Trump administration proposes new Medicare drug payment model to reduce costs
HEALTHCARE FINANCE- Susan Morse, Senior Editor October 25,2018 The International Pricing Index model would reset Medicare payments for physician-administered drugs. President Trump on Thursday proposed to reduce prescription drug costs in a move projected to save taxpayers and patients $17.2 billion over five years. America's Health Insurance Plans commends the proposed payment model, while the American Medical Association voiced more caution. Under the proposed International Pricing Index model, Medicare's payments for select physician-administered drugs would shift to a level more closely aligned with prices in other countries. The move from current payment levels to payment levels based on international prices would be phased in over a five-year period, would apply to 50 percent of the country, and would cover most drugs in Medicare Part B, which includes physician-administered medicines such as infusions, according to the Department of Health and Human Services. HHS said it is considering a randomized approach to determine which geographies in the country would participate. The Centers for Medicare and Medicaid Services is taking comments prior to issuing a proposed rule in the spring of 2019, with a potential start in spring 2020. WHY THIS MATTERS HHS contends the model would correct existing incentives to prescribe higher-priced drugs and, for the first time, address disparities in prices between the United States and other countries. Since patient cost sharing is calculated based on Medicare's payment amount, patients would see lower costs under the model, HHS said. TREND Physicians currently purchase the drugs they administer and receive payment from Medicare at an amount equal to the average sales price plus an add-on fee. The add-on is calculated as a percentage of the average sales price of the drug. This creates several problems, HHS said. First, [...]