I received a call today to contact my Representative about a new bill working it’s way through our illustrious House (sponsored by Republicans, of course).
H.R.5122 - To prohibit further action on the proposed rule regarding testing of Medicare part B prescription drug models.
I’m sorry, but am I the only one who thinks this is a bizarre thing for the House to do — to block a government agency, Centers for Medicare & Medicaid (CMS), from doing it’s job (testing a model for Part B drug payments)?
According to the CMS description, the test, which would begin in 2017, targets the pricing structure for Medicare Part B drug treatments.
For those of you not familiar with Medicare Part B drugs, these are specialty drugs that must be administered in a doctor’s office, clinic, or hospital (such as chemotherapy drugs). Many new bio-engineered drugs fall into this category since they are typically injected, and that’s the primary driver for which drugs are classified as Part B. As you might imagine, these types of drugs are often where we see the highest cost per treatment — often thousands of dollars per treatment.
The CMS seems to be attempting to find ways to manage costs without negatively impacting the quality of care for patients. They describe the goals of their proposal, to test based on a new model for reimbursement, as follows:
Today’s proposal is part of the Administration’s broader strategy to encourage better care, smarter spending, and healthier people by paying providers for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality.
...
CMS would conduct a complete evaluation of the proposed model, which would run for five years, with the goal of having the incentive and value-based purchasing tests fully operational during the last three years to evaluate changes and collect sufficient data.
As with other evaluations, the criteria for a successful model will be whether it reduces net Medicare spending, without limiting coverage or benefits, while maintaining or improving patient care. CMS plans to implement a concurrent real-time claims monitoring program to track utilization, spending, and prescribing patterns as well as changes in site of service delivery, mortality, hospital admissions, and several other high-level claims-based measures
The CMS seems to have the right goals and criteria identified for this test. So, what’s so darned awful about the proposed model that the House needs to step in to block them from even testing the model?
The CMS’s proposed model is focused on reducing providers’ profits for the most expensive drugs (those over $1,000) while maintaining and slightly increasing profits for less expensive drugs.
The proposed model reduces the reimbursement add-on percentage from 6% to 2.5% while adding a flat fee of $16.80 per injection. (The add-on is ostensibly given to providers to offset costs of stocking and managing these drugs, but often may simply be profit.) The table below shows how this reimbursement add-on plays out for providers:
Example Impact of CMS Medicare Part B Drug Model
DruG Price |
Existing REIMBURSEMENT Add-on (6%) |
Test Reimbursement Add-On (2.5% plus $16.80) |
$100 |
$6.00 |
$19.30 |
$1,000 |
$60.00 |
$41.80
|
$10,000 |
$600.00 |
$266.80 |
$50,000 |
$3,000.00 |
$1,266.80 |
Could incentivizing less expensive drugs in this way be bad for patients as providers try to maximize profit at the expense of patient care? But it’s clear from the table above, the primary effect will be in lowering the Medicare add-ons for the more expensive injectable drugs (I just don’t see providers prescribing low cost, less effective drugs just to pick up the flat $16.80 per injection). No one is talking about actually reducing the drug price here — just the add-on for providers.
Which brings us back to the question: Why is Congress writing a bill to specifically block the CMS from doing it’s job? Aren’t Republicans the party of fiscal responsibility? Isn’t cutting waste from government programs one of their favorite goals? Are they blocking this test because they want the CMS to just implement the new reimbursement add-on without testing to make certain it doesn’t degrade the quality of care? (Yeah, right!) Or is this about how the CMS, if allowed to continue with this type of cost-management approach, will be able to significantly affect somebody’s profit margin — somebody with deep lobbying pockets? Would this type of shift in incentives cause more prescribers to choose lower cost alternatives? Could that degrade sales (and profits) for drug manufacturers? It’s a slippery slope, indeed.
If there are serious concerns about the proposed test, CMS is asking for comments. If providers have solid reasons they need a 6% add-on (for instance, because they sometimes have to discard damaged drugs), they should speak up to the CMS — not push Congress to block the test with this type of bill.
And while we’re on the subject of weird bills: Have I been missing it? Has Congress been busy blocking other government agencies from doing their job (other than cutting their budget, I mean)? Or are we entering a new phase where the health care lobby is so paranoid about what CMS might do to their profits that they’re willing to try such a blatant action to prevent the CMS from finding ways to manage health care costs.