MedPAC Considers Restructuring Medicare Part B

The Medicare Payment Advisory Commission (MedPAC) released a draft package proposing several changes to Medicare’s Part B program, which regulates how doctors are paid for administering drugs.

The program usually pays doctors the average sales price (ASP) plus 6 percent for in-office administered drugs with no monitoring of drug effectiveness or cost. The goal of the package is to increase competitive pricing for alternative treatments and ultimately cut drug spending. Critics of the current “buy and bill” payment system argue that it incentivizes doctors to prescribe higher-priced drugs.

One of the most significant changes to the current system is transitioning the payment system to a drug value program, a voluntary market-based program in which third-party vendors negotiate the prices on behalf of the medical providers rather than direct purchase from the manufacturer. The 6 percent add-on would be replaced with a fee for the private vendor.

Other recommendations include:

  • cutting the add-on payment to 3 percent
  • penalizing drug manufacturers who fail to report ASP data
  • using a common billing code for branded drugs and biosimilars

Reports from the meeting of MedPAC commissioners suggest that most members support the recommendations but expressed concern over the proposed drug value program and its shared-savings features.

Source: Medicare Payment Advisory Commission news release, March 6, 2017.