CY 2019 Medicare Physician Fee Schedule and Part B Proposed Rule Signals Payment Reduction for New Part B Drugs

Comments on the Proposed Rule are due by September 10, 2018. 

Among a host of other proposals related to Medicare reimbursement for physician services, the Proposed Rule contains provisions that would decrease the amounts that Medicare pays for drugs administered by physicians or in the physician office setting under Medicare Part B. Specifically, the Centers for Medicare & Medicaid Services (CMS) is proposing that, effective January 1, 2019, new drugs or biologicals introduced to the market lacking Average Sales Price (ASP) data during the first and second quarters of sales be reimbursed at the drug or biological’s Wholesale Acquisition Cost (WAC) plus a three percent (3%) add-on, as opposed to the six percent (6%) add-on that is currently used. CMS cited several justifications for the change in reimbursement, most heavily relying upon a June 2017 report issued by the Medicare Payment Advisory Commission (MedPAC) containing the recommendation, and also arguing that the change in reimbursement will ultimately lower beneficiary cost-sharing.

The payment adjustment in the Proposed Rule would also necessitate changes to the corresponding regulation at 42 CFR 414.904(e)(4) and policy guidance contained in the Medicare Claims Processing Manual. 

The Proposed Rule does clarify that the change in reimbursement would not apply to new biosimilars, whose reimbursement would remain at the drug’s WAC plus 6% of the reference drug’s ASP. In addition, reimbursement for established drugs whose WAC is below ASP would continue to be reimbursed at WAC plus 6%.

Stakeholders in this space should utilize the opportunity to comment on all relevant provisions of the Proposed Rule. 

Arent Fox’s Health Care group regularly advises clients on submitting comments on proposed regulations and regularly monitors developments regarding the evolving pharmaceutical reimbursement environment, as well as other issues affecting the pharmaceutical industry. If you have any questions regarding this topic, please contact Stephanie Trunk or Douglas Grimm in our Washington, DC office, Thomas Jeffry in our Los Angeles office, or the Arent Fox professional who regularly handles your matters