Advisor Live: Understanding the Part B Drug Payment Proposed Model from CMS

Advisor Live®

Reviewing the proposed Part B Drug Payment Model

March 21, 2016

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Faculty

Marla Kugel, M.P.H. Principal research scientistPremier, Inc.


Agenda

• Overview of Proposed Model• Background on Part B Drug Payment• Phase I Payment Changes• Phase II Value-based changes• Overlap with other CMS programs• Provider and Beneficiary Protections• Evaluation Plan• Regulatory Impact Analysis• Questions and Answers


Released March 9, published in March 11, Federal Register

Proposes ASP+2.5% plus flat fee of $16.80 as alternative to ASP+6% all Part B drugs in Phase I

Proposes to apply value-based purchasing concepts such as reference pricing and clinical decision support tools in Phase II

Mandatory five year model will be implemented nationwide by randomly assigning all providers located in clusters of zip codes known as primary care service areas to each arm of the trial

Phase I begins no earlier than Fall 2016, Phase II begins no earlier than January 2017

Providers enrolled in alternative payment models will NOT be exempt

Comments due May 9, 2016

Proposed Part B Drug Payment Model


CMS will accept comments until 5 p.m. EDT on May 9, 2016, and will respond to all comments in a final rule, issue date TBD.

In commenting, please refer to file code CMS-1670-P. You may submit electronic comments on this regulation to http://www.regulations.gov

• Follow the instructions under the “submit a comment” tab.

You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1670-P, P.O. Box 8016, Baltimore, MD 21244-8016.

Submitting comments

http://www.regulations.gov/


Part B drugs defined as “incident to” a physician service• Infusions, including those infused through durable medical equipment

(DME) covered item, i.e. intravenous pump• Injectables• Drugs with specific benefit categories – certain vaccines, oral anti-cancer,

immunosuppessive, hemophilia, and ESRD-related

Average Sales Price (ASP) is based on manufacturer sales to all purchasers net of all rebates, discounts and price concessionsMedicare Prescription Drug, Improvement, and Modernization Act of 2003 established ASP + 6% payment for Part B drugs for physicians and suppliersRegulation established ASP + 6% for outpatient hospital under the Outpatient Prospective Payment SystemAdd-on payment to ASP meant to account for handling and overhead costs

Background Part B Drugs


HHS 2/15 goals:Better Care. Smarter Spending. Healthier People

Volume to Value

Track 2:Alternative payment models*

Track 1:

Value-based payments 85% of all Medicare payments 90% of all Medicare payments

30% of all Medicare payments 50% of all Medicare payments

2016 2018

Focus Areas Description

Incentives

Promote value-based payment systems – Test new alternative payment models– Increase linkage of Medicaid, Medicare FFS, and other payments to value

Bring proven payment models to scale

Care Delivery

Encourage the integration and coordination of clinical care services Improve population health Promote patient engagement through shared decision making

Information Create transparency on cost and quality information Bring electronic health information to the point of care for meaningful use


CMS Rational for Proposed Changes

MedPAC June 2015 report to Congress

May reduce incentives to prescribe more expensive drugs in order to receive greater add-on payment

Mandatory instead of voluntary to reduce selection bias and limit generalizability

Take advantage of tools commercial payers, pharmacy benefit managers, hospitals and other entities currently use to manage health benefits and drug utilization


Phase 1 – ASP+X (no earlier than 60 days after

display of final rule, Fall 2016)

Phase 2 – VBP (no earlier than January 2017)

ASP+6% (control) ASP+6% (control)

ASP+6% with VBP Tools

ASP+2.5% and Flat Fee Drug Payment

ASP+2.5% and Flat Fee Drug Payment

ASP+2.5% + Flat Fee Drug Payment with VBP Tools

Nationwide Trial Design

• Stratified random approach for assignment of trail arms to areas• Strata factors/cut points:

• Mean Part B spending/beneficiary ($500 and $3,000)• Number of beneficiaries (1,500)


Considered five options: States, Core Based Statistical Areas, Hospital Referral Regions, ZIP codes, and Primary Care Service Areas (PCSAs)PCSAs will provide best mix of size, internal homogeneity, and statistical power (N = 7,048)

• Areas need to be sufficiently large so that most providers and suppliers do not have practice locations in multiple areas.

• Areas need to have characteristics that are relatively more similar when comparing one to another so that observed changes at the area level can be more clearly attributed to the intervention and not to other factors.

• Areas need to be sufficient in number to ensure adequate statistical power for the evaluation of the model.

Clusters of zip codes based upon patterns of Medicare Part B primary care services All PCSAs with Maryland zip codes are excluded

Geographic areas


Part B drugs will be paid at ASP+2.5%+$16.80 per drug per dayBudget neutral with respect to total Part B drug paymentsAnnual update factor for flat fee: CPI Medical Care (MC)Adopted MedPAC’s recommendation outlined in June 2015 report

• Use of an add-on percentage plus a flat fee to mitigate underpayment or overpayment

• Redistribution favors providers prescribing relatively inexpensive drugs or relatively fewer drugs in general; limits incentives for overuse

Use 2014 claim payments for Part B drugs to determine flat fee• Public Use File released with rule summarizing payment and volume• 2015 claims instead?

Soliciting comment on alternative approaches – different % add-on, tiering, varying flat fee based on overhead cost commonality (i.e. cold storage, special handling)

Phase I: Changes to Part B Drug Add-on Payment


Illustrative Example of Change in Payment Calculation


All Part B drugs, inclusive ofOPPS Pass-through drugsNon-infused drugs furnished by DME suppliersIgG

…with the exception of:Contractor-priced drugsInfluenza, pneumococcal pneumonia, and hepatitis B vaccines as these are considered to be preventativeDrugs infused with a covered item of DME in Phase I onlyESRD drugsBlood and blood productsDrugs in short supply

Part B Drug Inclusions and Exclusions


Will not apply to all Part B drugs, only where appropriateProvide 30 day public comment and provide, at minimum, 45 day notice before implementingTypes of pricing strategies

• Reference pricing• Indication pricing• Outcomes pricing• Waiving beneficiary coinsurance

CMS looking for comments regarding• Educational activities around these changes?• Groups of Part B drugs most suitable to value-based pricing?• Pre-appeals process?• Safe guards?

Phase II: Value-Based Pricing Strategies


Evidence-based support for choosing best drug treatment• Tool only provided to clinicians assigned to VBP arms of the trial• Available online and include updated guidelines, information on

drug safety• Not meant to replace clinical judgment

Provide feedback reports on prescribing patterns• Tool only provided to clinicians assigned to VBP arms of the trial• Get information on their billing patterns compared to others in

PCSA and national patterns• Education-only, not tied to payment• CMS looking for input on specific data elements to include and

level of personalization, and means of distribution

Phase II: Clinical Decision Support Tool


“Try before you buy” rebate based payment arrangements• Generally in the form of outcomes-based rebates to reward quality• Less risk for payers on new products; market differentiator for

manufacturer• Looking for feedback on real-world, commercial payer examples,

mitigating risk of abuse, and distribution of savings from rebates

The Part B drug Competitive Acquisition Program• Alternative to “buy and bill” approach, but was suspended in 2009• Is there now a role for this alternative approach?

Episode-based or bundled pricing approach• Incentive to consider the total cost of care of a patient treated with

a particular drug regimen• Seeks input on bundle construction, attribution, risk model, gain-

sharing relationships, prospective vs retrospective calculation, etc.

Phase II: Alternative Value-Based Strategies


Medicare Shared Savings Programs• Will not exclude patients from Part B drug payment model• Represents very small percentage of payments• No additional patient reconciliation process

IVIG Demonstration• Will not exclude patients from Part B drug payment model• Focuses on items and services for in-home admin, not IVIG drug

payments

Oncology Care Model *new*• Starts later this year, participants will be notified in April• Aim to improve management of chemotherapy patients• Could account for 40% of total Part B drug spending and 70% of

Part B spending on oncology drugs• Due to large enrollment and estimated even distribution, CMS is

not proposing to exclude despite overlap in scope of models

Interaction with Other Payment Policies


Pre-Appeals Payment Exceptions Review Process • Available for providers, suppliers, and beneficiaries• Applicable to Phase II payments, not ASP payment add-on• Usage optional: does not impede existing appeals process

Existing appeals process• Existing process starting with Medicare Administrative Contractor

and escalating as necessary• Phase II pricing and any pricing determination rendered through

the Pre-Appeals process given substantial deference

“CMS plans to implement a concurrent real-time claims monitoring program to track utilization, spending, and prescribing patterns as well as changes in site of service delivery, mortality, hospital admissions, and several other high-level claims-based measures.”

Provider, Supplier, and Beneficiary Protections


Examine impact of interventions on improved quality and reduced costs at PCSA level, but will also consider provider and beneficiary level affectsHope to have three years of data for Phase II Inspect interactions with ongoing interventions such as OCM, BPCI, ACO modelsBeneficiary claims as data source, may also conduct surveysKey evaluation areas: payment, prescribing patterns, prescriber acquisition prices, outcomes/quality, unintended consequences, variable model effectsComments on additional research questions are requested

Evaluation Plan


Phase I designed to be budget neutral, not expected to generate savingsImpact of Phase I on Hospitals

• Hospitals will see an overall -0.3% decrease in total Medicare payment; overall -2.3% decrease in drug payment

• Rural hospitals slightly better off; large, urban hospitals slightly worse off

Impact of Phase I on Physicians• Physicians in aggregate will see an increase of 1.3% in Part B

drug payment• Oncologists, hematologists, rheumatologists worst off• Primary care, infectious disease, pain management and

anesthesiology best off

Impact of Phase II not evaluated, designed to generate savings but no dollar figure estimated at this time

Regulatory impact analysis: Winners and Losers


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For more information, contact: Anna VordermarkSenior manager, thought leadership communications

[email protected] 704.816.5599

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Advisor Live: Understanding the Part B Drug Payment Proposed Model from CMS