CMS to revise CAP under Medicare Part B

August 22, 2005

While the Medicare Part D drug benefit is still on track to begin on Jan. 1, 2006, another CMS program that was scheduled to kick off then—Medicare Part B's competitive acquisition program (CAP)—will now have a delayed start. Two days before all bids to the CAP program were due to the Centers for Medicare & Medicaid Services, as outlined in an interim rule published in the July 6 Federal Register, the agency announced that it's returning all the bids it has received and suspending the bidding process. CMS explained that it is setting back the program in order to make it more attractive and efficient.

While the Medicare Part D drug benefit is still on track to begin on Jan. 1, 2006, another CMS program that was scheduled to kick off then-Medicare Part B's competitive acquisition program (CAP)-will now have a delayed start. Two days before all bids to the CAP program were due to the Centers for Medicare & Medicaid Services, as outlined in an interim rule published in the July 6 Federal Register, the agency announced that it's returning all the bids it has received and suspending the bidding process. CMS explained that it is setting back the program in order to make it more attractive and efficient.

Unlike the Medicare Part D program, which has received a lot of fanfare, CAP has so far drawn relatively little attention among payers and providers. Under CAP, doctors can opt to buy their physician-injectable drugs from vendors that successfully bid for the business, instead of purchasing the products themselves. The program is designed to make life easier for physicians, giving them an alternative to the existing buy-and-bill system.

According to CMS' new timeline, it will publish a final rule late this year. About 30 days after publishing the rule, CMS will again accept bids from vendors interested in participating. Then after winning vendors are selected and physicians sign up to use the vendors, CMS projects that drugs will be delivered through CAP by July 2006.

Rubinstein thinks CMS has received a chorus of complaints, so it is backing off on launching the program in January. He only hopes CMS will make major changes, not just minor tweaks, to the program.

Which companies are expected to submit bids? Paul Nagle, partner, BioMedical Insights, who spoke at a recent symposium on specialty pharmacy in New York, thinks two or three national vendors plus some regional ones might submit bids. In the interim rule, CMS said bidding entities could consist of three groups: specialty pharmacies, drug wholesalers, and group purchasing organizations. Vendors can also subcontract with statewide or regional entities to ensure national coverage. CMS added that it had received 15 responses from vendors to a request for information issued back in December 2004.

Rubinstein commented that vendors that submitted bids know that they might not even break even. "Those bidding were doing so because they were worried about what their competitors were doing," he explained. He contended that CAP is not sustainable as proposed in the interim rule. "Vendors must be compensated fairly" in order for CAP to be viable.

Asked to comment on the suspension of the bidding process, the Pharmaceutical Care Management Association said it views the move "as a recognition that CMS wants to maximize participation in the program and is working collaboratively with stakeholders to address barriers to participation. This is good news for beneficiaries as it will ultimately help to increase competition and choices available to them."

At the specialty pharmacy symposium in New York, Mark Merritt, president and CEO of PCMA, commented that it's "fun to be on the front end," shaping the development of CAP. It's important for the association to be "proactive" so that everybody participating in the program can do well. PCMA's main concern with CAP is that its members "can't sit around" waiting for reimbursement. The association wants "payment safeguards" so that specialty pharmacies can have assurance that they will be paid. "We don't have a radical agenda. All we want is what's reasonable," he declared.