Hospitals want Part B proposals narrowed in scope

The American Hospital Association has praised the proposed Part B drug cost savings demonstration project, but believes a federal agency should narrow its scope.

The Centers for Medicare & Medicaid Services announced in March that it was considering new alterative payment models for Part B drug payments, primarily to try and curb the cost growth for drugs, as spending nationwide has exceeded $450 billion a year. 

As a result, there would be incentives to encourage patients and physicians to select lower-cost and higher-performing drugs. Among the proposals: Cutting payments to providers to the average sales price of a drug plus a 2.5 percent add-on and a flat payment of $16.80 per day for each drug, down from the current average sales price and 6 percent add-on There would also be payments based on patient outcomes.

The proposal has already drawn criticism from the pharmaceutical sector, which has expressed concerns that it would degrade patient access to treatment.

"Hospitals have little control over which drugs physicians prescribe in hospital-based settings," said the AHA's 19-page letter to acting CMS Director Andrew Slavitt. "Yet this model would hold them accountable for such decisions to an inappropriate degree. Even if hospitals could influence physicians' decisions, there is a dearth of lower-cost, clinically meaningful alternatives available for many of the common conditions treated in hospitals." The letter expressed concerns that hospital outpatient departments could bear up to 60 percent of the cost cuts.

Should the program proceed, the AHA asked that it exclude cancer drugs and be deployed in smaller geographical areas. It also proposed tiered payment systems for drugs based on whether their average sales price is below or above $100 or above $480.

To learn more:
- read the AHA's letter (.pdf)

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