Today, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule to test new models to improve how Medicare Part B pays for prescription drugs and supports physicians and other clinicians in delivering higher quality care. CMS values public input and comments as part of the rulemaking process, and looks forward to continuing to work with stakeholders through the rulemaking process to maximize the value and learning from the proposed tests.

Medicare Part B covers prescription drugs that are administered in a physician’s office or hospital outpatient department, such as cancer medications, injectables like antibiotics, or eye care treatments. The proposed Medicare Part B Model would test new ways to support physicians and other clinicians as they choose the drug that is right for their patients.

The proposed rule is designed to test different physician and patient incentives to do two things: drive the prescribing of the most effective drugs, and test new payment approaches to reward positive patient outcomes. Among the approaches to be tested are the elimination of certain incentives that work against the selection of high performing drugs, as well as the creation of positive incentives for the selection high performing drugs, including reducing or eliminating patient cost sharing to improve patients’ access and appropriate use of effective drugs.

“First and foremost, our job is to get beneficiaries the medications they need. These proposals would allow us to test different ways to help Medicare beneficiaries get the right medications and right care while supporting physicians in the process,” said Andy Slavitt, Acting Administrator for CMS. “This is consistent with our focus on testing value-based care models like we have been doing with physicians and hospitals in ACOs. Models like this one can help doctors and other clinicians do what they do best: choose the medicine and treatment that keeps their patients healthy.”

Today’s proposal is part of the Administration’s broader strategy to encourage better care, smarter spending, and healthier people by paying for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality.

“These models would test how to improve Medicare beneficiaries’ care by aligning incentives to reward value and the most successful patient outcomes,” said Dr. Patrick Conway, CMS Deputy Administrator for Innovation and Quality & CMS Chief Medical Officer. “The choice of medications for beneficiaries should be driven by the best available evidence, the unique needs of the patient, and what best promotes high quality care.”

Prescription drug spending in the U.S. was about $457 billion in 2015, or 16.7 percent of overall health spending, according to a report also released today. In 2015, Medicare Part B spent $20 billion on outpatient drugs administered by physicians and hospital outpatient departments.

The proposed rule seeks comments on testing six different alternative approaches for Part B drugs to improve outcomes and align incentives to improve quality of care and spend dollars wisely; these include:

  • Improving incentives for best clinical care. Physicians often can choose among several drugs to treat a patient, and the current Medicare Part B drug payment methodology can penalize doctors for selecting lower-cost drugs, even when these drugs are as good or better for patients based on the evidence. Today, Medicare Part B generally pays physicians and hospital outpatient departments the average sales price of a drug, plus a 6 percent add-on. The proposed model would test whether changing the add-on payment to 2.5 percent plus a flat fee payment of $16.80 per drug per day changes prescribing incentives and leads to improved quality and value. The proposed change to the add-on payment is budget neutral.
  • Discounting or eliminating patient cost-sharing. Patients are often required to pay for a portion of their care through cost-sharing. This proposed test would decrease or eliminate cost sharing to improve beneficiaries’ access and appropriate use of effective drugs.
  • Feedback on prescribing patterns and online decision support tools. This proposed test would create evidence-based clinical decision support tools as a resource for providers and suppliers focused on safe and appropriate use for selected drugs and indications. Examples could include best practices in prescribing or information on a clinician’s prescribing patterns relative to geographic and national trends.
  • Indications-based pricing. This proposed test would vary the payment for a drug based on its clinical effectiveness for different indications. For example, a medication might be used to treat one condition with high levels of success but an unrelated condition with less effectiveness, or for a longer duration of time. The goal is to pay for what works for patients.
  • Reference pricing. This proposed model would test the practice of setting a standard payment rate—a benchmark—for a group of therapeutically similar drug products.
  • Risk-sharing agreements based on outcomes. This proposed test would allow CMS to enter into voluntary agreements with drug manufacturers to link patient outcomes with price adjustments.

Today’s announcement is a continuation of the Department of Health and Human Services’ (HHS) work from last fall when HHS convened a forum that brought together consumers, physicians, clinicians, employers, manufacturers, health insurance companies, representatives from state and federal government, and other stakeholders to discuss ideas on how the health care system can meet the dual imperatives of encouraging drug development and innovation, while ensuring access and affordability for patients.

CMS Releases Interactive Mapping Medicare Disparities Tool

Today, the Centers for Medicare & Medicaid Services Office of Minority Health (CMS OMH) released a new interactive map to increase understanding of geographic disparities in chronic disease among Medicare beneficiaries. The Mapping Medicare Disparities (MMD) Tool identifies disparities in health outcomes, utilization, and spending by race and ethnicity and geographic location.  Understanding geographic differences in disparities is important to informing policy decisions and efficiently targeting populations and geographies for interventions.

“Our commitment to health equity begins with properly measuring the care people get and having an honest dialogue on how and where we need to improve,” said CMS Acting Administrator Andy Slavitt. “Today’s tool aims to make it harder for disparities to go unaddressed.”

Racial and ethnic minorities experience disproportionately high rates of chronic diseases, and are more likely to experience difficulty accessing high quality of care than other individuals. The identification of areas with large differences in the proportions of Medicare beneficiaries with chronic diseases is an important step for informing and planning health equity activities and initiatives. The Mapping Medicare Disparities Tool features:

  • A dynamic interface with data on the prevalence of 18 chronic conditions, end stage renal disease, or a disability; Medicare spending, hospital and emergency department (ED) utilization, preventable hospitalizations, readmissions, and mortality rates.
  • The ability to sort by state or county of residence, sex, age, dual-eligibility for Medicare and Medicaid, and race and ethnicity.
  • Built-in benchmarking features to investigate disparities within counties and across racial and ethnic groups, and within racial and ethnic groups across counties.

“It’s not enough to improve average health care quality in the U.S.,” said CMS OMH Director Cara James.  “As the CMS Equity Plan lays out, we must identify gaps in quality of care at all levels of the health care system to address disparities. We are excited to share this new tool, which allows us to pinpoint disparities in health care outcomes by population and condition.”

The MMD Tool was developed in collaboration with KPMG LLP and NORC at the University of Chicago as part of the CMS Equity Plan for Improving Quality in Medicare.  The plan provides a framework for advancing health equity by improving the quality of care provided to minority and other underserved Medicare beneficiaries.  MMD Tool

To access the MMD tool, visit

To learn more about how to use the tool and its data sources, see the MMD Tool Overview.  Further details are available in the MMD Tool Frequently Asked Questions (FAQ), the Quick Start Guide, and the MMD Tool Technical Documentation.

Centers for Medicare & Medicaid Services (CMS) Office of Minority Health (OMH) was established as a result of the Patient Protection and Affordable Care Act (ACA) and  works to eliminate health disparities and improve the health of all minority populations, including racial and ethnic minorities, people with disabilities, members of the LGBT community, and rural populations.

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