On Thursday, the Center for Medicare & Medicaid Services (CMS) announced that it would not move forward with its controversial Medicare Part B Payment Model  (Part B Demo).  The Part B Demo had come under heavy fire from industry groups, some patient organizations, providers and a bipartisan collection of policymakers in Congress.

CMS intended that the Part B Demo to create new methods to pay for drugs under Medicare Part B.  Currently, payment for drugs covered under Part B is based on Average Sales Price (ASP), plus a set mark-up.  If implemented, the Part B Demo, would have introduced value-based purchasing based on four new payment groups after a two-phase demonstration.  The payment groups included:

Group 1: Payment at ASP plus 6 percent;

Group 2: Payment at ASP plus 2.5 percent plus flat fee;

Group 3: Payment at ASP plus 6 percent, with value-based purchasing; and

Group 4: Payment at ASP plus 2.5 percent, plus flat fee, with value-based purchasing.

CMS told the media that despite some support, the decision to end the model was based on “strong concerns” of some stakeholders.  Those opposed to the Part B Demo cited its broad scope and its potential to limit the types of drugs doctors could prescribe.  With Medicare drug spending greater than $24 billion last year, the impact to revenue from drugs administered under Part B potentially would have been significant.  This significance was reflected in the time, money and effort expended by groups on both sides of the issue.

Even if CMS didn’t end the project, it was unclear that it had a path forward.  The pharmaceutical industry was rumored to be floating legislation to block the proposed rule by either limiting what the Center for Medicare & Medicaid Innovation can propose or by the Congressional Review Act (CRA).  The CRA allows congress to strike down rulemakings through passage of a joint resolution of disapproval. 

While the Part B Demo may have suffered an unceremonious end, the conversation of how the federal government can address rising drug prices is not over.  We will be watching this issue closely. 


Posted by Vince Sampson