How Potential Changes to Medicares Buy-and-Bill Model May Affect - - PowerPoint PPT Presentation

How Potential Changes to Medicare’s Buy-and-Bill Model May Affect Your Hub

John Carlsen Vice President, Market Access Consulting

February 2019

Important Disclaimer: According to the Trump administration’s spring 2019 regulatory agenda released on May 22, 2019, the proposed rule on the International Pricing Index (IPI) Model for Part B Drugs has been delayed until August 2019. The content of this presentation was developed for a conference in February 2019, and does not reflect the delayed timing of the proposed rule.

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Agenda

Overview of the IPI Model Historical Context What Happens Next? Implications for Hubs

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Overview of the IPI Model

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International Price Index (IPI) Model for Part B Drugs

October 25, 2018

The Centers for Medicare and Medicaid Services (CMS) announced a potential new model for Medicare Part B drugs

• Would apply to injectable/infused drugs

administered in a physician’s office or hospital outpatient department (HOPD)

Spring 2020 - Spring 2025

The IPI Model would test changes related to reimbursement for Part B drugs over a five-year period

Medicare payment rates based on prices in other countries Flat “add-on” payment not tied to cost of drug Providers obtain drugs from private-sector vendors instead

• f “buying and billing”

Three components

• f the Model

This presentation focuses on the third component of the model (a form of “white bagging”)

Important Disclaimer: According to the Trump administration’s spring 2019 regulatory agenda released

• n May 22, 2019, the proposed rule on the IPI Model has been delayed until August 2019. The content
• f this presentation was developed for a conference in February 2019, and does not reflect the delayed

timing of the proposed rule.

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Traditional Buying and Billing under Medicare Part B

Under this system, providers are reimbursed for most drugs at average sales price (ASP) + 6%

Provider

Bills Medicare for drug and admin service Collects patient cost- sharing for drug and admin service

Wholesaler/ Distributor

“Buy”

Provider (physician office or HOPD) purchases drug

“Bill”

Provider bills Medicare for drug and collects cost-sharing from patient (or secondary insurer); also bills and collects cost-sharing for administration service

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Drug Procurement and Reimbursement under the IPI Model

Model Vendor Wholesaler/ Distributor Provider

Bills Medicare for admin service Collects patient cost- sharing for drug and admin service

Procurement

Model vendor (e.g., specialty pharmacy) purchases drug and ships to provider

Reimbursement

► Model vendor bills Medicare for drug ► Provider bills Medicare for administration service and collects cost-sharing from patient (or secondary insurer); also collects cost-sharing for drug Under this model, providers would receive no reimbursement for the drug itself, but would receive a flat add-on payment (not based on ASP)

Bills Medicare for drug

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Key Aspects of the IPI Model: Vendors

Private-sector vendors would:

• Contract with CMS to supply providers with drugs included in the model
• Operate on a national basis
• Negotiate drug prices with manufacturers
• Take on the financial risk of purchasing drugs and billing Medicare
• Be reimbursed for drugs at rates tied to international prices

CMS anticipates that a variety of entities could potentially serve as vendors:

• Specialty pharmacies
• Group purchasing organizations (GPOs)
• Wholesalers
• Distributors
• Part D sponsors
• Physicians and hospitals
• Manufacturers
• Others

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Key Aspects of the IPI Model: Providers

Providers would:

• Be removed from the buying-and-billing process for included drugs
• Obtain included drugs from model vendor(s)
• Bill Medicare for the administration service (e.g., IV infusion)
• Receive a flat add-on payment for an administered drug
• Collect cost-sharing from the patient for both the drug and the administration service
• Continue to buy and bill for drugs excluded from the model

Providers subject to the model would include:

• Physician practices
• HOPDs
• Potentially others (e.g., ASCs, DME suppliers)

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Key Aspects of the IPI Model: Geographic Scope

Model would be implemented in approximately half of the country

• Randomized design across the U.S.
• Geographic areas to be determined
• Mandatory participation for providers in the geographic areas
• Providers outside of the geographic areas would continue to buy and bill

CMS is considering using Core Based Statistical Areas (CBSAs) for the geographic areas in the model

• > 900 CBSAs in the U.S.

However, CMS also notes that it may be necessary to use larger geographic areas “to avoid the potential for routine shifts in the site of care”

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Key Aspects of the IPI Model: Included Drugs

Model would initially focus on single-source drugs and biologicals (including biosimilars):

• Included drugs would need to have sufficient international pricing data
• At a minimum, CMS expects to begin the model by including “most” of the 32 “top Part B drugs”

referenced in a recent HHS report*

• Would also include multiple source drugs with a single manufacturer (and potentially other multiple

source drugs)

• More drugs would be added to the model over time
• To-be-determined mechanism for adding newly approved drugs

Certain types of drugs would be excluded from the model:

• “Not otherwise classified” (NOC) drugs (e.g., J3490)
• Radiopharmaceuticals
• End-stage renal disease (ESRD) drugs
• “Short supply” drugs as identified by the FDA
• Hospital outpatient packaged drugs

* U.S. Department of Health and Human Services (HHS). Comparison of U.S. and International Prices for Top Medicare Part B Drugs by Total Expenditures. October 25, 2018. Available at: https://aspe.hhs.gov/system/files/pdf/259996/ComparisonUSInternationalPricesTopSpendingPartBDrugs.pdf

Historical Context

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Competitive Acquisition Program (CAP) for Part B Drugs

2003 January 1, 2009 July 1, 2006 – December 31, 2008

White bagging program established by the Medicare Modernization Act (MMA) as an alternative to the ASP methodology

• Drugs supplied by CAP

vendor

• Physicians removed

from buying-and-billing process

Program in operation Contractual issues with bidders led CMS to indefinitely suspend the CAP

Only one vendor (BioScrip) Small percentage of physicians participated, with significant attrition each year Did not achieve cost savings Extensive logistical and administrative requirements limited appeal

• f program

Was not considered a success

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How is the IPI Model different from the CAP?

CAP (2006-2008) IPI Model (target: 2020-2025)

Provider participation Voluntary Mandatory Provider types Physician offices Physician offices and HOPDs (potentially others) Vendor types Specialty pharmacies only Various Provider choice Allowed to select only one vendor Can receive drugs from multiple vendors, change vendors Drug procurement Subject to rigid requirements (e.g., patient-specific order required for each drug shipped) Flexible arrangements permitted (e.g., vendors not required to take physical possession of drugs) Add-on payment None Flat rate CMS authority for program Mandated by statute (MMA) Test model (CMS Innovation Center)

Important Disclaimer: According to the Trump administration’s spring 2019 regulatory agenda released

• n May 22, 2019, the proposed rule on the IPI Model has been delayed until August 2019. The content
• f this presentation was developed for a conference in February 2019, and does not reflect the delayed

timing of the proposed rule.

What Happens Next?

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Several things must happen for the IPI Model to become a reality

► So far, CMS has only issued an advance notice of proposed rulemaking (ANPRM) ► The model still must go through the full rulemaking process:

• CMS issues proposed rule (target timeframe: spring 2019)
• Stakeholders submit comments on proposed rule
• CMS issues final rule (late 2019?)
• Model takes effect (target timeframe: spring 2020)

► Other important milestones for model implementation:

• Interested vendors submit applications to CMS
• CMS selects vendors
• Vendors contract with CMS
• Providers enroll with vendors

A delay to any of the individual milestones could affect CMS’s ability to meet its target timeframe

Important Disclaimer: According to the Trump administration’s spring 2019 regulatory agenda released

• n May 22, 2019, the proposed rule on the IPI Model has been delayed until August 2019. The content
• f this presentation was developed for a conference in February 2019, and does not reflect the delayed

timing of the proposed rule.

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Many policy and operational aspects of the model still need to be determined

Future rulemaking should provide more details on:

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How geographic areas will be defined

►

Nature of the drug add-on payment (e.g., amount, frequency)

►

Specific drugs included in the model

►

Process for adding new drugs

►

Coding and billing requirements

Other important questions:

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How will exceptions be handled (e.g., in emergency situations)?

►

What will be the rules surrounding wastage?

►

How much oversight will there be from CMS?

►

How will CMS match vendor and provider claims?

►

How will the model work for large provider organizations that span multiple geographic areas?

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Key questions related to the overall viability of the model

How will CMS respond to stakeholder concerns?

► Significant controversy around the use of international

pricing

Will there be sufficient interest from vendors?

► Will depend on their ability to secure low prices from

manufacturers

How will the model affect provider economics?

► Impact could vary depending on provider type, specialty,

practice size, payer mix, etc.

What happens after the five-year period?

► CMS will evaluate the impact of the model on access, costs,

and quality of care

Key Questions

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Implications for Hubs

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What does the IPI Model mean for manufacturer hubs?

The IPI model represents a major change to the reimbursement landscape for Part B drugs

► The mandatory nature of the model means that it would likely have a much

greater impact than the CAP

Hub support will be especially important for providers affected by the model

► Vendors also may look to hubs for assistance

In this section, we provide recommendations for manufacturers looking to optimize their hubs for the IPI Model:

► Know the details of the model ► Anticipate and respond to customer needs ► Be ready to operationalize ► Leverage analytics

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Know the details of the model

Progress of rulemaking and implementation Status of your drugs Implications for new drugs Coding and billing requirements What are the geographic areas? Who are the vendors?

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Anticipate and respond to customer needs

Customer segmentation Utilize institutional knowledge Stakeholder research Unique needs of vendors Education and

• utreach

Adapt as needs evolve over time

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Be ready to operationalize

Update scripts and protocols Ensure adequate capacity Prepare for general inquiries Plan for vendor/ provider coordination Train staff

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Leverage analytics

Call volume Types of requests Drug utilization Treatment patterns Patient access Different types of providers and vendors Use hub data and reports to assess the impact of the model on:

For more information:

John Carlsen

Vice President, Market Access Consulting 240-632-3548 john.carlsen@covance.com

Covance Market Access & Phase IV Solutions www.covance.com/marketaccess

These materials are provided for informational purposes only and do not constitute legal advice. Companies should consult with their own legal advisors.

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