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This proposed rule considers testing changes to payment for certain separately payable Part B drugs and biologicals.

Statement of Need:

The underlying issue addressed by the proposed rule is that the current Medicare Part B payment system has several features that may be incentivizing avoidable costs, causing greater utilization of higher priced drugs, encouraging prescription drug manufacturers to set higher list prices, and creating inequities between U.S. payment and payment in other countries.  By testing ways to address these payment issues, the model seeks to improve quality of care, address features of the current payment system that may be incentivizing unnecessary Medicare Part B drug spending and utilization of high cost drugs, and ensure that the Medicare program and its beneficiaries pay generally comparable prices for Part B drugs relative to certain other countries.

Summary of the Legal Basis:

This rule is necessary to test a new payment and service delivery model under the authority of section 1115A of the Act, which allows the Innovation Center to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care furnished to Medicare, Medicaid, and CHIP beneficiaries.

Alternatives:

This proposed rule contains a range of policies. Alternatives that we considered and rationales for our proposals are included in the rule.

Anticipated Costs and Benefits:

We believe the rule would substantially lower Medicare spending and beneficiary cost sharing for the Medicare Part B drugs with the highest annual spending over the course of the model.  As we move toward publication, estimates of costs and benefits will be included in the proposed rule.

Risks:

Risks of the proposals in this rule are still under development and will be included in the published rule for comment.