Earlier this month, the Centers for Medicare & Medicaid Services (CMS) proposed studying new ways of reimbursing providers for the cost of drugs covered under Medicare Part B. The goal is to test whether new payment policies can reduce costs and maintain, or even improve, patient health outcomes.
Since the Part B Drug Payment Model was released, there has been vocal opposition to the idea of testing alternative payment approaches. A number of drug companies, health care provider organizations, and patient groups have voiced concerns that the Part B initiative is focused on costs rather than on patients and the quality of health care.1
However, there are growing concerns over rising prescription drug costs, including in public programs such as Medicare. Drug spending in Medicare Part B reached $22 billion in 2015,2 and Part B drug costs have increased by an average of 8.6 percent annually since 2007.3 A recent poll found that 72 percent of Americans believe that drug prices are unreasonable.4
To address these concerns, CMS has proposed evaluating a number of policies, many of which are already used in the private sector by health plans, insurers, and pharmacy benefit managers. Limited evidence exists on how these payment policies would affect Medicare beneficiaries’ access to drugs, health outcomes, and overall costs; this payment model could help answer these questions.
However, challenges exist when designing any policy evaluation, including a study on the scale proposed by CMS. The agency should take the following factors into account as it develops the model:
Before any permanent changes to Medicare are implemented, policymakers must have high-quality evidence of how different payment policies would affect patients and providers. A well-designed experiment can help CMS generate that evidence, which is critical to informing future policies that are designed to ensure patient access, improve health outcomes, and reduce costs.
Chuck Shih leads Pew’s specialty drugs research initiative.
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How different reimbursement models could affect drug prices