Medicare payment overhaul proposal draws opposition from industry stakeholders

CMS' proposed plan to change how Medicare Part B pays for prescription drugs is drawing staunch criticism from pharmaceutical leaders and specialty care providers.

On Tuesday, CMS said it would test new Part B payment models to encourage physicians to select the most effective treatment for patients and to slow Medicare spending.

Physicians and hospital outpatient departments are typically paid the average sales price of a drug, plus a 6 percent add-on. CMS proposed changing the add-on payment to 2.5 percent plus a flat fee payment per drug per day. The agency believes the change will alter prescribing incentives and result in savings and improved quality.

"Physicians often can choose among several drugs to treat a patient, and the current Medicare Part B drug payment methodology can penalize doctors for selecting lower-cost drugs, even when these drugs are as good or better for patients based on the evidence," said CMS.

CMS also proposed setting a standard payment rate for a group of "therapeutically similar" drugs and paying drug companies based on the clinical effectiveness of a drug.

The initiative is facing opposition from drug manufacturers and specialty physicians, who say the proposed models focus too much on saving money and too little on ensuring patients' access to treatment.

"It's insulting. It's really infuriating," Robin Zon, MD, chair of the finance committee at Michiana Hematology-Oncology in South Bend, Ind., told The Wall Street Journal. "This is an experiment, and it's an experiment that will affect lives. I am so afraid this will do more harm than good."

In a letter to federal health officials, the Community Oncology Alliance called the proposal "inappropriate, potentially dangerous, and [a] perverse experiment." The Biotechnology Innovation Organization, told The New York Times it is "gravely concerned," about the proposal.

The proposal has also received criticism from leading Republicans, who claim the plan was hatched in secrecy.

Andy Slavitt, acting administrator for CMS, addressed industry concerns about the payment overhaul Wednesday at the annual PhRMA conference, according to The Hill.

"There is nothing that we propose to do, or should do, in any way, that prevents a patient from getting a prescription medicine that they need," he said.

CMS is accepting public comments on the proposed rule through May 9.

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