Health Subcommittee Examines Proposals for Reform and Improvement of the Medicare Part B Drug Program

June 28, 2013

WASHINGTON, DC – The Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), today held a hearing on “Examining Reforms to Improve the Medicare Part B Drug Program for Seniors.” While most drugs under Medicare are offered to seniors through Part D drug plans, some medications and services of physicians are reimbursed through Medicare Part B.

“Today’s hearing is an opportunity for us to examine Medicare’s Part B drug benefit and to assess how well it is working for both seniors and providers,” said Pitts. “Covered Part B drugs are usually those administered in a physician’s office or hospital outpatient setting including injectable and infused drugs, drugs used in conjunction with durable medical equipment, oral drugs for cancer or end-stage renal disease, and some self-administered drugs in the hospital outpatient setting.”

In 2003, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act, which reformed the payment method by establishing a pricing model based on an Average Sales Price (ASP) payment system, plus a 6 percent service fee.

Dr. Barry Brooks, testifying on behalf of the US Oncology Network, said, “The current Medicare reimbursement structure for Part B drugs is not perfect, but it has achieved many of the goals of those who designed it back in 2003. It has clearly created a more accurate reimbursement approach than the prior system and it has attenuated the prior significant growth rate of Part B drug units and spending, creating stability in the costs to Medicare and the patients who rely on it.”

Reimbursement rates under Medicare Part B have caused the shift of some patient populations, including those with cancer and other rare diseases, from physician offices to hospital outpatient centers. The reimbursement shift, as coupled with community cancer centers closing, has caused an increased cost to the Medicare system and patients. As Brooks added, “Medicare payments for chemotherapy administration services in hospital outpatient settings have more than tripled since 2005, while payments to community cancer clinics have actually decreased by 14.5 percent.”

In the 113th Congress, members have submitted proposals to reform and improve the Medicare Part B drug benefit program:

  • H.R. 800, authored by Reps. Ed Whitfield (R-KY) and Gene Green (D-TX), which seeks to exclude prompt-pay discounts from manufacturers to wholesalers from the calculation of ASP;
  • H.R. 1416, authored by Rep. Renee Ellmers (R-NC), which would terminate application of sequestration to certain physician-administered Part B drugs; and
  • H.R. 1428, authored by Rep. Michael C. Burgess, M.D. (R-TX) and Rep. Ron Kind (D-WI), which seeks to provide coverage for immunosuppressive drugs for kidney transplant recipients.

Nancy Davenport-Ennis, CEO and President of the National Patient Advocate Foundation, noted, “The overarching message for Congress to consider is that Medicare Part B should minimize beneficiaries’ financial risk over time. This principle will be an increasingly important element of the program as the baby boom population continues to reach Medicare eligibility.”

Noting that the Medicare Part B drug program is vitally important for America’s seniors, Committee Chairman Fred Upton (R-MI) said, “We owe it to our seniors to evaluate the effectiveness of Medicare and suggest improvements to the program.”