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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

AAMC Comments on Proposed Rule to Test New Medicare Part B Prescription Drug Models

May 13, 2016—The AAMC May 9 submitted a comment letter  to the Centers for Medicare and Medicaid Services (CMS) regarding the Medicare Program Part B Drug Payment Model proposed rule. The proposed rule, which CMS released March 8, would test a new payment model intended to improve value and outcomes, and reduce expenditures for Part B drugs. While the AAMC is concerned with the rapidly rising cost of drugs, the association believes the proposed rule will harm hospitals, physicians, and the patients they serve.

Currently, Medicare pays for Part B drugs that are administered in a physician’s office or outpatient department, such as cancer medications, at Average Sales Price (ASP) plus 6 percent. During the first phase of the model, CMS would test how prescribing patterns are impacted by changing the payment amount to ASP plus 2.5 percent plus $16.80 [see Washington Highlights, March 11]. While CMS hopes to eliminate financial incentives for providers to prescribe more expensive drugs, the AAMC believes the proposed model would overpay for inexpensive drugs and underpay for expensive drugs.

Furthermore, for many diseases and conditions, the drugs available for treatment do not include a less expensive alternative. Therefore, the AAMC’s letter notes the model merely underpays for a drug that is needed by the patient and would have an adverse impact on access to clinically effective drugs for some patients.

The AAMC’s letter also states the program should not be layered on top of previously existing models, such as the Medicare Shared Savings Program (MSSP), Bundled Payments for Care Improvement (BPCI), and the Oncology Care Model (OCM). These programs already have established benchmarks and quality measures that are tied to financial incentives. Imposing financial risks will introduce a confounding factor that weakens the assessment of these individual programs.

Finally, the association believes the proposed rule will represent a significant payment cut to hospitals, including those that serve the most vulnerable patients by further reducing Medicare reimbursement for outpatient services and hurt hospitals that are providing services that cannot be found elsewhere.

Contact:

Tanvi Mehta
Physician Payment & Quality Specialist, HCA
Telephone: 202-909-2020
Email: tmehta@aamc.org

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org