On October 25, 2018, The Centers for Medicare & Medicaid Services (CMS) quietly released an Advance Notice of Proposed Rule Making (ANPRM). Unless you were part of the medical/insurance industry, you probably missed this as none of the big news networks covered this story.
The Trump Administration seeks to bring International style price controls to Medicare Part B prescription coverage.
The Centers for Medicare & Medicaid Services (CMS) is committed to implementing President Trump’s blueprint to lower drug costs and reduce out-of-pocket costs for patients. In line with the policies discussed in the President’s blueprint, the CMS is soliciting public comments on potential options we may consider for testing changes to payment for certain separately payable Part B drugs and biologicals (“drugs”). Specifically, CMS intends to test whether phasing down the Medicare payment amount for selected Part B drugs to more closely align with international prices; allowing private-sector vendors to negotiate prices for drugs, take title to drugs, and compete for physician and hospital business; and changing the 4.3 percent (post-sequester) drug add-on payment amount, would lead to higher quality of care for beneficiaries and reduced expenditures for the Medicare program.
ANPRM International Pricing Index Model for Medicare Part B Drugs
This program would begin in 2020 and operate for five years to monitor and evaluate the impacts of payments on drugs administered in a doctor’s office or in a hospital outpatient setting while excluding those medicines dispensed by pharmacies. A very similar program called the Competitive Acquisition Program (CAP) was launched in 2006 but was indefinitely suspended at the end of 2008 when litigation overwhelmed the program.
Again in 2012, CMS tried the auction process and litigation withstanding, the CAP program was a failure as to it being a true auction of services. The Center for Regulatory Effectiveness detailed the flaws in how CMS conducted their bidding and ended up being nothing more than a price setter.
Although CMS presents their competitive bidding program as being a single stage auction, the CBO official explained that it is actually a dual-stage process with bidders in the first stage bidding low, even offering prices they may not be willing to honor, just to make it to the second stage of the process.
The Need for a Clinical Trial of CMS’ Competitive Bidding Program for Durable Medical Equipment
Since CMS plans to use just three vendors for the IPI proposition, making it seem as though they have not learned from their historical mistakes.
The Obama Administration also tried to revamp Medicare Part B payments in 2016 but its’ plan was scrapped as a firestorm of Republican opposition formed and a number of commenters logged their concerns during that program’s public commenting period.
The opposition to the IPI is sure to ramp up in the weeks and months to come from the private sector, but with a Republican in the White House, the firestorm from The Hill will be quite muted this time around.