Medicare Monday: A guide to MedPAC’s Part B vote this week

The Medicare Payment Advisory Commission (MedPAC) is an independent congressional agency that advises Congress on issues related to the Medicare program, including payment, access to and quality of care. You can learn more about MedPAC here.

Later this week, Thursday, April 6^th, MedPAC will vote on a series of draft recommendations affecting Medicare Part B and how it covers and provides access to physician-administered medicines. Here are a few things to watch for:

Medicare Part B covers a subset of prescription medicines used by patients with serious and complex conditions who currently have few or no other treatment options. The current Medicare Part B payment methodology – Average Sales Price (ASP) – is an effective, market-based pricing mechanism that successfully balances patient access with controlling costs, as demonstrated by the fact that spending on Part B medicines represents a small and stable share of overall Medicare Part B spending and provides significant value to patients. In the current system, the add-on fee covers purchasing variability based on location, size of practice and also helps cover other overhead costs and ongoing patient monitoring for providers who administer Part B drugs. Reducing the add-on fee could mean that some providers, particularly those in rural or small practices, would be unable to continue providing medicines to their patients. Learn more about how ASP works here and here.

A draft recommendation to “consolidate billing” for biologic products would allow the government to blend coding and payment for all innovator biologics and their biosimilars. This proposal creates concerns about using clinically appropriate treatments for patients, patient safety and incentives for competition. These blended coding proposals could have more harmful consequences for patients down the road and could hurt the competitive market for Part B medicines. Learn more about billing and coding for biologics in Part B here.

Another draft recommendation would require manufacturers to pay a rebate to the Centers for Medicare & Medicaid Services (CMS) if a product’s ASP grew faster than an inflation benchmark – a form of government price controls. ASP is a market-based price and so it can fluctuate overtime depending on the discounts that are being negotiated in the private market. Applying government price controls in Part B in the form of a manufacturer rebate could stifle innovation in products that are used to treat diseases that disproportionately affect the elderly, resulting in reduced therapeutic options for patients.

A draft recommendation called the “drug value program” includes redesigning and restarting Medicare Part B’s competitive acquisition program, which failed in the past. Unfortunately, the redesigned “drug value program” would include government price controls and establish a binding arbitration process for new drugs. While this program is often described as making Part B more competitive, government price setting would in fact do the opposite. The new program could also restrict patient access through new tools such as formularies and prior authorization. These changes ignore the competitive forces at work in the current Part B market to control costs. The ASP mechanism has been successful at moderating price growth over time, and even CMS has noted multiple competitive factors are at work to keep prices stable. Learn more about Part B spending here.

These proposed changes to Medicare Part B could have a detrimental impact on access for patients who rely on Part B therapies. Keep an eye on MedPAC activity later this week to see what happens with these draft recommendations.