WASHINGTON -- The Obama administration has decided not to move forward with a demonstration project to change the way Medicare pays physicians for administering drugs under its Part B program.
"After considering comments, CMS will not finalize the Medicare Part B drug payment model during this Administration," a spokesman for the Centers for Medicare & Medicaid Services (CMS) said in a statement issued late Thursday night.
"While there was a great deal of support from some, a number of stakeholders expressed strong concerns about the model," the spokesman said. "While CMS was working to address these concerns, the complexity of the issues and the limited time available led to the decision not to finalize the rule at this time. We appreciate the robust dialogue with our stakeholders on this important topic and value the feedback on this proposal and other CMMI [Center for Medicare & Medicaid Innovation] models."
Medical specialty groups that believed the payment model would hurt their members expressed relief.
"We thank CMS for listening to the rheumatology community's concerns about the negative and disproportionate impact this proposal would have on our Medicare patients living with rheumatic diseases by not moving forward with this [project]," , MBBS, MD, president of the American College of Rheumatology, said in a statement. "This positive outcome will help ensure Medicare beneficiaries living with rheumatic diseases are able to continue receiving the therapies they need to manage their chronic conditions and avoid pain and disability."
"Cancer patients and their providers across the country can breathe a sigh of relief now that the Part B experiment on cancer care is finally dead," , executive director of the Community Oncology Alliance, said in a statement. "It was encouraging to have such strong support from Congress to end this proposed model that was, at best, an overreach by CMS, created with no stakeholder input."
The American Medical Association (AMA) also praised the decision. "This is a model for how Washington should – but often doesn't – work," AMA president , said in a statement Friday. "When CMMI made the recommendation to make changes to Medicare Part B, CMMI and CMS officials welcomed feedback. The AMA and others explained how the proposal would hurt patient care. CMMI then re-evaluated its original proposal, resulting in the announcement that CMS would not go forward with these changes. We are grateful that CMS came to the right decision after listening to stakeholders."
Gurman added, however, that "The Innovation Center can be a valuable tool in developing innovative health care payment and service delivery models. We look forward to continue working with it as Washington grapples with ways to implement MACRA [the Medicare Access and CHIP Reauthorization Act] and to reform healthcare payment systems."
Medicare Part B pays for drugs that are administered in a physician's office or hospital outpatient department. Currently, Medicare usually pays the physician the drug's average sales price (ASP) plus a 6% add-on payment. But CMS officials argued that as a result of that payment structure, physicians may be incentivized to choose a higher-priced drug because their reimbursement will be higher.
The proposed demonstration project, outlined in a published in March, would have reduced the add-on payment to 2.5%, but also added a flat fee of $16.80 per drug per day. The flat fee would be updated at the beginning of each year. "The proposal was intended to test whether alternative drug payment structures would improve the quality of patient care and the value of Medicare drug spending," the CMS spokesman said in the Thursday statement.
Backlash against the plan was swift. The proposed payment model "is an inappropriate, dangerous, and perverse mandatory experiment on the cancer care of seniors who are covered by Medicare," wrote , president of the Community Oncology Alliance, in a letter to federal officials. "This experiment is a misguided government intrusion on the treatment of seniors with cancer and a very dangerous precedent in severing the sacred physician-patient bond."
The American College of Rheumatology also weighed in against the proposal in its on the proposed rule: "Many rheumatologists have already been forced to stop administering biologic therapies to Medicare patients because the current Part B payment structure does not cover the costs of obtaining and providing these complex therapies in the outpatient setting. Additional cuts will force rheumatologists to send patients elsewhere to get the same drugs, often at increased cost and burden to the patient."
Not everyone was opposed, however. The American Academy of Family Physicians, for one, when it was first announced.
And its suspension met with some criticism. "Some inside the Beltway will call this a victory," , president of the Medicare Rights Center, a non-profit organization that assists Medicare beneficiaries, said in a statement. "But let's be 100% clear -- people with Medicare are not the winners here. Our helpline counselors will continue taking calls from distraught seniors and people with disabilities who simply cannot afford soaring prescription drug prices. The new Administration, Congress, and many decision-makers in Washington would do well to live a day in the lives of these callers."