March 25, 2016 Practice Points

Medicare Proposes Mandatory Participation in Part B Drug Payment Model

A proposed rule published by CMMI would require all physicians, outpatient hospitals, and suppliers nationwide to participate in a payment-model demonstration covering all Part B drugs.

By Kara Cardinale

Medicare would require all physicians, outpatient hospitals, and suppliers nationwide to participate in a payment-model demonstration covering all Part B drugs under a proposed rule published by the Center for Medicare and Medicaid Innovation (CMMI) March 8, 2016. CMMI states in the proposed rule preamble:

To eliminate selection bias, we are proposing to require participation for all providers and suppliers furnishing any Part B drugs included in the Part B Drug Payment Model. . . . Mandatory participation allows us to observe the experiences of an entire class of providers and suppliers with various characteristics, such as different geographies, patient populations, and specialty mixes, and to examine whether these characteristics impact the effect of the model on prescribing patterns and Medicare Part B drug expenditures.

Mandatory participation by purchasers and Part B drug manufacturers nationwide represents a significant expansion in the scope and breadth of payment models tested by CMMI. CMMI recently finalized a rule establishing a separate payment model—the Comprehensive Care for Joint Replacement Model (CJR)—that mandates hospital participation in 67 metropolitan statistical areas, not nationwide. No litigation has commenced to date over mandatory hospital participation in the CJR.

Drug manufacturers, providers and suppliers already have expressed significant concern with the mandatory nature of the proposed payment model—as well as myriad other policy-payment issues raised in the proposed rule. Additionally, members of Congress including House Energy and Commerce Committee chairman Fred Upton (R-MI), House Ways and Means Committee chairman Kevin Brady (R-TX), and Senate Finance Committee chairman Orrin Hatch (R-UT) stated they will pursue “aggressive oversight over CMMI” in response to the proposed rule.

CMMI’s statutory authority to conduct mandatory payment demonstrations appears rather broad, however. Section 1115A of the Social Security Act states that the Department of Health and Human Services “Secretary may elect to limit testing of a model to certain geographic areas.” As written, this statutory language seems to presume that model testing will occur in all Medicare geographic areas, but could be limited to only certain geographic areas if the secretary so chose. Moreover, the statute declares that “no administrative or judicial review” exists to appeal specified model requirements including: “(A) the selection of models for testing; (B) the selection of organizations, sites or participants to test those models selected; and (C) the elements, parameters, scope, and duration of such models for testing or dissemination.”

CMMI does propose excluding certain providers, suppliers, and specific drugs from the Part B Drug Payment Model, but on a very limited basis for specific policy concerns.

CMMI will accept comments on the proposed rule through May 9, 2016.

— Kara Cardinale, Kasper Cardinale Consulting, LLC, Washington, D.C.

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