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Medicare to test alternative payment methods for prescription drugs — 6 insights

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To drive down costs for patients and reward physicians based on patient outcomes, Medicare is testing a new payment method for Medicare B drugs, according to U.S. News& World Report.

Here are six insights:

1. Providers administer Medicare B drugs in physicians' offices or hospital outpatient departments. Medicare B drugs include cancer drugs, injectable antibiotics and eye-care medications.

2. The current payment system allows the CMS to pay physicians and hospitals the average sales price of a drug and an additional 6 percent to cover handling and administration, which the Medicare Advisory Commission reported gives physicians an incentive to prescribe higher-priced drugs.

3. The incentives may impact providers' clinical decisions, and may deter from optimal patient care if physicians are prioritizing profits, according to Patrick Conway, MD, CMS's chief medical officer.

4. CMS seeks comments on various alternative payment approaches for Part B drugs to determine which methods have the highest quality care for the best value. CMS will accept comments on the proposed rule through May 9, 2016.

5. Medicare will try out the payment methods in different geographic locations to compare results in different parts of the country.

6. Some of the proposals include:
•    Lowering the add-on payments from 6 percent to 2.5 percent with an additional $16.80 flat payment
•    Decreasing or eliminating patient cost-sharing
•    Analyzing physicians' prescribing patterns to create decision-support tools to help provide patients with the safest and most appropriate drug choices
•    Set standard prices for similar classes of drugs
•    Implement risk-sharing with drug companies

More articles on coding & billing:
Texas payers seeking more freedom to choose preferred drug lists: 5 highlights
How ASCs can demonstrate value to payers: 4 key concepts
Dr. Jonathan Kaplan focuses on the importance of price transparency — 5 takeaways

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