Medicare Part B Drug Payment Model Proposed Rule by the

Centers for Medicare and Medicaid Services (CMS)

NORM Town Hall April 27, 2016

Slides & Frequently Asked Questions

NORM Hill Visits & CMS Leave Behinds

April 28 & 29, 2016

4/28/2016

1

PART B DEMONSTRATION

NORM

TOWN HALL MEETING

Part B Demonstration

Project

• What? 5 year demonstration project with 2

phases

• Goal – Drive prescribing utilization of the most

effective drugs and test new payment approaches to

reward positive patient outcomes (Phase 2)

• Why? Concerns that ASP+6 incentivizes physician to

prescribe higher cost drugs (higher profit)

4/28/2016

2

Phase 1

• ASP +6% Control – 50% zip codes

• ASP +2.5% Plus Flat fee of $16.80 per drug per day - 50% zip codes

• Zip Codes to be randomly selected

Phase 2

Phase 2 breaks the two groups from Phase 1 into 2 arms within

each group

• ASP +6% Control – Phase 2 moves 50% of zip codes into equal groups:

– ASP +6 Percent (Control)

– ASP +6 Percent with VBP (Value Based Purchasing) Tools

• ASP +2.5% Plus Flat fee of $16.80 per drug per day – Phase 2 moves 50% of zip codes into equal groups:

– ASP +2.5 Percent and flat fee drug payment

– ASP +2.5 Percent and flat fee drug payment with VBP tools

4/28/2016

3

Value-Based Tools

• This has not clearly been defined or developed

• CMS is looking at a variety of tools such as

– Reference Pricing – This would set a standard payment rate for a

group of therapeutically similar drug products (For example – CMS will reimburse

a provider at the lowest cost of any product in the “group” or “therapeutic class”)

– Discounting or eliminating patient cost-sharing

– Indication-based pricing

– Evidence-based clinical decision support tools

– Risk sharing agreements based on outcomes

Timing

• We are in comment period

– This ends May 9th

• Next 60 days following closing of the comment

period, CMS will review comments

• 90 days to implement the program, best estimate

Phase 1 could be around October 1, 2016

• Phase 2 no earlier than January 1, 2017

4/28/2016

4

Exceptions

• Oncology Care Model – May be Exempt

– Demonstration project under way for a small group

which takes drug utilization into consideration

• State of Maryland (Currently working with

CMS)

??????????????????????????????????????????????

Sequestration

• Part B Demonstration is subject to sequestration

What does this mean for Drug reimbursement?

Under ASP +2.5% plus $16.80 flat fee we will be

reimbursed approximately ASP +0.86% plus $16.46

once per J Code per day

4/28/2016

5

What We Learned

on the Hill

• CMMI – Part B Demonstration assigned by

White House to Manage Utilization/Cost of

Part B Drugs

• Demonstration will NOT be withdrawn,

however CMS/CMMI opened to solutions

submitted through the CMS Comment vehicle

• Letter under consideration from both

Democratic and Republican Houses in congress

What We Learned

on the Hill

• Concerns regarding size and scope of the

demonstration projects

• Concerns over aggressive timetable

• Open to understanding Utilization by

Rheumatology

• Concerns over the ability of small practices (7

Providers and under) to purchase at or below

ASP

4/28/2016

6

CSRO/NORM POINTS

• Rheumatologist DO NOT prescribe based on increased

profit margins. In fact our highest priced biologic is

prescribed 11% of the time.

• Clinical Pathways – Rheumatology will start with

DMARDS (generic) and then if patients fail then move

on to biologics

• Smaller practice do not buy at or below ASP

• Phase 2 – Reference Pricing/Patient Outcomes do not

fit our biologics – no data to support

CSRO/NORM POINTS

• Practice may need to shift site of care to hospital. This

would be an additional hardship to our Medicare

patients

– CMS did not see this following sequestration does

not believe this will happen now

• Provided data that Physician Practice is the lowest cost

option for delivering infusions. If site of care changed

to hospital/home will actually increase cost to the

Medicare system

4/28/2016

7

CSRO/NORM POINTS

• Annual Rise of ASP is increasing rapidly

• Provided Survey from CSRO showing 73.08%

of practice would not be able to infusion

Medicare patients

• Most hospitals that continue to infuse are 340B

hospitals, however only 40% of hospitals

participate in 340B program

4/28/2016

8

Have Your Voice Heard

• Letters/Emails have flooded the Hill

– Petitions, standard letters are effective when you can

personalize the document

• Direct your efforts to your State Representatives

• Comment Period Ends May 9th - This is a public

forum and they are looking for your suggestions and

concerns

• CMS is interested in Invoices/EOBs showing

practices are underwater with reimbursement of drugs

CMS COMMENT

• Medicare Program; Part B Drug Payment Model

• A Proposed Rule by the Centers for Medicare & Medicaid Services on 03/11/2016

• https://www.federalregister.gov/articles/2016/03/11/2016-05459/medicare-program-part-b-drug-payment-model#open-comment

• You are submitting an official comment to Regulations.gov. Comments are due 05/09/2016 at 11:59 PM EDT.

4/28/2016

9

NORMs Position

• Beneficiary Impact

• Model Scope

• Physician Impact

• Physician Acquisition of Drugs

• Other Models

• Potential Shifts in Site of Service

• Phase One Comment Period

Patients

• Access to Care

– Hospital Infusion

– Physician Office Infusion

– Home Infusion

• Affordability

• Physicians Relationships

• Testimonials

Town Hall – FQA

1. Does Sequestration apply to the demonstration project? Yes, it applies. At the ASP +2.5 (effectively our reimbursement rate will be 0.86%) and to the $16.80 (effectively $16.46).

2. Is this demonstration project only applicable to a small group of zip codes? Or essentially all zip codes? Phase 1 50% - Phase 2 will be 75%, only 25% will be paid as the control group as seen below

Phase 1 Phase 2

ASP +6% Control – 50% zip codes ASP +6% Control ASP +6% with VBP tools ASP +2.5% and flat fee $16.80 ASP +2.5% and Flat Fee 50% zip codes ASP +2.5% Flat Fee with VBP tools

3. Why shouldn’t practices just send their patients to the hospital for infusions?

That will be each practice decision to make once you do a profitability analysis.

4. Is the $16.80 add-on per drug unit per claim? No. J code per day (not by units) Example: J7145 80 units will have a $16.80 add on payment J7145 20 units will have a $16.80 add on payment

5. Does the $16.80 add on apply to premeds, both oral and IV?

Only to J Codes we will bill under Part B. For example: solumedrol

6. Are there any carve outs or exemptions to this demonstration project? There is an Oncology Care Model that a few physicians participate in. This is under consideration. The State of Maryland may be exempt as well.

7. Is this another program like PQRS, VBM, MIPS, Etc? Technically NO. This is aFive year demonstration project however, the size and scope brings this into question.

8. Does NORM have any taking points for us to use when we or our patients call Congress? Highlight concerns in your ability to continue in infuse Medicare patients in your office. If you are a small practice and cannot purchase all your biologics at ASP or below, this is a concern you can highlight. Physician’s office provides the best Quality of Care for our very complex chronic patients. Sending these patients to the hospital will increase cost to the Medicare system. Also are you in an area with a 340B hospital? If your patients are sent to the hospital this will be additional burden to our patients.

9. What are options for small solo or two MD practices like us, if we are chosen for this experiment?

You will need to do a profitability study. You may join GPO’s, Rebate programs etc. to get the absolute best pricing. Once we have more information on the final rule we will try to provide additional information.

10. ACR GAC indicated this is a done deal-now concerned about input to implement but not cxl-CMS

wont cxl-need input on implementation We are hearing that there will be no withdraw, however, they are open to comments with solutions

11. Will all of our traditional Medicare patients fall under whatever payment model is applied to our

practice based on PCSA? What we know at this time is all traditional Medicare patients within your practice will fall under your assigned ASP. If they go to another practice/hospital they will fall under their billing zip code

12. What do hospitals make on the Drug? Will the hospitals be able to service all the patients if the

local practice chooses to send? Great question. I am not sure what hospital will make on the drug, however, 340B hospital have a huge discount. Hospital may choose not to infusion or embrace the infusions. Like private practice, the hospital will have to make those decisions when all the facts are known.

Ethel Owen President

1121 Military Cutoff #337 Phone: 561-659-4242 (ext 325) Wilmington, NC 28405 Fax: 910-254-1091 www.normgroup.org Email: ethel.owen@arapb.com

April 21, 2016

To Whom It May Concern:

The National Organization of Rheumatology Managers is a 501c6 organization representing rheumatology managers,

physicians and patients. Our mission statement proclaims we are a forum by which we promote and support education,

expertise and advocacy for access to care for our rheumatology practices and their patients.

On behalf of our manager members, I am writing to share our concerns with the Medicare Part B Drug Payment Model

Proposed Rule by the Centers for Medicare and Medicaid Services (CMS). We share the Administration’s concern about

rising Part B Drug costs and agree that this problem must be addressed. However, we don’t agree with the assertion by

CMS that physicians may choose their Medicare patients’ drug therapy based on the highest reimbursement to the

physicians.

Under the proposed demonstration many practices may shift treatment for their Medicare patients to the hospital

setting, but in many areas of our country this is not an option. Many hospitals removed these therapies from their

outpatient services when sequestration was implemented. In fact after sequestration many rheumatology practices took

in hospital outpatient infusion patients. Patients saw a reduction in cost, less time spent on treatment and improved

communications when receiving treatment. Many of our older population have limited transportation and funds. Data

shows that both Medicare and beneficiaries will pay more for treatments in the hospital setting. Patients have travel,

tolls and parking expenses. The overall out of pocket expense for receiving infusions in hospitals vs. in office infusion

treatment is more. Copays are considerably higher for patients receiving care in a hospital setting. Cost to our patients is

a concern related to the underlying concept of this demonstration. We believe many Medicare beneficiaries will be

significantly disadvantaged by the proposed rule

NORM has concerns about the timing, logistical challenges and the complexity of the program. Understanding the

localities by zip code, the two phase approach with four study arms, and the rapid shifting of our payment model

without having proper advance notification of the specifics are all problematic aspects.

NORM also has concerns about the financial impact of the Medicare Part B Drug Payment Model Proposed Rule. We

manage our practices, employ staff, maintain compliance with state and federal regulations, balance our budgets, and

participate in PQRS and MU. We have successfully implemented ICD-10, adapted EHR’s, and are preparing for

MACRA and Value Based Modifiers. We manage small medical businesses that provide services to some of America’s

oldest and sickest citizens. We ask that CMS withdraw the proposal and work with physicians and other healthcare

professionals to develop an alternative to effectively address the high cost of Part B medications.

Sincerely,

Ethel D. Owen

Ethel Owen President

1121 Military Cutoff #337 Phone: 561-659-4242 (ext 325) Wilmington, NC 28405 Fax: 910-254-1091 www.normgroup.org Email: ethel.owen@arapb.com

MEDICARE UTILIZATION OF BIOLOGIC DRUGS FOR AUTOIMMUNE DISORDERS: RHEUMATOID ARTHRITIS Source: Magellan Rx Management, Medical Pharmacy Trend Report, 2015 Sixth Edition

2014 Medicare Cost per Unit and Claim for Top Drugs by Provider Type

Source: Magellan Rx Management, Medical Pharmacy Trend Report, 2015 Sixth Edition

Annual Rises in ASPs for Two Representative Products

$53.73

$18.698

$79.905

$39.442

0

10

20

30

40

50

60

70

80

90

REMICADE ORENCIA

Chart Title

Q1 2007

Q1 2008

Q1 2009

Q1 2010

Q1 2011

Q1 2012

Q1 2013

Q1 2014

Q1 2015

Q1 2016