MedPAC Spends the Afternoon on Drugs

The Medicare Payment Advisory Commission (MedPAC) a key advisory group to Congress on issues of Medicare payment, spent the afternoon on March 3, 2016 discussing three issues of importance to hematologists and patients with hematologic diseases. Sessions covered oral drugs covered by Medicare Part D plans, physician-administered drugs covered by Medicare Part B, and new methods to more efficiently treat patients with cancer. Each of these discussions included items of note for hematologists.

Part D Drugs

The Medicare Modernization Act (MMA) was enacted in 2003. The highlight of this law was the initiation of the Medicare Part D prescription plan, adding prescription drug coverage to the Medicare benefit. The benefit was structured in a somewhat confusing way which included various coverage levels based on spending. Many people are familiar with the coverage “donut hole” gap in which patients who had more than $3,300 in drug spending were required to pay for a very high portion of the costs. Changes from the Affordable Care Act (ACA) are eliminating that benefit gap. However, the ACA did not address what happened to patients who exceed levels of spending of $7,500 on drugs in a year. Those patients are required to pay 5% coinsurance on drug spending beyond this $7,500 without any cap on overall spending. When the Part D benefit was first initiated in 2006, very few patients would reach such high spending. However, drug spending has changed dramatically in ten years. Many more patients are treated with specialty drugs with very high prices and can easily hit the $7,500 limit with their first prescription. MedPAC’s analysis found that nearly 3 million Medicare beneficiaries had more than $7,500 in spending on drugs in 2013. With all of these facts in mind, the commission discussed a policy that would set a hard out of pocket spending cap for patients in Part D drug plans. Such a cap would have a significant benefit for patients who are being treated with new drugs for hematologic diseases. MedPAC did not make a formal recommendation on this issue.

Part B Drugs

Over the past year, MedPAC has discussed the issue of payment rates for physician-administered drugs a number of times. In addition to creating a prescription drug benefit, the MMA changed the payment rates for physician administered to 106% of Average Sales Price (ASP), a payment rate reported by manufacturers that includes all purchasers of this drug. The commission discussed making changes to this payment calculation in order to reduce the incentive to provide more expensive drugs. The commission appears to be coalescing around a policy that would support a payment rate equal to 103.5% of ASP plus a $5 add-on payment. This would have the result of decreasing payments for expensive drugs and increasing payment for very inexpensive drugs. MedPAC’s analysis showed that such a change would reduce Medicare payments to hematologists/oncologists by 1%. Commissioners also discussed broader changes to payment mechanisms for physician-administered drugs, including revisiting a competitive acquisition program that was generally considered a failure after a pilot a decade ago. MedPAC will continue to consider these policy options going forward.

Oncology Care

MedPAC also began to address issues associated with the efficiency of care for patients with cancer. While MedPAC did not consider any particular policy options, the commission did hear presentations on a number of potential cost-saving options for the program, including clinical pathways and oncology medical homes. It is unclear how MedPAC will address this issue in the future.

MedPAC issues a report in June that will likely cover these topics. In addition, some formal recommendations may be made at their meeting in April.