“The Pink Sheet”

The Centers for Medicare & Medicaid Services (CMS) should look for ways to ensure that financial incentives for Medicare accountable care organizations (ACOs) do not promote inappropriate shifts in prescribing from the Part B benefit to Part D, urged clinician and biotechnology groups in comments filed with the agency on June 6, 2011.

The Part B benefit covers drugs administered in a physician’s office, such as infused products. It excludes most oral and other medications that patients obtain at retail or mail-order pharmacies for use at home; these medications instead are covered under Part D. So in theory, the ACO program will encompass Part B expenditures, but not Part D. ACOs could save on the cost of drugs by shifting some prescriptions to Part D.

The comments respond to the proposed rule to establish ACOs that the CMS published on March 31, 2011. ACOs are part of a “shared savings” initiative, mandated by the Affordable Care Act, aimed at driving providers through financial incentives to better manage and coordinate healthcare delivery to improve quality and reduce costs. ACOs are slated to begin operating January 1, 2012. Under the proposed regulation, ACOs would be made up of physician practices, hospitals, and other healthcare providers. Primary care physicians are expected to serve as coordinators of individual patient care. The proposal posal does not specifically discuss potential shifts in prescribing. However, the Biotechnology Industry Organization (BIO) and others have urged the CMS to develop a process to ensure that patient care is not secondary to the pursuit of savings.

The implications of prescribing shifts

The BIO points out that the Congressional Research Service (CRS) identified prescribing shifts as a possible issue in an April 25 report on ACOs and the Medicare shared savings program. Such shifts might occur because the savings calculations used to evaluate ACOs are based on Parts A and B expenditures only, suggests the CRS, an analytic unit employed by Congress. Thus, “there may be instances where there is the appearance of cost savings as a result of providers unduly relying on Part D prescription medicines over other forms of care,” the CRS cautioned. The BIO added, “this issue may present problems from both the perspective of quality patient care as well as for Medicare program expenditures.” A shift to Part D drugs could actually increase patient outof- pocket costs, “which in turn may impact prescription drug adherence and ultimately clinical outcomes,” the comments stated.

The prospect of increasing patient costs under Part D is supported by a CMS-commissioned report released in August 2010. The report looked at the potential impact of consolidating Medicare reimbursement for drug categories with overlapping Parts B and D coverage. It found, on average, that patients would face higher costsharing if categories are consolidated under Part D, but that the Medicare program would save money, because Part D has less generous coverage rules. The study looked at oral anticancer and antiemetic drugs, insulin, vaccinations, inhalants, and rheumatoid arthritis medications.

In separate comments, the American Society of Clinical Oncology (ASCO) also targeted potential prescribing shifts in cancer therapies. “The CMS should address perverse incentives that will arise due to the proposed rule’s exclusion of Part D drugs from the costs by which ACO savings are measured,” ASCO warned. “Safeguards are needed to ensure that cancer patients receive the most appropriate therapy, regardless of whether that therapy is typically covered under Part B or under Part D.” (In addition to chemotherapy administered in a physician’s office, some oral anticancer drugs are also covered under Part B when they are direct substitutions for physician-administered treatments.)

Even the medical device and diagnostics industry registered concern with possible prescribing shifts to Part D drugs. The Advanced Medical Technology Association pointed out that providers might have an artificial incentive to substitute a pain medication, for example, when a surgical procedure covered under Part A or B would be considered standard of care.

Carving out the cost of new technologies

A number of stakeholders flagged the prospect that cost issues might also deter the adoption of cuttingedge drugs or other medical technologies by ACOs. The BIO and the Medical Device Manufacturers Association are among the groups urging CMS to consider ways to carve out new technologies from the benchmark for ACO costs and from annual expenditure performance reviews.

As proposed, the ACO program would be risk-based: an organization would receive a bonus payment if cost and quality benchmarks are met but would also face penalties if they are not. As a result, providers may be reluctant to adopt expensive new technologies, based on the comments.

To ensure beneficiary access to new therapies and to retain incentives for innovation, the stakeholders have suggested that the CMS adapt the Medicare payment mechanisms already used for new technologies in the hospital setting. Medicare’s hospital payment scheme includes mechanisms for add-on (inpatient) or pass-through (outpatient) payments. They provide payment for new and relatively expensive treatments in their first few years on the market in addition to the reimbursement rate set for their therapeutic category. The system is designed to account for the fact that the CMS does not yet know with certainty how much the new treatment will add to hospital charges and costs. And the extra reimbursement is intended to make it more likely that hospitals can afford to “try out” new technologies while the CMS collects the data on cost and use patterns that will ultimately allow it to develop a more permanent payment level.

The BIO has suggested that the carveout should apply regardless of the healthcare setting and should include drugs and biologics provided in the physician’s office. “Such congruity is necessary to ensure that the policy does not create an incentive to perform procedures in the hospital rather than the physician’s office,” according to the comments.

Quality metrics and warfarin

In comments on other aspects of the proposal, the BIO has recommended that the CMS should establish a process to rapidly update the quality measures used to evaluate ACO performance. The proposal outlines a number of quality measures, including whether patients at risk of serious disease or frail elderly patients are taking drugs for managing chronic disease. The agency also will track patient measurements, such as cholesterol levels and hemoglobin A1c values, to monitor the effectiveness of disease management. The quality measures are expected to improve adherence to drugs for chronic disease.

Nevertheless, the BIO takes issue with the quality metric assessing adherence to warfarin therapy in patients with heart failure and paroxysmal or chronic atrial fibrillation; the concern is that it could discourage the use of newer agents. “This [warfarin] measure already is outdated,” the BIO stated. “There are more advanced therapeutic options available for these patients today as well as additional therapies in development. Leaving the measure in place may force ACOs to use a therapy that is no longer the only clinically appropriate, or even recommended, choice.”

The latest newcomer to the category is dabigatran (Pradaxa). Two other oral anticoagulants are in late-stage development: rivaroxaban (Xarelto) and apixaban. The biotech group’s concerns reflect the tension in the anticoagulant market segment among developers of newer agents and payer concerns over whether the advantages offered by such drugs can justify their increased cost.

A more prominent role for specialists

The ACO proposal is designed to emphasize the role of primary care providers. However, the BIO has advised that the CMS also ensure that specialists play an important part in the operation of ACOs, such as during the development of clinical guidelines and processes. Under the proposed rule, ACOs would be required to “develop and implement evidence-based medical practice or clinical guidelines and processes for delivering care consistent with the goals of better care for individuals, better health for populations, and lower growth in expenditures.”

ASCO echoed the BIO recommendation. “Given the prevalence of cancer in the Medicare community … [the] CMS should require ACOs to secure substantial input from specialists practicing in the community.” ASCO also requested that the CMS ensure that oncology practices do not face undue financial or procedural challenges under the ACO program.

“Oncologists already face a significant form of financial risk arising from the need to purchase and administer chemotherapy drugs within an environment in which Medicare and other health insurers often provide ambiguous coverage policies, payment rates that are inadequate to cover acquisition costs and slow preauthorization decisions,” ASCO stated. Furthermore, ASCO noted that Medicare contractors frequently require “excessive documentation” on the effectiveness of off-label drug indications, even when the indication is supported in the peer-reviewed literature.

The Centers for Medicare & Medicaid Services (CMS) should look for ways to ensure that financial incentives for Medicare accountable care organizations (ACOs) do not promote inappropriate shifts in prescribing from the Part B benefit to Part D, urged clinician and biotechnology groups in comments filed with the agency on June 6, 2011.

The Part B benefit covers drugs administered in a physician’s office, such as infused products. It excludes most oral and other medications that patients obtain at retail or mail-order pharmacies for use at home; these medications instead are covered under Part D. So in theory, the ACO program will encompass Part B expenditures, but not Part D. ACOs could save on the cost of drugs by shifting some prescriptions to Part D.

The comments respond to the proposed rule to establish ACOs that the CMS published on March 31, 2011. ACOs are part of a “shared savings” initiative, mandated by the Affordable Care Act, aimed at driving providers through financial incentives to better manage and coordinate healthcare delivery to improve quality and reduce costs. ACOs are slated to begin operating January 1, 2012. Under the proposed regulation, ACOs would be made up of physician practices, hospitals, and other healthcare providers. Primary care physicians are expected to serve as coordinators of individual patient care. The proposal posal does not specifically discuss potential shifts in prescribing. However, the Biotechnology Industry Organization (BIO) and others have urged the CMS to develop a process to ensure that patient care is not secondary to the pursuit of savings.

The implications of prescribing shifts

The BIO points out that the Congressional Research Service (CRS) identified prescribing shifts as a possible issue in an April 25 report on ACOs and the Medicare shared savings program. Such shifts might occur because the savings calculations used to evaluate ACOs are based on Parts A and B expenditures only, suggests the CRS, an analytic unit employed by Congress. Thus, “there may be instances where there is the appearance of cost savings as a result of providers unduly relying on Part D prescription medicines over other forms of care,” the CRS cautioned. The BIO added, “this issue may present problems from both the perspective of quality patient care as well as for Medicare program expenditures.” A shift to Part D drugs could actually increase patient outof- pocket costs, “which in turn may impact prescription drug adherence and ultimately clinical outcomes,” the comments stated.

The prospect of increasing patient costs under Part D is supported by a CMS-commissioned report released in August 2010. The report looked at the potential impact of consolidating Medicare reimbursement for drug categories with overlapping Parts B and D coverage. It found, on average, that patients would face higher costsharing if categories are consolidated under Part D, but that the Medicare program would save money, because Part D has less generous coverage rules. The study looked at oral anticancer and antiemetic drugs, insulin, vaccinations, inhalants, and rheumatoid arthritis medications.

In separate comments, the American Society of Clinical Oncology (ASCO) also targeted potential prescribing shifts in cancer therapies. “The CMS should address perverse incentives that will arise due to the proposed rule’s exclusion of Part D drugs from the costs by which ACO savings are measured,” ASCO warned. “Safeguards are needed to ensure that cancer patients receive the most appropriate therapy, regardless of whether that therapy is typically covered under Part B or under Part D.” (In addition to chemotherapy administered in a physician’s office, some oral anticancer drugs are also covered under Part B when they are direct substitutions for physician-administered treatments.)

Even the medical device and diagnostics industry registered concern with possible prescribing shifts to Part D drugs. The Advanced Medical Technology Association pointed out that providers might have an artificial incentive to substitute a pain medication, for example, when a surgical procedure covered under Part A or B would be considered standard of care.

Carving out the cost of new technologies

A number of stakeholders flagged the prospect that cost issues might also deter the adoption of cuttingedge drugs or other medical technologies by ACOs. The BIO and the Medical Device Manufacturers Association are among the groups urging CMS to consider ways to carve out new technologies from the benchmark for ACO costs and from annual expenditure performance reviews.

As proposed, the ACO program would be risk-based: an organization would receive a bonus payment if cost and quality benchmarks are met but would also face penalties if they are not. As a result, providers may be reluctant to adopt expensive new technologies, based on the comments.

To ensure beneficiary access to new therapies and to retain incentives for innovation, the stakeholders have suggested that the CMS adapt the Medicare payment mechanisms already used for new technologies in the hospital setting. Medicare’s hospital payment scheme includes mechanisms for add-on (inpatient) or pass-through (outpatient) payments. They provide payment for new and relatively expensive treatments in their first few years on the market in addition to the reimbursement rate set for their therapeutic category. The system is designed to account for the fact that the CMS does not yet know with certainty how much the new treatment will add to hospital charges and costs. And the extra reimbursement is intended to make it more likely that hospitals can afford to “try out” new technologies while the CMS collects the data on cost and use patterns that will ultimately allow it to develop a more permanent payment level.

The BIO has suggested that the carveout should apply regardless of the healthcare setting and should include drugs and biologics provided in the physician’s office. “Such congruity is necessary to ensure that the policy does not create an incentive to perform procedures in the hospital rather than the physician’s office,” according to the comments.

Quality metrics and warfarin

In comments on other aspects of the proposal, the BIO has recommended that the CMS should establish a process to rapidly update the quality measures used to evaluate ACO performance. The proposal outlines a number of quality measures, including whether patients at risk of serious disease or frail elderly patients are taking drugs for managing chronic disease. The agency also will track patient measurements, such as cholesterol levels and hemoglobin A1c values, to monitor the effectiveness of disease management. The quality measures are expected to improve adherence to drugs for chronic disease.

Nevertheless, the BIO takes issue with the quality metric assessing adherence to warfarin therapy in patients with heart failure and paroxysmal or chronic atrial fibrillation; the concern is that it could discourage the use of newer agents. “This [warfarin] measure already is outdated,” the BIO stated. “There are more advanced therapeutic options available for these patients today as well as additional therapies in development. Leaving the measure in place may force ACOs to use a therapy that is no longer the only clinically appropriate, or even recommended, choice.”

The latest newcomer to the category is dabigatran (Pradaxa). Two other oral anticoagulants are in late-stage development: rivaroxaban (Xarelto) and apixaban. The biotech group’s concerns reflect the tension in the anticoagulant market segment among developers of newer agents and payer concerns over whether the advantages offered by such drugs can justify their increased cost.

A more prominent role for specialists

The ACO proposal is designed to emphasize the role of primary care providers. However, the BIO has advised that the CMS also ensure that specialists play an important part in the operation of ACOs, such as during the development of clinical guidelines and processes. Under the proposed rule, ACOs would be required to “develop and implement evidence-based medical practice or clinical guidelines and processes for delivering care consistent with the goals of better care for individuals, better health for populations, and lower growth in expenditures.”

ASCO echoed the BIO recommendation. “Given the prevalence of cancer in the Medicare community … [the] CMS should require ACOs to secure substantial input from specialists practicing in the community.” ASCO also requested that the CMS ensure that oncology practices do not face undue financial or procedural challenges under the ACO program.

“Oncologists already face a significant form of financial risk arising from the need to purchase and administer chemotherapy drugs within an environment in which Medicare and other health insurers often provide ambiguous coverage policies, payment rates that are inadequate to cover acquisition costs and slow preauthorization decisions,” ASCO stated. Furthermore, ASCO noted that Medicare contractors frequently require “excessive documentation” on the effectiveness of off-label drug indications, even when the indication is supported in the peer-reviewed literature.

The Centers for Medicare & Medicaid Services (CMS) should look for ways to ensure that financial incentives for Medicare accountable care organizations (ACOs) do not promote inappropriate shifts in prescribing from the Part B benefit to Part D, urged clinician and biotechnology groups in comments filed with the agency on June 6, 2011.

The Part B benefit covers drugs administered in a physician’s office, such as infused products. It excludes most oral and other medications that patients obtain at retail or mail-order pharmacies for use at home; these medications instead are covered under Part D. So in theory, the ACO program will encompass Part B expenditures, but not Part D. ACOs could save on the cost of drugs by shifting some prescriptions to Part D.

The comments respond to the proposed rule to establish ACOs that the CMS published on March 31, 2011. ACOs are part of a “shared savings” initiative, mandated by the Affordable Care Act, aimed at driving providers through financial incentives to better manage and coordinate healthcare delivery to improve quality and reduce costs. ACOs are slated to begin operating January 1, 2012. Under the proposed regulation, ACOs would be made up of physician practices, hospitals, and other healthcare providers. Primary care physicians are expected to serve as coordinators of individual patient care. The proposal posal does not specifically discuss potential shifts in prescribing. However, the Biotechnology Industry Organization (BIO) and others have urged the CMS to develop a process to ensure that patient care is not secondary to the pursuit of savings.

The implications of prescribing shifts

The BIO points out that the Congressional Research Service (CRS) identified prescribing shifts as a possible issue in an April 25 report on ACOs and the Medicare shared savings program. Such shifts might occur because the savings calculations used to evaluate ACOs are based on Parts A and B expenditures only, suggests the CRS, an analytic unit employed by Congress. Thus, “there may be instances where there is the appearance of cost savings as a result of providers unduly relying on Part D prescription medicines over other forms of care,” the CRS cautioned. The BIO added, “this issue may present problems from both the perspective of quality patient care as well as for Medicare program expenditures.” A shift to Part D drugs could actually increase patient outof- pocket costs, “which in turn may impact prescription drug adherence and ultimately clinical outcomes,” the comments stated.

The prospect of increasing patient costs under Part D is supported by a CMS-commissioned report released in August 2010. The report looked at the potential impact of consolidating Medicare reimbursement for drug categories with overlapping Parts B and D coverage. It found, on average, that patients would face higher costsharing if categories are consolidated under Part D, but that the Medicare program would save money, because Part D has less generous coverage rules. The study looked at oral anticancer and antiemetic drugs, insulin, vaccinations, inhalants, and rheumatoid arthritis medications.

In separate comments, the American Society of Clinical Oncology (ASCO) also targeted potential prescribing shifts in cancer therapies. “The CMS should address perverse incentives that will arise due to the proposed rule’s exclusion of Part D drugs from the costs by which ACO savings are measured,” ASCO warned. “Safeguards are needed to ensure that cancer patients receive the most appropriate therapy, regardless of whether that therapy is typically covered under Part B or under Part D.” (In addition to chemotherapy administered in a physician’s office, some oral anticancer drugs are also covered under Part B when they are direct substitutions for physician-administered treatments.)

Even the medical device and diagnostics industry registered concern with possible prescribing shifts to Part D drugs. The Advanced Medical Technology Association pointed out that providers might have an artificial incentive to substitute a pain medication, for example, when a surgical procedure covered under Part A or B would be considered standard of care.

Carving out the cost of new technologies

A number of stakeholders flagged the prospect that cost issues might also deter the adoption of cuttingedge drugs or other medical technologies by ACOs. The BIO and the Medical Device Manufacturers Association are among the groups urging CMS to consider ways to carve out new technologies from the benchmark for ACO costs and from annual expenditure performance reviews.

As proposed, the ACO program would be risk-based: an organization would receive a bonus payment if cost and quality benchmarks are met but would also face penalties if they are not. As a result, providers may be reluctant to adopt expensive new technologies, based on the comments.

To ensure beneficiary access to new therapies and to retain incentives for innovation, the stakeholders have suggested that the CMS adapt the Medicare payment mechanisms already used for new technologies in the hospital setting. Medicare’s hospital payment scheme includes mechanisms for add-on (inpatient) or pass-through (outpatient) payments. They provide payment for new and relatively expensive treatments in their first few years on the market in addition to the reimbursement rate set for their therapeutic category. The system is designed to account for the fact that the CMS does not yet know with certainty how much the new treatment will add to hospital charges and costs. And the extra reimbursement is intended to make it more likely that hospitals can afford to “try out” new technologies while the CMS collects the data on cost and use patterns that will ultimately allow it to develop a more permanent payment level.

The BIO has suggested that the carveout should apply regardless of the healthcare setting and should include drugs and biologics provided in the physician’s office. “Such congruity is necessary to ensure that the policy does not create an incentive to perform procedures in the hospital rather than the physician’s office,” according to the comments.

Quality metrics and warfarin

In comments on other aspects of the proposal, the BIO has recommended that the CMS should establish a process to rapidly update the quality measures used to evaluate ACO performance. The proposal outlines a number of quality measures, including whether patients at risk of serious disease or frail elderly patients are taking drugs for managing chronic disease. The agency also will track patient measurements, such as cholesterol levels and hemoglobin A1c values, to monitor the effectiveness of disease management. The quality measures are expected to improve adherence to drugs for chronic disease.

Nevertheless, the BIO takes issue with the quality metric assessing adherence to warfarin therapy in patients with heart failure and paroxysmal or chronic atrial fibrillation; the concern is that it could discourage the use of newer agents. “This [warfarin] measure already is outdated,” the BIO stated. “There are more advanced therapeutic options available for these patients today as well as additional therapies in development. Leaving the measure in place may force ACOs to use a therapy that is no longer the only clinically appropriate, or even recommended, choice.”

The latest newcomer to the category is dabigatran (Pradaxa). Two other oral anticoagulants are in late-stage development: rivaroxaban (Xarelto) and apixaban. The biotech group’s concerns reflect the tension in the anticoagulant market segment among developers of newer agents and payer concerns over whether the advantages offered by such drugs can justify their increased cost.

A more prominent role for specialists

The ACO proposal is designed to emphasize the role of primary care providers. However, the BIO has advised that the CMS also ensure that specialists play an important part in the operation of ACOs, such as during the development of clinical guidelines and processes. Under the proposed rule, ACOs would be required to “develop and implement evidence-based medical practice or clinical guidelines and processes for delivering care consistent with the goals of better care for individuals, better health for populations, and lower growth in expenditures.”

ASCO echoed the BIO recommendation. “Given the prevalence of cancer in the Medicare community … [the] CMS should require ACOs to secure substantial input from specialists practicing in the community.” ASCO also requested that the CMS ensure that oncology practices do not face undue financial or procedural challenges under the ACO program.

“Oncologists already face a significant form of financial risk arising from the need to purchase and administer chemotherapy drugs within an environment in which Medicare and other health insurers often provide ambiguous coverage policies, payment rates that are inadequate to cover acquisition costs and slow preauthorization decisions,” ASCO stated. Furthermore, ASCO noted that Medicare contractors frequently require “excessive documentation” on the effectiveness of off-label drug indications, even when the indication is supported in the peer-reviewed literature.