Proposed Medicare Part B rule would cut payments for some drugs

Proposed Medicare Part B payment changes for physician-administered-such as infused chemotherapy-drugs would reduce reimbursement for those that cost more than $480 per day in 2016, according to a new analysis.

Medicare Part B covers prescription drugs that are administered in a physician’s office or hospital outpatient department, such as cancer drugs, injectables such as antibiotics, or eye care treatments. Drugs paid under Medicare Part B generally fall into three categories:

• Drugs furnished incident to a physician’s service in the office or hospital outpatient settings

• Drugs administered via a covered item of durable medical equipment, and

• Other categories of drugs explicitly identified in the law.

According to the analysis by Avalere, as a result, specialties that use higher-cost drugs, including ophthalmologists, oncologists, and rheumatologists, would experience a reduction in payments; though, many of the drugs do not have lower cost alternatives. Seven of the 10 drugs that constitute the largest reduction in reimbursement are used to treat cancer.

The rule seeks to eliminate financial incentives for providers to prescribe more expensive drugs. If finalized, the first phase of the rule would change Medicare payments for about half of providers from 106% of the average sales price (ASP) of the drug to 102.5% of the ASP plus a flat fee of $16.80 per drug, per day. Consistent with current law, payments to physicians would be further reduced by 2% as a result of budget sequestration. The payment changes are proposed to begin in the fall of 2016 and would continue for five years while CMS evaluates the impact of the model.

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