In recent months, the Administration has proposed a number of changes to Medicare Part B. From the Department of Health and Human Services’ request for information, HHS Blueprint To Lower Drug Prices And Reduce Out-Of-Pocket Costs, to the Centers for Medicare & Medicaid Services 2019 proposed Physician Fee Schedule and 2019 proposed Hospital Outpatient Prospective Payment System rule, many of the changes under consideration alter the Part B program’s successful structure in ways that could negatively impact patients.
As conversations about Medicare Part B continue, it’s important to get the facts straight and ensure they are being put in context. Did you know these facts?
- Part B uses an Average Sales Price system that has been successful in controlling costs – Medicare Part B uses the market-based Average Sales Price (ASP) to reimburse for medicines covered under the benefit. ASP reflects the weighted average of manufacturer sales prices, including rebates and discounts privately negotiated between manufacturers and purchasers. Analysis of the July 2018 ASP Pricing File and 2018 Medispan files for the 25 Part B medicines with the highest total spending indicates that ASP reflects a utilization-weighted average discount of more than 21 percent off of the list price of a medicine. Over the years, ASP has proven to be an effective payment mechanism that encourages negotiation and saves Medicare and beneficiaries money. In fact, recent research from the Moran Company found that volume-weighted ASP for all Part B medicines remained fairly stable from 2007 to 2017 and well below the growth rate of medical prices overall. That means the government, and patients, benefit from discounts negotiated in the private market.
- Part B spending is not a key driver of Medicare costs – While some have expressed concerns about Part B contributing to Medicare spending growth, year after year, Part B continues to be a small, stable share of overall Medicare spending. A recent MedPAC report found that in 2015, Part B drug spending remained just 3 percent of total Medicare spending and 11 percent of spending under the Part B benefit. In fact, the Moran Company found “prescription drugs and biologicals are not a key driver of increased costs for the Medicare Part B program.”
- Part B provides patients access to innovative products that treat complex conditions – The medicines covered under Part B are often new, innovative medicines administered by a physician that are used to treat conditions like cancer, rheumatoid arthritis and autoimmune disorders. Medicare Part B ensures patients have access to the treatments they need, while avoiding the excessive cost sharing and burdensome coverage restrictions common elsewhere. In Part D, for example, Avalere found average patient out-of-pocket costs were about 33 percent higher for new cancer therapies than for new cancer therapies covered under Part B.
- Part B has been evolving to continue to provide patients with access to needed medicines – Reflecting broader changes in the market, Part B has been evolving in ways that are driving competition through stronger incentives to control costs and improve quality. This includes expansion of Accountable Care Organizations, creation of alternative payment models like the Oncology Care Model and growth in the number of beneficiaries signing up to receive care through Medicare Advantage. As Xcenda noted in its recent report “the Medicare program continues to provide both value and choice to patients through transparent reimbursement and a range of value-based incentives.”
As changes to Part B are considered, it’s critical to preserve patient access to the full range of treatment options and avoid undermining the strengths of the current system.
To learn more about the success of the Part B program, visit PhRMA.org/PartB.
Nicole Longo
Nicole Longo is Deputy Vice President of public affairs at PhRMA focusing on Medicare, 340B, importation and more. She previously worked for a D.C.-based public affairs firm where she assisted a wide range of clients with communications efforts on everything from trade policy to agriculture policy to health care policy. Outside the office, Nicole can be found trying new restaurants (usually Italian), taking an occasional barre class and cheering on the Cincinnati Bengals.
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