Medicare officials proposed Tuesday to test new ways of reimbursing doctors who administer drugs in their offices and hospital outpatient clinics, with a long-term goal of encouraging greater use of treatments that are high quality but less costly.
The proposal by the Centers for Medicare and Medicaid Services would apply to Medicare Part B, which covers drugs such as infused cancer medications and injectable antibiotics. Last year, Medicare spent about $20 billion on Part B drugs.
Patrick Conway, chief medical officer for CMS, said in a telebriefing that the plan isn’t designed to save money. But he left little doubt that the ultimate aim is to eliminate incentives that may encourage doctors to select higher-priced medications that benefit their bottom lines but not their patients.
Conway called the current system — in which doctors are paid the average sales price plus 6 percent for handling and administration costs — a “perverse incentive structure that doesn’t benefit patients or the system.” He said oncologists have told CMS they sometimes feel pressure from their health-care systems to pick more expensive drugs to bolster profits.
The agency intends to try different approaches in different parts of the country. Under one approach, doctors would be paid a drug’s average sales price plus 2.5 percent and a flat daily payment of $16.80. Another would peg reimbursements to a drug’s effectiveness for different uses.
The Pharmaceutical Research and Manufacturers of America, which represents the drug industry, immediately criticized the proposal. “Proposing sweeping changes to Medicare Part B drug reimbursement without thoughtful consideration and stakeholder input is not the right approach and puts Medicare patients who rely on these medicines at risk,” the group said in a statement.
Peter Bach, director of the Center for Health Policy & Outcomes at Memorial Sloan Kettering Cancer Center, said that he hadn’t reviewed the proposal but that it’s important to clearly separate treatment decisions by doctors from potential profits. Data shows doctors’ prescribing patterns are affected by the way they are reimbursed, he said, adding, “We need a system that pays for drugs based on value.”