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Policy Watch
Why Proposed Changes in Medicare Part B Payments Worry Some Neurologists

ARTICLE IN BRIEF

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MANY PATIENTS with multiple sclerosis receive infused drugs. MS specialists are concerned that the proposed reimbursement schedule would not adequately cover the costs of the drug and the expenses related to administering it.

The CMS has proposed a new set of rules to change the way physicians are reimbursed for drugs under Medicare Part B, aiming to encourage more cost-effective prescribing. But critics of the plan, including neurologists, say it does not address the rising costs of therapies and could adversely affect patient care.

Some neurologists are unhappy about a proposed rule by the Centers for Medicare & Medicaid Services (CMS) that would change the way physicians are reimbursed under Medicare Part B for prescription drugs given in a doctor's office or outpatient hospital department.

CMS officials said the proposed rule, which was issued on March 8, comes in response to feedback that the current structure of Medicare Part B reimbursements may encourage doctors to select higher-priced drugs for their patients, rather than making treatment choices based on their value and effectiveness.

The proposals “would test new ways to support physicians and clinicians as they choose the drug that is right for their patient,” the CMS said.

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DR. BRUCE A. COHEN: “I suspect there are a few people out there who are biased toward prescribing something that earns them more money, but I dont think that is the case for the vast majority of doctors.It is less of a conflict-of-interest problem than that of insurance companies that are biased against a treatment simply because it costs them more money.”

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DR. EDWARD J. FOX: “CMSs proposals do not take into consideration how complicated it is to administer some of these drugs. Medicines are becoming more powerful and immediate side effects can occur, and they require immediate medical attention.”

According to the CMS, prescription drug spending reached $457 billion in 2015, which was 16.6 percent of overall health spending in the US. Medicare Part B spent $20 billion for prescription drugs administered at doctor's offices, outpatient clinics, and departments.

Medicare Part B typically pays physicians and hospital outpatient departments the average sale price of a drug plus a 6 percent add-on. Under the proposed rule, the add-on would instead be 2.5 percent plus a flat fee of $16.50 per drug per day.

The agency provided an example of how the reimbursement change would work: “Consider two drugs, each prescribed for a similar condition, with similar outcomes, but with widely varying prices. The average sales price for Drug A is $5, and for Drug B, it's $100. Today, Drug A is paid at $0.30 above the price of the drug and Drug B at $6. But under this proposal, Medicare would pay Drug A at $16.93 above the average sale price and Drug B at $19.30.”

The math in that example trends in favor of physicians, but doctors are often choosing from drugs that are all incredibly expensive. In the case of a $1,000 drug, the current reimbursement add-on is $60 compared to $41.80 under the proposed system, the CMS said.

The proposed rule for Medicare Part B contains other changes CMS says it wants to test over five-year period, though the proposed reimbursement restructuring is getting most of the attention from critics. (See “CMS Proposals for Medicare Part B Reimbursement.”)

MIXED RESPONSE FROM THE FIELD

Many of the drugs that fall under Medicare Part B are high-priced biologics, and that category of drug will continue to grow. Specialists such as neurologists, oncologists, and rheumatologists that utilize infused drugs would be affected by the reimbursement change.

Critics of the proposal view the move by CMS as a poorly conceived cost-saving measure that could end up putting an unfair financial burden on doctors and limit treatment choices for patients.

“As a general principle, we are concerned about any regulatory proposals that could negatively impact neurologists who are already struggling with burdens on their practices and changes that do not improve the patient's quality of care,” said Daniel Spirn, JD, MA, the regulatory counsel for the AAN.

He said the Academy supports efforts to find ways to control ever-rising drug costs, though “we disagree with the assumption that physicians practice medicine solely by financial incentives and not by what is in the best interests of their patients.”

Spirn said the proposed rule does nothing to address the cost of drugs set by pharmaceutical companies. He said the AAN is still reviewing the details of the proposal and talking with its members, other medical societies, and members of Congress about the potential ramifications. A decision has not yet been made as to how the AAN will respond to the proposed rule, which is available for comment until May 9, Spirn said.

Other professional groups have come out against the proposed changes in Medicare Part B reimbursement, including cancer organizations such as the American Society for Clinical Oncology, which fear that cancer patients may end up with fewer chemotherapy choices. Some pharmacy trade groups, including the Pharmaceutical Research and Manufacturers Association, have also criticized the proposal, saying it would reduce patients' treatment options.

In neurology, many multiple sclerosis patients receive infused drugs. The Medicare reimbursement a doctor receives goes toward not just the cost of the drug, but also the cost of administering it.

Nicholas E. Johnson, MD, who chairs the AAN Government Relations Committee, said the CMS rightly recognizes that the “the rising cost of medication, unencumbered by federal regulation, is unsustainable,” but he said the proposed rule is “mistargeted.”

“We certainly have concerns, chief among them is that this proposal doesn't address the basic underlying issue, which is skyrocketing drug prices,” said Dr. Johnson, an assistant professor of neurology, pediatrics, and pathology at the University of Utah. “The proposed rule puts the responsibility on the shoulders of providers, rather than dealing with drug prices at the source. We certainly would encourage CMS to look at other options.”

Edward J. Fox, MD, PhD, FAAN, director of the MS Clinic of Central Texas in Round Rock, said the CMS proposal does nothing to address the fact that drug manufacturers keep pushing up the prices of their products, even when a drug has been around for a long time. He cited MS drugs as a prime example.

“Currently we have a system that very much favors the pharmaceutical and insurance industries over the individual patient,” he said.

Dr. Fox worries that patients' treatment choices could end up narrower under the CMS plan. Also, reimbursement changes may make it harder for practitioners to meet the cost of staffing and other overhead expenses related to administering drugs, perhaps leading some offices or infusion centers to close, he said.

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DR. NICHOLAS E. JOHNSON: “We certainly have concerns, chief among them is that this proposal doesnt address the basic underlying issue, which is skyrocketing drug prices. The proposed rule puts the responsibility on the shoulders of providers, rather than dealing with drug prices at the source. We certainly would encourage CMS to look at other options.”

“CMS's proposals do not take into consideration how complicated it is to administer some of these drugs,” Dr. Fox said. “Medicines are becoming more powerful and immediate side effects can occur, and they require immediate medical attention.”

Bruce A. Cohen, MD, FAAN, a professor of neurology and neurosciences at the Feinberg School of Medicine at Northwestern University in Chicago, said the CMS proposal on Part B reimbursement changes seems to “make doctors the boogieman in a way” when it comes to addressing escalating drug expenditures. He said there are multiple players that need to be considered when looking for ways to curb rising costs of care, including insurance companies and drug manufacturers.

“I suspect there are a few people out there who are biased toward prescribing something that earns them more money, but I don't think that is the case for the vast majority of doctors. It is less of a conflict-of-interest problem than that of insurance companies that are biased against a treatment simply because it costs them more money,” said Dr. Cohen, who specializes in MS care and serves on the AAN MS Section's Economic Working Group.

He said CMS's “major thrust seems to be on trying to change physicians' prescribing behavior without really addressing the increasing medication cost issue.”

MORE CAN BE DONE

Elaine C. Jones, MD, FAAN, a private-practice neurologist in Bristol, RI who serves as chair of the AAN Payment Policy Subcommittee and serves on the AAN Board of Directors, said, “I don't think physicians in general have been as fiscally responsible as we could be on holding the line on costs.” At the same time, she noted, “how these drugs are priced needs to be more transparent.”

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DR. ELAINE C. JONES: “How these prices are set is illogical at this point. Some of these medications have been on the market since the early 90s and they cost three to four times more than they used to.”

“How these prices are set is illogical at this point. Some of these medications have been on the market since the early 90s and they cost three to four times more than they used to,” Dr. Jones said. She said the lack of head-to-head comparisons of drugs also makes it hard to determine which particular treatment is truly the most cost-effective.

“We as neurologists need to be more cost-conscious in terms of the medications we prescribe,” Dr. Johnson added.

CMS PROPOSALS FOR MEDICARE PART B REIMBURSEMENT

The CMS, which says its proposals will be budget-neutral, contains provisions characterized as “value-based strategies,” which the federal agency would evaluate during the five years of the test program.

They include strategies:

  • to reduce or eliminate cost-sharing for patients under Medicare Part B
  • provide clinicians with feedback on their prescribing patterns compared to best-practice evidence
  • introduce reference pricing, in which a standard payment rate is set for a group of therapeutically-similar drugs
  • utilize “indication-based pricing,” in which CMS would vary the reimbursement for a given drug depending on its effectiveness for the condition for which it is being used
  • enable CMS to enter into voluntary agreements with drug manufacturers to link patient outcomes to price adjustments.

LINK UP FOR MORE INFORMATION:

•. Federal Register—Medicare Program: Part B Drug Payment Model: http://bit.ly/CMS_PartB