Medicare Shift to Value-Based Reimbursement Could Reduce Access to Treatment

An attempt by the US Centers for Medicare and Medicaid Services to reduce Medicare spending could potentially backfire.

Currently, under Medicare Part B, physicians and hospitals are paid the average sales price for the drug, plus an additional 6%. The CMS believes this may actually incentivize physicians to prescribe costlier drugs when a lower cost equivalent drug is available.

To avoid this issue, the CMS recently created a proposed model where reimbursement would be the average sales price plus 2.5%, and an additional fee of $16.80 per drug per day. The CMS also states the proposal would provide adequate reimbursement and uses figures that could potentially be misleading:

“To illustrate the effect of this change, consider two drugs each prescribed for a similar condition, with similar patient 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 $6.00. But under this proposal, Medicare would pay Drug A at $16.93 above the average sales price and Drug B at $19.30.”

However, the proposal is meant to save money on Part B drugs, many of which typically would not be priced so low. More expensive drugs do not see such a drastic change from $0.30 above the sales price to $16.93 above the sales price.

This proposal received bipartisan criticism in the Senate recently. Sen Tom Carper (D-DE) wonders why more than 75% of the country is involved in the experimental payment policy, according to an article published by the Associated Press.

Critics believe this policy may affect medication access for patients who live in rural areas or who receive care from small practices and may not be able to afford the upfront costs for certain life-saving medications.

Patients who visit these practices for oncology care and cannot receive their medications due to financial hardships may have to visit hospitals for care, resulting in higher costs, the Associated Press stated.

CMS Chief Medical Officer Patrick Conway, MD, told the Senate that there will be a proposed monitoring plan to prevent access problems, according to an article published by Modern Healthcare.

However, despite reassurance from Dr Conway that this proposal will reduce costs and not effect access, both Democrats and Republicans are requesting withdrawal or delay of the proposal.