1. Impact on ``Best Price''
Since the model payments to model vendors for drugs is a Medicare
payment and it is not a ``price available from the manufacturer,'' the
model payment amounts would not be included in the manufacturer's
determination of best price. However, since the model payment amounts
would drive manufacturer drug prices down, the model may impact a
manufacturer's best price. In order for model vendors to purchase
included drugs in the U.S. at prices that would not lead to financial
loss, the prices available from the manufacturer would need to be
competitive with the model payments. Therefore, such manufacturer sales
to the model vendors could potentially lower best price and potentially
increase Medicaid rebates. Medicaid programs could benefit.
Specifically, if the manufacturer lowers prices available to a
model vendor at or below the model payment rate, such prices would be
considered in the manufacturer's determination of best price and may
reset the manufacturer's best price. This is particularly possible
because the model payment amount includes the impact of sales outside
of the U.S., which are typically lower than prices in the U.S., while a
manufacturer's best price represents prices available only to
purchasers in the U.S. We seek public comments on how manufacturers
would respond to these factors as they relate to model vendors and
Medicaid drug rebates.
2. Impact on Average Manufacturer Price (AMP)
Similarly, the model payment amounts to model vendors would not be
part of the AMP determination. AMP is defined at section 1927(k)(1) of
the Act. Generally, AMP is determined based on the average price paid
to the manufacturer for a drug in the U.S. by wholesalers and retail
community pharmacies with certain exclusions. The AMP for a Part B drug
will likely be determined using the AMP computation for 5i drugs,\25\
which would include sales that are not generally dispensed through
retail community pharmacies (see 42 CFR 447.504(d)), such as sales to
physicians, pharmacy benefit managers (PBMs) and hospitals. In this
case, it is likely the manufacturer's sale to a model vendor (or price
paid) that would be included in the AMP or 5i AMP and due to the
downstream effects of the model payment approach, may lower AMP. If the
AMP is lower, it may result in potentially lowering the Medicaid drug
[[Page 54559]]
rebate paid to states (the rebate, in part, is based on a percentage of
AMP), although the rebate would also be affected because ``best price''
may be lower as described above.
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\25\ Inhalation, infusion, instilled, implanted or injectable
drugs.
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We continue to consider how the model may impact the Medicaid
program. Authority for implementing innovative payment and quality
models under 1115A of the Act does not completely include Title XIX
waiver authority, and thus, such waiver authority does not extend to
the Medicaid Drug Rebate Program, which is authorized under Title XIX
at section 1927 of the Act. We welcome public feedback, including from
State Medicaid programs, on this issue.
3. Interaction With 340B Program
The Health Resources and Services Administration (HRSA) administers
the 340B Drug Pricing Program that allows certain hospitals and other
health care providers (``covered entities'') to obtain discounted
prices on ``covered outpatient drugs'' (as defined at 1927(k)(2) of the
Act) from drug manufacturers. HRSA calculates a 340B ceiling price for
each covered outpatient drug, which represents the maximum price a
manufacturer can charge a covered entity for the drug. Several types of
hospitals as well as clinics that receive certain federal grants from
the HHS may enroll in the 340B program as covered entities. Such
entities located in the selected model geographic areas would be
included in the IPI Model and would be supplied included drugs for
included beneficiaries through a model vendor.
4. Impact on 340B Ceiling Price
Covered entities that enroll in the 340B Program can purchase drugs
at no more than a ``ceiling price'', which are calculated based on a
drug's AMP net the Medicaid unit rebate amount. Since the Medicaid unit
rebate amount is based partly on AMP minus best price, to the extent
the potential model affects a drug's AMP and best price, the 340B
prices would be affected.
I. Quality Measures
Congress created the Innovation Center for the purpose of testing
innovative payment and service delivery models that are expected to
reduce program expenditures while preserving or enhancing the quality
of care for Medicare beneficiaries. In the IPI Model, we are
considering collecting quality measures to help us better understand
the impact of this model on beneficiary access and quality of care. We
intend to identify quality measures to be collected as part of this
model that reflect national priorities for quality improvement and
patient-centered care consistent with the measures described in section
1890(b)(7)(B) of the Act, to the extent feasible. To this end, we are
interested in several categories of measures, specifically: patient
experience measures, medication management measures, medication
adherence, and measures related to access and utilization.
We are sensitive to concerns regarding adding administrative burden
to model participants. Some models (for example, the Bundled Payments
for Care Improvement Advanced Model) are currently structured to
include quality measures that are calculated directly by CMS or
collected during the evaluation and do not require the submission of
additional data by providers and suppliers. We are considering
following this approach, to the extent feasible, and to assess the
quality of care for purposes of real-time monitoring of utilization,
hospitalization, mortality, shifts in site-of-service and other
important indicators of patient access and outcomes, without requiring
providers or suppliers to report additional data.
We seek information on the categories and types of quality measures
CMS can incorporate in the model that are targeted and judicious, while
still capturing key indicators of patient experience, access, and
medication management. We welcome recommendations for specific
measures.
J. Legal Considerations and Potential Waivers of Medicare Program
Requirements for Purposes of Testing the Model
We plan to test the potential IPI Model under the authority of
section 1115A of the Act and to waive certain Medicare program
requirements as necessary solely for purposes of testing the potential
model. Under section 1115A(d)(1) of the Act, the Secretary of Health
and Human Services may waive the requirements of Titles XI and XVIII
and of sections 1902(a)(1), 1902(a)(13), 1903(m)(2)(A)(iii), and 1934
of the Act (other than subsections (b)(1)(A) and (c)(5) of such
section) as may be necessary solely for purposes of carrying out
section 1115A of the Act with respect to testing models described in
section 1115A(b) of the Act.
We plan to waive requirements of the following provisions as may be
necessary solely for purposes of testing the Model. The purpose of this
flexibility would be to allow Medicare to test approaches described in
the ``Model Payment Methodology'' section, with the goal of reducing
Medicare expenditures while improving or maintaining the quality of
beneficiaries' care as we implement and test this potential model.
Section 1833(t) of the Act and 42 CFR 419.64 related to
Medicare payment amounts for drugs and biologicals under the OPPS as
necessary to permit testing of a modified payment amount for included
drugs using the pricing approaches described in this section;
Section 1847A of the Act and 42 CFR 414.904 and 414.802
related to use of ASP+6 percent and WAC as necessary to permit testing
of a modified payment using the pricing approaches described in this
paper.
Section 1847B of the Act and 42 CFR 414.906 through
414.920 related to the Medicare Part B Drug Competitive Acquisition
Program (CAP) requirements as necessary to permit testing using a CAP-
like approach for the acquisition of included therapies through vendor-
administered payment arrangements.
Other requirements under title XVIII of the Act as may be
necessary solely to test separate payment for included therapies
furnished to included beneficiaries by participant health care
providers not paid under the outpatient prospective payment system or
section 1847A of the Act.
K. Model Termination
CMS may terminate the potential IPI Model for reasons including,
but not limited to, the following: CMS determines that it no longer has
the funds to support the Model; or CMS terminates the Model in
accordance with section 1115A(b)(3)(B) of the Act.
L. Model Evaluation
Models operated under section 1115A of the Act are required to have
an evaluation that must include an analysis of the quality of care
furnished under the model and the changes in spending by reason of the
model. The evaluation of the model would help inform the Secretary and
policymakers whether this model, as designed, reduces program
expenditures while maintaining or improving the quality of care
furnished to Medicare beneficiaries.
Whenever feasible, a comparison group composed of entities similar
to the model participants but not exposed to the model is used to
determine the model impact. In this particular potential model,
intervention and comparison groups would be determined through a random
selection or assignment process. A randomized design helps minimize the
impact of unmeasurable factors that may
[[Page 54560]]
contribute to providers' and suppliers' likelihood to participate in
the model. Our inability to control for these unobserved differences
could lead to biased or incorrect estimates in the evaluation of the
model's impact on quality of care and spending. We note that to the
extent that model sales affect the overall ASP calculation, we may
experience evaluation challenges with the comparison group geographic
areas not selected for the model.
We seek input on the evaluation approach to examine the IPI Model's
impact on Medicare spending and quality of care including potential
alternatives.
M. Potential Impacts of Implementing the IPI Model
1. Financial Impacts
This section outlines the potential financial impact of
implementing the potential IPI Model on federal Medicare and Medicaid
spending. There are many uncertainties around estimating the financial
effects of this model. In addition to the various policy parameters
that are either currently unspecified or subject to change throughout
the policy development process, the expected change in beneficiary,
provider, vendor, and manufacturer behavior would significantly affect
the financial impact of the model. The current analysis of this model
reflects many generalized assumptions that are likely to change pending
further policy development and additional analysis. As such, the
estimates shown below should be considered an approximate measure of
the potential savings of the potential model, and subsequent analyses
would likely be materially different from those shown below as
additional information becomes available.
a. Medicare and Dual Medicare-Medicaid Impacts
The following table presents the potential financial impact of the
model. For 2020-25, federal Medicare spending is estimated to be
reduced by $16.3 billion and Medicaid spending for Medicare-Medicaid
dual beneficiaries is expected to be reduced by $1.6 billion, of which
$0.9 billion is reduced federal spending and $0.7 billion is reduced
State spending.
[GRAPHIC] [TIFF OMITTED] TP30OC18.002
[[Page 54561]]
Note the following:
No changes in utilization are assumed in this analysis.
Medicare Advantage spending would be reduced
proportionately to the reduction in FFS spending.
Included drugs would represent 61 percent of Part B
allowed drug spending in years 1 and 2, 81 percent of Part B allowed
drug spending in years 3 and 4, and 94 percent of allowed drug spending
in year 5.
The Medicaid impact represents the portion of Medicare
cost-sharing that is paid on behalf of dual beneficiaries. It is
estimated based on the change in Medicare cost-sharing and current dual
beneficiary enrollment. No assumptions are made for State price
limitations that would limit the beneficiary cost-sharing paid for by
Medicaid.
Effects on private market cannot be estimated at this time
and are not reflected in this analysis.
b. Medicaid Impacts
Based on a review of the Part B drugs that constituted the majority
of Part B drug spending in 2017, as well as the top reported Medicaid
drugs that were also covered by Part B, the affected drugs reimbursed
by Medicaid spending totaled at least $4 billion in 2017, or an
estimated 6 percent of gross Medicaid drug spending. The model may
impact AMP, ASP, best price, and 340B pricing for these affected drugs,
reducing both reimbursements as well as rebates. CMS would seek comment
on whether we should exempt prices offered under the model from AMP and
Best Price calculations.
2. Potential Impacts on Medicare Providers and Suppliers Participating
in the Potential IPI Model
The potential IPI Model would affect a significant number of health
care providers that would furnish included drugs to included Medicare
beneficiaries. The effect of the model on individual hospitals,
physicians, practitioners, and other providers and suppliers would
depend on individual practice patterns and the drugs that would be
selected for inclusion.
IV. Collection of Information Requirements
This ANPRM is a general solicitation of comments on several options
pertaining to the potential IPI Model and thereby not subject to OMB
review as stated in the implementing regulations of the Paperwork
Reduction Act (PRA) of 1995 (44 U.S.C. 3501 et seq.) at 5 CFR
1320.3(h)(4). Should the outcome of the ANPRM result in any information
collection requirements or burden that are not covered under the
provisions in section 1115A(d)(3) of the Act \26\ or otherwise covered
under a PRA exemption, a detailed discussion of the requirements and
burden will be submitted to OMB for approval. In accordance with the
implementing regulations of the PRA at 5 CFR 1320.11, interested
parties will also be provided an opportunity to comment on such
information through subsequent proposed and final rulemaking documents.
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\26\ As stated in section 1115A(d)(3) of the Act, Chapter 35 of
title 44, U.S.C., shall not apply to the testing and evaluation of
models under section 1115A of the Act
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V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will review all comments we receive by
the date and time specified in the DATES section of this preamble, as
we continue to consider the model presented in this ANPRM.
In accordance with the provisions of Executive Order 12866, this
ANPRM was reviewed by the Office of Management and Budget.
Dated: October 25, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: October 25, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-23688 Filed 10-25-18; 4:15 pm]
BILLING CODE 4120-01-P