CMS piecing together Medicare Part D and Part B

March 21, 2005

The Centers for Medicare & Medicaid Services is proposing additional changes to Medicare outpatient drug programs. Earlier this month, CMS requested proposals for a system to calculate the true out-of-pocket (TrOOP) cost for patients buying drugs under the Part D benefit that begins in 2006.

The Centers for Medicare & Medicaid Services is proposing additional changes to Medicare outpatient drug programs. Earlier this month, CMS requested proposals for a system to calculate the true out-of-pocket (TrOOP) cost for patients buying drugs under the Part D benefit that begins in 2006.

CMS also issued proposed rules that would allow physicians to buy Medicare Part B drugs on their own based on average sales price (ASP) or obtain drugs from an outside vendor under a competitive acquisition program (CAP).

Early comments on real-time systems to calculate patient payments for Part D pharmacy purchases are positive. "When you look at TrOOP, CMS is actually calling for a system that relieves pharmacists and pharmacies from an administrative burden in order to devote more time to patients," said one pharmacy official whose association has not yet taken a formal position. "When was the last time you heard anyone at CMS mention pharmacists talking with patients? That's a major step in the right direction."

That's a tall order for a system that does not yet exist. "We support efforts to coordinate the true out-of-pocket calculations," said American Pharmacists Association spokeswoman Tenikka Greene. "This request for proposals may or may not be the final answer, but TrOOP certainly needs to be addressed."

The National Community Pharmacists Association also praised CMS. "It is addressing a real concern about how pharmacies and pharmacists will be enabled under Part D," said John Rector, senior VP for government affairs. "It is good that the issue is out before the industry so early. We're all on the same page here."

Confusion is written into Part D, Rector noted. Once a $250 deductible has been met, Medicare pays 75% of a beneficiary's drug costs up to $2,250 yearly, then drops to zero. If out-of-pocket expenses hit $3,600, Medicare pays 95% of further drug costs for the year. Low-income beneficiaries get more comprehensive benefits with no gap. Part D is also designed to work with other Rx plans. Some beneficiaries may have some or all of their out-of-pocket costs paid by a former employer, state agency, charity, supplemental insurance coverage, and other sources.

When the patient gets to the counter, CMS expects a system to be in place to accurately balance and calculate precisely how much cash, if any, the pharmacist must collect with no additional waiting time.

Rector suggested another feature for TrOOP: immediate electronic pharmacy payments. "With real-time adjudication, there is no reason plans should not pay pharmacies immediately, just like a credit card or debit card pays on the spot," Rector said.

As far as the Part B changes, pharmacy groups are taking a wait-and-see approach. Their concern, said Gary Stein, director for federal regulatory affairs for ASHP, is that "if physicians are going to be losing money under the new system, they'd close down some outpatient programs and throw patients back on hospitals."

Hospitals are already seeing patients shifting from private practice physicians, noted Ernest Anderson, pharmacy director at Lahey Clinic in Burlington, Mass. He conducted an informal poll at a March 2005 meeting of the Association of Community Cancer Centers. Both hospital pharmacy directors and private practice physicians agreed that a small but noticeable shift from private practice to hospital-based oncology treatment has begun. The shift is a result of earlier cuts in physician drug reimbursement by CMS, he said.

The physician payment proposals may also be a trial balloon for similar changes in hospital pharmacy reimbursement. Stein said ASHP and other groups would look at the impact of ASP on private practice physicians and their patients if CMS proposes similar changes for hospital reimbursement.