International Pricing Index Model for Part B Drugs

The Network Urges CMS to Not Move Forward

On December 31, The Network submitted formal comments urging the Centers for Medicare and Medicaid Services (CMS) to not move forward with a potential International Pricing Index Model (IPI) for Part B drugs.

“We have strong concerns regarding the IPI Model under consideration, which would fundamentally disrupt patient access to timely, personalized cancer treatment options close to home,” The Network letter states. “The proposed model could further escalate consolidation in oncology care and impede ongoing investments and efforts to transition toward value-based care delivery.” The Network’s comments focused on several concerning elements of the IPI model:

  • The IPI’s mandatory participation will jeopardize the success and savings achieved from voluntary value-based payment models, like the OCM, and make it unrealistic for CMS to extract usable data.
  • Inserting a third-party vendor in the procurement and distribution of Medicare Part B drugs will disrupt Medicare patients’ access to personalized cancer treatment and introduce an unparalleled level of complexity and administrative burden for community-based providers.
  • The IPI model flat-fee does not adequately account for provider risk and operational challenges, nor does it fully account for the inherent system costs that would remain.
    The IPI model could limit patient access to novel, innovative therapies not available in other countries.
  • The disruptive elements of the IPI model pose excessive risk and unpredictability to community-based practices and could result in providers closing their doors, further pushing patients out of the community-setting and into less convenient, more costly settings of care.
  • We believe the answer lies in proven strategies such as the development of voluntary, targeted, collaborative payment models such as the OCM and use of evidence-based treatment guidelines such as Value Pathways.

On October 25, CMS issued an Advance Notice of Proposed Rulemaking (ANPRM) on an expansive new demonstration project, the International Pricing Index (IPI) model, that would allow private-sector vendors in Part B to negotiate drug prices in order to purportedly align payments for physician-administered drugs to prices paid in other countries. The comment period for the ANPRM closed on December 31, 2018. CMS will review comments and is considering issuing a proposed rule for the IPI in the spring of 2019, with a potential model start in spring 2020. The following is a high-level summary of the proposed model:

  • The model would be phased in over a five-year period, apply to 50 percent of the country, and cover most drugs in Medicare Part B.
  • CMS would use a randomized approach to determine which geographies in the country would participate in the model.
  • Model participation would be mandatory for the physician practices, HOPDs, and potentially other providers and suppliers, in each of the selected geographic areas.

The IPI model would create a system in which private vendors procure drugs, take title to drugs, distribute them to physicians and hospitals, and take on the responsibility of billing Medicare. Vendors would aggregate purchasing, seek volume-based discounts, and compete for providers’ business. Physicians and hospitals would pay the model vendor for distribution costs and would collect beneficiary cost-sharing, including billing supplemental insurers.

The model would begin with two broad groups of drugs – single source drugs and biologicals – but could expand to include multiple source drugs and Part B drugs provided in other settings. Instead of paying based on ASP, CMS would pay for the drug based on a Target Price derived from international price index and designed to draw down Part B drug prices toward international prices over the course of the model. The Target Price would be 126 percent of the average price other countries pay for the drug.

Instead of the current percentage-based add-on payment, physicians and hospitals would receive a set payment amount for storing and handling drugs that would not be tied to drug prices. The ANPRM considers a slight increase in the alternative add-on payment – so that total payments to physicians and hospitals for the add-on would reflect the full 6 percent rather than the 4.3 percent due to sequestration – for the model. CMS is also considering creating alternatives to the add-on payment amount for model participants, such as a set payment amount per encounter or per month for an administered drug, which would not vary based on the price of the drug itself.  CMS is also considering whether to uniquely set the payment amount for each class of drugs, physician specialty, or physician practice (or hospital).

Previously, The US Oncology Network released a statement and joined a letter from the Part B Access for Seniors and Physicians (ASP) Coalition to express concerns with the IPI proposal. In its comments to HHS on the American Patients First Blueprint and the Outpatient Prospective Payment System, The Network warned against a Competitive Acquisition Program (CAP)-like model and will continue to oppose any proposals that jeopardize patients’ access to care in the community-based setting.