AT HOUSE ENERGY AND COMMERCE HEALTH SUBCOMMITTEE HEARING

WASHINGTON (FRONTLINE MEDICAL NEWS) Physician organizations are calling on Congress to stop a proposed federal regulation that would test how Medicare pays for drugs administered in a physician’s office.

Subcommittee member Rep. Larry Bucshon (R-Ind.), a cardiothoracic surgeon, called the premise of the proposed rule – that physicians are making prescribing decisions based on the cost of drugs – “almost an insult to the medical profession.” He has introduced legislation, H.R. 5122, that would require the Centers for Medicare & Medicaid Services to rescind the proposed rule.

CMS argues in the proposed rule that the current payment formula – average sales price (ASP) plus 6% – incentivizes the use of expensive drugs over lower-cost alternatives. Therefore, the agency seeks to run a test – half of doctors would continue to receive ASP plus 6%, while others would receive ASP plus 2.5% and a flat fee of $16.80. The proposed rule also would test other value-based tools. At the May 17 hearing, physicians presented their concerns regarding the proposed rule.

“CMS has yet to produce any evidence indicating that physician prescribing patterns show any correlation to that of choosing higher priced drugs as opposed to appropriate therapeutic treatment for patients,” said Dr. Debra A. Patt, vice president of Texas Oncology. Dr. Patt testified on behalf of the American Society of Clinical Oncology, the Community Oncology Alliance, and the U.S. Oncology Network. “Additionally, there is no evidence that the payment changes contemplated by CMS’s model will improve the quality of care, or for that matter, ensure patients have access to the same level of care they are currently receiving.”Dr. Michael Schweitz, national advocacy chair of the Coalition of State Rheumatology Organizations (CSRO), cited CMS’s admission that this rule will likely have no impact on ASP.

“While we appreciate CMS’s attention to the topic of drug costs, we feel that this proposal is misguided,” Dr. Schweitz testified. “As CMS acknowledges in the rule, the proposed approach ‘does not directly address the manufacturer’s ASP, which is a more significant driver of drug expenditures than the add-on payment amount for Part B drugs.’ Given that a slash to the ASP add-on is unlikely to actually lower costs for patients … and may jeopardize access, we have requested that CMS withdraw the model and we urge the committee to do the same.”

Dr. Patt also questioned ASP, noting that it is simply an average, and the prices actually paid by rural and small group providers could be higher than larger group and hospital practices – and that difference puts the smaller and rural practices at a potentially significant financial disadvantage.

“Average sales price is by its very nature an average,” Dr. Patt testified. “Some people will pay higher amounts for procurement and some people will pay lower amounts. Larger hospital systems and larger practices have the ability to have contracting arrangements where they purchase at a lower price. … Smaller practices disproportionately pay a higher amount.”

Small practices that are slated to receive ASP plus 2.5% and that flat fee “could be losing money on all of the drugs that they buy. It will be impossible for smaller practices in rural areas to be open,” she added, noting that such a situation could cause care to be shifted to hospital outpatient departments, raising costs as well as access issues. “Cutting provider reimbursement without addressing the ASP, the actual cost of the drug in the first place, is just the wrong approach,” Rep. Bucshon said.

According to the proposed rule, whether or not a practice is in the test or control group would be based on ZIP code. Dr. Patt also noted that if she were in a test ZIP code and a neighboring ZIP code was not, she might have to refer patients to that area still receiving ASP plus 6% and “not at my center.”

Witnesses at the hearing also condemned the way CMS devised the proposed tests. Unlike the recent work on the Medicare Access and CHIP Reauthorization Act regulations and more specialized programs like the Oncology Care Model, Dr. Schweitz and Dr. Patt both testified that CMS made no outreach to the provider community with regards to getting their input before issuing the proposed rule.

They also took exception to the scope of the proposed test, which covers 49 of the 50 states (Maryland is excluded) and provides no mechanism for physicians to opt out under the proposed rule.

“I do see this as an experiment, but we conduct clinical research at our cancer and patients have informed consent,” Dr Patt said.

Dr. Schweitz agreed. “When you look at the goals of this plan, initially it appeared that it was to direct a way to save costs. But in meeting with [the Center for Medicare & Medicaid Innovation], we were advised that this is budget neutral. … So the goal of the program is to collect information which makes it a study, a test. So if the goal is to collect information, and the patients are part of that process, they should be signing informed consent.”

Several physician organizations have called on CMS to withdraw the proposal.

“We are deeply concerned that because the new methodology will frequently not properly cover the cost of physician administration of infused drugs, they will be forced to stop offering patients the ability to receive infusion treatments,” the American College of Rheumatology wrote in comments submitted on the proposed rule. Likewise, CSRO “must oppose the Part B drug payment model as it suffers from serious procedural and substantive flaws that we believe render it unworkable – and it does nothing to actually address drug prices,” according its comments .

While the proposal has garnered backlash from several directions, rheumatologists are seeing it as particularly burdensome because of the high price of medications with very limited options to substitute for lower-cost alternatives.

“Although we certainly seek to control costs for patients and Medicare whenever possible, the proposed new methodology does not adequately consider the higher average cost many of our physicians have acquiring, handling, administering, and billing for drugs and biologics,” according to the comments submitted by the ACR.

Indeed, comments from CSRO point out that when factoring in budget sequestration, the actual reimbursement physicians are receiving is ASP plus 4.4%, and doctors are actually losing money on certain drug purchases.

Of additional concern is that the proposed rule does not address ASP itself.

“A far greater concern than the add-on percentage is the underlying ASP, and the steep, fast price increases that these medications show each quarter, according to comments from the CSRO.

From 2007 to 2016, first-quarter ASP for infliximab rose from $53.73 to $79.90; ASP for abatacept rose from $18.70 to $39.44, according to CSRO comments. “These ASP increases are unsustainable for both the Medicare program and its beneficiaries, and we would like to work with CMS to explore actual solutions to stem the increases in those underlying prices.”

In its comments, ACR proposed a number of potential paths forward, starting with certain practices that should be exempted from the proposed demonstration: physician groups with 25 or fewer physicians; physician-owned practices that are located in rural and medically underserved areas; reimbursement changes for drugs and biologics that do not have an alternative with more than a 20% ASP differential; and drugs and biologics where there are three or fewer members of the drug class or biologics.

ACR also proposed altering the add-on formula that takes into account the costs of storing and administering supplies.

“For example, CMS could use a formula for reimbursement of ASP plus 6% or $500 (whichever is lower),” ACR said in its comments. “This formula would allow CMS to effectively target spending on expensive drugs, while leaving in place reimbursement rates for cheaper drugs.”

Additionally, ACR called for CMS to delay the testing of more value-based tools until it understands the impact of the ASP changes that are to be tested under this proposal.

CSRO does not have any specific policy recommendations to replace or modify the proposed rule, but rather calls for CMS to bring together all stakeholders, including patients, providers, payers, and manufacturers to devise a system that would work to the benefit of all while ensuring the best outcomes for patients, Dr. Schweitz said in an interview.

gtwachtman@frontlinemedcom.com

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