Government Affairs Q&A: The latest on Medicare Part B

Let’s start with a look at Medicare Part B physician fee cuts. In our last issue, we urged practices to prepare for cuts to Medicare physician reimbursement that were scheduled to take effect on January 1, 2023. What changed?

AmerisourceBergen U.S. Policy and Advocacy team:

A meaningful portion of the cuts to Medicare Part B physician reimbursement that were expected to go into effect in the new year were averted in the end through the Omnibus Appropriations for FY 2023 legislation (officially entitled the “Consolidated Appropriations Act, 2023¹”). Congress passed the Omnibus Appropriations on December 23, 2022, and President Biden then signed it into law on December 28. It’s fair to say specialty physicians and their patients were able to make significant beneficial progress when this legislation passed.

What does the new legislation entail?

AmerisourceBergen U.S. Policy and Advocacy team:

The Omnibus Appropriations legislation¹ proposed a 4% PAYGO sequester of Medicare spending. It also proposed an annual application of the 2% Medicare sequester has gone into effect through 2031. Other significant aspects include:

• The 4% PAYGO sequester physician pay cut was stopped for two years
• The 4.5% cut to the Medicare Conversion Factor (CF) in 2023 was lowered to a 2% reduction from the 2022 CF, with the cut rising to 3.25% in 2024
• The value-based care incentive for participating in Advanced Alternative Payment Models (APMs) was extended, although the add-on will be 3.5% versus the 5.0% currently provided

Our team also notes a 4.48% reduction in the Medicare physician fee schedule conversion factor, which accounts for the expiration of the temporary 3% pay increase for physicians in 2022. And budget neutrality requirements led to another 1.48% cut.

This sounds like good news for physician practices. What else do practitioners need to know about Medicare Part B physician fee cuts?

AmerisourceBergen U.S. Policy and Advocacy team:

First, we’d like to assure our physician partners that our team will continue in our efforts to further educate and inform Congress on how inflation and reduced reimbursements will impact access to quality care. It’s important to note that during our concentrated advocacy near the end of 2022, we heard clear indications that the new Congress will consider solutions to avoid the ongoing concern of continued physician fee cuts. We’ll remain engaged in that policy discussion and will continue to keep this community informed.

The Inflation Reduction Act drew a lot of attention at the end of 2022. What’s next for 2023?

AmerisourceBergen U.S. Policy and Advocacy team:

After the passage of the IRA, the federal government is taking steps to implement the law into action, and these actions will have significant bearing on AB and our customers. In February, the Department of Health and Human Services (HHS) announced that the Centers for Medicare & Medicaid Services (CMS) would aim to lower the cost of prescription drugs by testing three new payment models². The Center for Medicare and Medicaid Innovation (CMMI) plans to test models that intend to:

• Encourage Part D plans to offer Medicare generic prescriptions at $2 or less
• Cut Medicaid costs for cell and gene therapies through multistate outcomes-based agreements with manufacturers
• Impose Medicare payment restrictions on medicine approved through the Food and Drug Administration’s accelerate approval pathway to sure safety and efficacy

These models are expected to build on the drug pricing reforms put forth in the Inflation Reduction Act (IRA).

• The generic drug model is intended to encourage Part D plans to offer prescription drugs for $2 or less per month per drug for a standardized list of generic drugs that treat chronic conditions. The model will also test whether a standard list of high-value drugs could improve access and adherence. If CMS leverages existing systems, implementation could happen quickly.
• The cell and gene therapies access model would allow state Medicaid agencies and CMS to coordinate and administer multistate, outcomes-based agreements with manufacturers for certain CGTs. The model will account for clinical evidence, pricing data, and utilization patterns and may allow for outcomes-based payments, outcomes-based rebates, or outcomes-based annuities. Beyond measuring for outcomes, it would hopefully improve access to CGT for Medicaid beneficiaries. The intent is to launch in 2026.
• The accelerated approval model would allow CMS to consult with the FDA to develop Part B payment methods for drugs approved through the accelerated approval pathway to encourage the timely completion of confirmatory clinical trials and access to post-market safety and efficacy data.

CMMI is also researching other potential models³ that could align cost sharing and payment incentives for biosimilars, create shared savings arrangements for therapeutic classes, or adjust payment methods to increase competition and investment in biosimilar development. And CMMI will explore opportunities to build on previous efforts to encourage price transparency for prescription drugs so providers and beneficiaries can work together to consider the best options for every patient. 

Speak out on issues that matter to community practices at www.communitycountsadvocacy.org

Resources

1. Consolidated Appropriations Act, 2023. Accessed March 1, 2023. Source: https://www.congress.gov/bill/117th-congress/house-bill/2617/text

2. Lowering Prescription Drug Costs for Americans, Response to President Biden’s Executive Order. Accessed March 1, 2023. Source: https://innovation.cms.gov/data-and-reports/2023/eo-rx-drug-cost-response-report-summary

3. A Report in Response to the Executive Order on Lowering Prescription Drug Costs for Americans. Accessed March 1, 2023. https://innovation.cms.gov/data-and-reports/2023/eo-rx-drug-cost-response-report