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The Network Expresses Concerns with

Proposed International Pricing Index Model

The US Oncology Network expressed concern with a new Centers for Medicare and Medicaid Services (CMS) proposal to change how Medicare pays for physician-administered drugs.

On October 25, the Centers for Medicare and Medicaid (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 will close on December 24, 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 model would test wide-scale, broad changes to the current Part B system, including several concerning components that could have negative implications for patient access and safety. The Network will be commenting on the rule before the December 24 deadline and encourage practices to do so as well. Please see a high-level summary of the IPI model below:

  • 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).

The US Oncology Network, in its comments to HHS on the American Patients First Blueprint and the Outpatient Prospective Payment System, 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.