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Important reimbursement information.

Please be aware that Medicare is considering a change in how it reimburses for drugs administered in a physician’s office. This could have a dramatic, positive impact on your practice, so please follow this issue carefully.

From Medscape Medical News:
Part B Drug Proposal Has Winners and Losers Alike
Robert Lowes
April 21, 2016

Last month, a coalition of more than 300 medical societies, patient advocacy groups, and others asked Congressional leaders in a letter to help kill a proposal for changing how Medicare pays for drugs administered in clinical settings.

Societies representing oncologists signed the letter, as did those for rheumatologists and ophthalmologists. They contend that under the less favorable terms of the new plan, many of their members would no longer be able to afford administering drugs in their offices that preserve a patient's eyesight, mobility, or life. As a result, those treatments would shift to a costlier hospital outpatient setting, and thus become unaffordable for many patients.

Missing from the list of signatories, however, were societies for family physicians, internists, orthopaedic surgeons, and cardiologists. That might not be surprising: Their members stand to earn more money — for family physicians, more than 40% more — by administering drugs to Medicare patients if the proposal is set in stone, according to the Centers for Medicare and Medicaid Services (CMS).

Once again, Medicare policy promises to make some physicians financial winners and some financial losers.

The Medicare Part B program, which covers physician services, pays clinicians the average sales price (ASP) of drugs they purchase and administer plus an extra 6% that covers handling and storage. CMS suspects, however, that this formula motivates physicians to order higher-priced drugs when a less expensive one will do because the 6% margin translates into higher revenue as the price goes up.

Accordingly, CMS has proposed a new formula that reduces this incentive. Medicare Part B would pay physicians the ASP, an add-on of only 2.5%, and a flat fee of $16.80 per drug per day, regardless of the price. This change would boost Part B drug revenue for primary care physicians and others who administer relatively inexpensive drugs such as injectable steroids, antibiotics, and vitamins, while reducing revenue for specialists who administer the more expensive ones. Oncologists, ophthalmologists, and rheumatologists fall into that camp. Total spending on Part B drugs would neither decrease or increase, but just get redistributed.

CMS intends to test this reimbursement framework for Part B drugs in select geographic regions late this year.

In 2017, CMS will broaden the experiment by adding various pricing strategies now used in the private sector in an attempt to lower Part B drug costs overall. These strategies include discounting or eliminating patient cost-sharing, giving clinicians feedback on their prescribing decisions, and basing a drug's price on its clinical effectiveness. The government will compare the new model with the status quo in other geographic areas over the course of 5 years.

Read more here ( requires Medscape member login).

Specialty Winners and Losers Under the Part B Drug Proposal:

Selected specialties

Total Payments for Part B Drugs in 2014 (in Billions of Dollars)

Projected Change Based on ASP Plus 2.5% Plus $16.80

Hematology/oncology

$4.1 billion

-0.6%

Ophthalmology®

$2.4 billion

-1.7%

Pharmacy

$1.4 billion

4.2%

Rheumatology

$1.2 billion

-1.5%

Medical oncology

$1.2 billion

-0.7%

Internal medicine

$412 billion

9.1%

Urology 

$349 billion

0.4%

Neurology

$231 billion

-1.4%

Orthopedic surgery

$223 billion

15%

Hematology

$164 billion

-0.6%

Nurse practitioner

$136 billion

8.7%

Family practice

$119 billion

43.6%

Cardiovascular disease

$113 billion

9.3%

Gastroenterology

$76 billion

-1.5%

Nephrology

$50 billion

4.7%

Interventional pain management

$16 billion

46.9%

All clinician specialties
(including pharmacies)

$13.2 billion

1.3%

All hospitals

$7.2 billion

-2.3%

Total for all clinician specialties does not include those with less than $10 million in total drug spending.

Source: Centers for Medicare and Medicaid NursServices

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