CMS Ends Medicare Part B Drug Payment Pilot Program

The Centers for Medicare and Medicaid Services (CMS) recently announced that it will abandon its pilot plan, the Part B Drug Payment Model, that was aimed at lowering Medicare pharmaceutical spending.

“After considering comments, CMS will not finalize the Medicare Part B Drug Payment Model during this Administration... While there was a great deal of support from some, a number of stakeholders expressed strong concerns about the Model,” CMS officials told Focus in a recent report. “While CMS was working to address these concerns, the complexity of the issues and the limited time available led to the decision not to finalize the rule at this time.”

Prior to the decision to pull the pilot program, the first phase of the program would have changed the 6% add-on to the average sales prices that CMS uses to make drug payments under Part B. The second phase of the program would have implemented a value-based purchasing tool, similar to ones used by commercial health plans, pharmacy benefit managers, hospitals and other entities that manage health benefits and drug utilization.

“We intend to achieve savings through behavioral responses to the revised pricing, as we hope that the revised pricing will remove any excess financial incentive to prescribe high cost drugs over lower cost ones when comparable low cost drugs are available,” CMS said.

After announcing the pilot program, CMS received over 1300 comments—many of which were negative, including comments from pharmaceutical companies that opposed the pilot program.

Following the news to end the pilot program, organizations including the American Medical Association (AMA), applauded the decision.

“This is a model for how Washington should—but often doesn’t—work,” Andrew Gurman, MD president of AMA, said in a press release.  “When the Center for Medicare & Medicaid Innovation (CMMI) made the recommendation to make changes to Medicare Part B, CMMI and CMS officials welcomed feedback. The AMA and others explained how the proposal would hurt patient care. CMMI then re-evaluated its original proposal, resulting in the announcement that CMS would not go forward with these changes. We are grateful that CMS came to the right decision after listing to stakeholders.”

—Julie Gould