In case you missed it, a recent white paper from Xcenda took a deeper look at how Medicare Part B reimburses for physician-administered medicines and how the program has evolved over time. The white paper describes how the Part B Average Sale Price (ASP) reimbursement system works effectively to balance patient access and cost control, concluding that “Medicare pays a lower and more transparent rate than other payers, and the way it is currently structured benefits physicians and patients.” Xcenda also highlights ways this market-based program has been evolving to manage drug spending while ensuring patients who need physician-administered medicines (many of whom have serious and complex diseases) have access to the treatments they need.
In the paper, Xcenda calls attention to four strengths of Part B starting with the ASP system for reimbursing for physician-administered medicines. We’ve talked before about how ASP is a transparent methodology that reflects changes in the marketplace through quarterly updates. This system incorporates the rebates and discounts that are privately negotiated between manufacturers and purchasers. In fact, Xcenda explains, “The ASP methodology incentivizes providers to negotiate lower drug acquisition prices. This competitive, dynamic environment helps restrain prices, especially year-over-year increases, in the market.” Many have proposed changing the ASP system, overlooking its success since implementation. However, Xcenda concludes this could lead to increased costs for Medicare and beneficiaries through: 1) a shift of patients to more expensive hospital settings; 2) waste of unused medicines; 3) additional bureaucracy in the system; and 4) insertion of third parties between patients and doctors.
In addition to the ASP system, the other strengths the paper identifies include:
- The availability of Medicare Advantage as an option for beneficiaries: “A growing share of Medicare enrollees now opt to receive their Part A and Part B benefits through these commercial health insurance plans [Medicare Advantage] … . Medicare Advantage plans often leverage the ASP system, but also have added flexibility to negotiate contracted payment rates and manage utilization of Part B drugs.”
- The incorporation of alternative payment models (APMs) in Part B: “APMs can apply to a specific clinical condition, an episode of care, or a population. Most Medicare APMs encourage providers to keep spending under a pre-defined benchmark. Seven active Medicare APMs call on providers to manage Medicare Part B drug spending, in addition to other Medicare Part A and/or B services.”
- The broader shift toward value-based care in Part B: “Under the new Part B payment system, the Quality Payment Program (QPP), physicians have significant incentives (e.g., a 5% bonus payment) to participate in qualifying APMs. The number of physicians in value-based payment programs that include Part B drug spending, such as OCM and MSSP, is expected to grow as they respond to these incentives. Even physicians who do not sign up to participate in APMs will be paid under performance-based methodologies.”
Over the past few years, there has been increased discussion of changing Medicare and how the program pays for physician-administered medicines. But in the midst of these conversations, it is important to take a step back and reflect on areas where Medicare has gotten it right. Part B spending continues to be a small, stable share of overall Medicare spending, and other stakeholders can apply lessons learned from the program’s successes.