CMS withdraws its proposed alternative payment models in pharmaceutical reimbursement

CMS’ Center for Medicare and Medicaid Innovation (CMMI) rattled many in the healthcare system, including manufacturers, when it announced its Medicare Part B Payment Model last spring. The program was proposed as an “experiment,” but its national scope and multi-year rollout made it look more like a complete reimbursement overhaul. More or less simultaneously with the Model introduction, another CMS function, the Office of the Assistant Secretary for Planning and Evaluation (ASPE), produced some “Issue Briefs” documenting the worrisome rise in specialty pharmaceutical spending—something that nearly everyone understands, but for which there is no consensus on what to do.

Now, just as the program was supposed to begin taking hold, CMS has withdrawn it, in the face of strident criticism from pharma and healthcare trade groups, and little Congressional support. One of the key targets of the Model was what are generally regarded as the “perverse incentive” of current drug reimbursement: physicians (or their employers) make more money when a more expensive drug is prescribed over a cheaper one. To address this and other potential improvements in Medicare reimbursement, CMMI proposed bundling the reimbursement of low-cost and high-cost drugs in certain therapeutic classes; risk-sharing; a flat-fee reimbursement for dispensing (rather than one tied to the cost of the drug); and others. The CMMI proposals were not revolutionary new reimbursement programs; it noted that such models are currently in use in commercial insurance.

The widespread criticism of the program centered on the issue of how reimbursement interferes with healthcare providers’ medical judgement (which, in fact, any reimbursement program short of patients with infinite resources and physicians with infinite prescribing discretion does); and that an “experiment” set up the way CMS was proposing was not an experiment at all. The program also suffered from the reflexive dislike of anything being done under the Affordable Care Act (Obamacare), a touchstone of the Republican Party since the law was passed in 2010.

A measure of how far off from practicality the program was can be found in an opinion piece written by the leaders of the Community Oncology Alliance and the Healthcare Leadership Council, published this week in The Hill news service, supporting the idea that CMMI should be allowed to continue to exist in some form when Congress goes after Obamacare next year.