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Part B Reimbursement for Drugs to Change in Physician Offices

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Part B Reimbursement for Drugs to Change in Physician Offices


By Susan Theuns, PA-C, CPC, CHC

CMS has proposed a new Part B drug payment model that may adversely affect your bottom line.


Beginning in August, 2016, CMS may be applying a new methodology geared toward reducing profits on expensive drugs.  The current model is average sales price (ASP) plus 4% — it is advertised as ASP plus 6% but then a 2% sequestration is applied so it is net 4%. On drugs that cost more than $480, the percentage will be reduced more since the percentage may be the same but the actual dollar amount increases above their comfort threshold. So, the reimbursement proposal will be for less than the ASP + 6%.

Bad news

Part of the study will be at the current methodology and the second arm will be at ASP plus 2.5% plus a daily fee of $16.80. Of course, these will be subject to the 2% sequestration as well. This is a cost saving study for CMS that narrows the margin of profitability for the providers. Unlike relative value unit methodologies, there is no overhead built into pass-through drug reimbursement so it becomes critical that providing Part B reimburseable drugs  is not a loss leader for providers.  This makes where you purchase your drugs one of the most important parts of the process. Be sure to get pricing from distributors or manufacturers direct at or below ASP, also figuring into the equation the shipping costs when ordering.




Good news

The good news is that exclusions for the new methodology are flu, pneumonia, and hepatitis B vaccines as well as drugs in short supply, those used for end stage renal disease, and drug infused durable medical items. Bundled drugs are also excluded but are currently included in the visit/procedure so no real change there.  It will be interesting to see what the outcome of this trial methodology reaps.

For more information, visit:


Susan Theuns, PA-C, CPC, CHC, is the administrative director of physician practices at MedStar Union Memorial Hospital in Baltimore, Maryland. In addition to her certifications, she holds degrees in Allied Health, Business Management and Leadership & Education. Theuns serves as a national advisor and is a contributing author for The Business of Medical Practice, 3rd edition. She is a member of the Baltimore, Maryland, local chapter.


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3 Responses

  1. Specialty Drug Cost Trend Projected at 18.7% in 2017

    Segal Consulting recently released projected health plan benefit cost trends for 2017. Here are some key findings from the report:

    • The projected cost trend rate for speciality drugs in 2017 is 18.7%.
    • Medicare Advantage PPOs have a projected cost trend of 3% for 2017.
    • Medical cost trends for PPO plans in the Western U.S. are projected at 9.2%.
    • 7% is the projected trend for PPO plans in the Northeastern U.S.
    • The projected increase in reimbursement allowance for hospital visits is 4.1%.
    • HMOs have a projected medical cost trend of 6.7% in 2017.

    Source: Segal Consulting, October 2016


  2. Costliest Commercial Benefit Drugs Averaged $421,220 Annually Per Patient

    Magellan Rx Management recently released their seventh annual Medical Pharmacy Trend Report. Here are some key findings:

    • Commercial medical pharmacy spend increased by 12% each year from 2011-2015.
    • Medicare Advantage pharmacy spend increased 5% from 2011-2015.
    • Oncology and supportive care represent 50% of commercial benefit drug spend.
    • The 10 most expensive commercial benefit drugs averaged $421,220 annually/patient.
    • Members using a medical benefit drug paid 3% of pharmacy costs in commercial.
    • The 10 costliest Medicare medical benefit drugs averaged $268,780/patient.

    Source: Magellan Health, April 3, 2017


  3. Medicare Part B Prescription Spending Was $29.1 Billion in 2016

    JAMA recently published an investigation of the projected financial impact of the proposal to shift drugs from Medicare Part B to Part D. Here are some key findings from the report:

    • Shifting Part B drugs to Part D will decrease drug spending by 7%-18% after rebates.
    • In 2016, Medicare Part B spending for prescription drugs was $29.1 billion.
    • From 2010-2016, Medicare Part B drug spending increased by 9.8% per year.
    • Medicare Part D program expenditures grew 8.2% per year between 2010-2016.
    • Shifting Part B drugs to Part D will decrease out-of-pocket costs by a median of $860.

    Source: JAMA, January 14, 2019


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