The Community Oncology Alliance Calls CMS’ Medicare Part B Reimbursement Proposal ‘Perverse’ and ‘Inappropriate’

On March 9, 2016, the Community Oncology Alliance (COA), a non-profit organization dedicated solely to the practice of community oncology, wrote a letter to the Centers for Medicare and Medicaid Services (CMS) stating its opposition to the new reimbursement rules for Medicare Part B that were proposed on March 8, 2016. The group, which said it will actively pursue “every legal, legislative, and related option to stop the CMS Medicare Part B Drug Payment Model,” provided numerous reasons in its letter why it thinks the plan is fundamentally flawed.

First, the group says that as a result of a change in the Medicare Modernization Act (MMA), CMS mandated that pharmaceutical manufacturers include “prompt pay” discounts in the calculation of a drug’s average sales price (ASP). These discounts were traditionally only brokered between manufacturers and drug wholesalers, but were then required for ASP calculations. This change, according to the COA, artificially lowered “the Medicare reimbursement rate for cancer drugs from ASP plus 6% to closer to ASP plus 4%.”

Second, the sequester to Medicare drug reimbursement lowered the payment for cancer drugs even further, dropping the effective reimbursement rate to approximately ASP plus 2%. After accounting for the actual costs related to procurement of drugs, handling, storage, inventory, drug preparation, and waste removal, financial incentives for physicians are virtually non-existent-and in some cases, drugs may now actually be reimbursed below cost.

The plan was not created with input from industry experts or stakeholders, asserts the COA, and is not in alignment with the purpose of the Affordable Care Act. It is simply a “plan to circumvent Congress,” notes the letter.

The real increases to Medicare Part B are a result of practice consolidation
The COA points the finger at hospital mark-ups for price increases of Medicare Part B drugs, and says that one of the main reasons so many smaller oncology practices are being purchased by large hospital systems is because physicians have no financial incentives to administer drugs, whereas hospitals can increase profits by absorbing smaller practices and billing for drugs at higher rates via the Medicare Hospital Outpatient Prospective Payment System. 340B discounts, the group says, also provide an enormous incentive for hospitals to incorporate smaller practices.

“The proposed cut to the ASP plus 6% drug reimbursement rate to ASP plus 2.5% plus a flat fee is based on an insulting assumption that community oncologists practice medicine solely by financial incentives, not by what is in the best interests of their patients,” concluded the letter. “This is not only highly offensive and derogatory, but also simply not grounded in fact.”

Source: Community Oncology Alliance