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    MedPAC proposals seek to mitigate Part B spending

    Possible changes include grouping drugs with ‘similar health effects’ into single billing code

    Robert A. Dowling, MDDr. DowlingI have previously discussed some important details affecting reimbursement for drugs that are administered in the physician’s office—including Medicare Part B drug payments and the average sales price (ASP) methodology (See www.urologytimes.com/buy-bill). I subsequently described a Centers for Medicare & Medicaid Services proposed rule that was generally known as the “Part B demonstration project” and how that might significantly affect reimbursement for Part B drugs (See www.urologytimes.com/perfect-storm). That proposed rule met with widespread and bipartisan opposition, and following the election in November 2016, it appears that the Part B demo is not going to be finalized.

    However, there are strong indications that payments for prescription drugs—including infusions, injectables, and other drugs administered by physicians in their office—will continue to be carefully examined by policymakers. In this article, I will review a recent development in this area.

    Also by Dr. Dowling: OIG targets IMRT, chronic care payments in 2017

    In 2015, Part B drug spending was about $25 billion, roughly 11.2% higher than in 2014. Since 2009, Part B drug spending has increased an average of 9% per year, roughly double the rate of health care spending in general. The Part B demonstration project was premised on a hypothesis that the ASP +6% method of reimbursement might incentivize the utilization of more expensive drugs by physicians, and one part of that proposal would have lowered the “add on” to 2.5% to mitigate this possible incentive.

    One problem with this approach is that there are many clinical scenarios where there are no inexpensive alternatives; furthermore, ASP is an “average” of prices that physicians pay for drugs, meaning that the narrower the “margin,” the more likely that some physicians may actually pay more for the drug than they are able to recoup. While the root cause may be an open question, there is no denying that program spending is growing and it will continue to capture the attention of policymakers who try to control that spending growth.

    Next: Four proposals floated by MedPAC

    Robert A. Dowling, MD
    Dr. Dowling is president of Dowling Medical Director Services, a private health care consulting firm specializing in quality ...

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