Medicare's Part B Reform Proposal May Be Gaining Momentum; Congress Not Hearing Strong Protests

Muted stakeholder reactions may reflect Trump Administration efforts to address physician concerns in its Medicare Part B drug payment reform.

Members of the US Congress have not been hearing the same level of opposition to the recently proposed Medicare Part B drug International Pricing Index payment model that they did from stakeholders concerned with the Part B demonstration project proposed unsuccessfully by the Obama Administration a couple of years ago, according to Senate staffers.

“When we saw the Medicare Part B demonstration put out by the last Administration, there were definitely a lot more stakeholders coming to the Hill with concerns than there are right now with this Medicare Part B proposal,” Rita Habib, health policy advisor to Sen. Michael Bennet, D-Col., commented at Prevision Policy’s Biopharma Congress Nov. 14.

Lauren Fleming Paulos, health legislative assistant to Sen. Orrin Hatch, R-Utah, agreed but suggested that may not mean there is support for the International Pricing Index (IPI) proposal among Republicans.

“We have not seen as much stakeholder involvement as last time,” she said. “But I think there are still the same concerns among members as last time. I think that’s still the state of play; there are still members that are skeptical.”

Sen. Hatch is one skeptic who will not be in a position to challenge the Part B project because he will be retiring at the end of this session. Hatch’s successor at the head of the Senate Finance Committee may be Sen. Chuck Grassley, R-Iowa, who has been at odds with the biopharma industry at times.

The project does not need legislation to advance. But the Obama Administration’s Part B demonstration failed because of strong opposition from physicians, patient groups, and Republicans in Congress so the reaction on Capitol Hill is important. (Also see "CMS Cancels Part B Demo Before HHS Secretary-Designate Price Does" - Pink Sheet, 16 Dec, 2016.)

During the debate on the Obama-era Part B initiative, physicians had argued the demonstration’s pricing structure would not cover acquisition costs for many drugs, creating financial hardship for physician practices that would, in turn, impede patient access to treatments.

The more muted response to the new Part B payment reform initiative may reflect the Trump Administration’s efforts to design the new Part B reform initiative in a way that avoids some of the more controversial aspects of the Obama demonstration project. (Also see "Can Medicare International Price Index Model Avoid Part B Demo Pitfalls?" - Pink Sheet, 28 Oct, 2018.)

The Trump Administration’s plans to experiment with a new International Pricing Index for Part B drugs through the Centers for Medicare and Medicaid Services innovation center are detailed in an advance notice of proposed rulemaking with request for comment released Oct. 25. (Also see "Medicare's Foreign Price Bench-marking Will Only Hurt Bad Negotiators, HHS's Azar Argues" - Pink Sheet, 25 Oct, 2018.)

IPI Has Protections For Physicians, Verma Maintains

CMS Administrator Seema Verma maintained the IPI is designed to protect physicians while lowering prices in a speech to the conference.

“The goal of the IPI model is to maintain financial stability for physicians – essentially to keep doctors whole, contrary to information being put out by some stakeholders,” she said.

“Instead of basing physician payment on the price of a drug, physicians would receive a fixed payment amount that could vary by physician specialty, physician practice, drug class, or some other variable. We are open to input, and we are working with physicians on this.”

Verma also emphasized the project is at an early stage and the agency is seeking input before developing a proposed rule to implement it, which is expected to be released in the spring of 2019.

It may undergo significant changes before then, particularly its controversial approach of basing Medicare reimbursement on prices abroad. But the Administration seems determined to get something done to bring drug prices down in Part B so some kind of new model may advance.