We took a closer look at the proposed IPI model and found that it affects more than drug pricing.

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Nov. 16, 2018


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It’s been one of those weeks where we looked up and realized that Thanksgiving is next week. NEXT WEEK. How did this happen? Given the recent crazy of the last few weeks, we’re taking a step back this week and highlighting some recent updates. Excuse us while we hit the internet and try to find a recipe for gluten-free stuffing.

As per our usual, we’re off next week… See you on November 30.


Things We’re Learning About the Proposed International Price Index Model


The International Pricing Index (IPI) proposed model may only be in the form of advanced notice of proposed rule-making but, as we unpack it, there is a lot there that affects more than drug pricing; for example, on the provider side:

  1. As proposed, it’s a mandatory demonstration that moves 50% of Part B drug spending from buy-and-bill to a third-party vendor. Key words: 50%, mandatory. Presumably this would mean that providers in these practices would have less ability to negotiate with group purchasing organizations for their other patients because they have less volume.
  2. Providers not in the mandatory demonstration are likely to make less revenue; this is due to the average sales price (ASP) decreasing because of the price at which manufacturers are expected to sell to third-party vendors. Because they still make ASP plus 4.3%, when ASP goes down, their revenue goes down. Unfortunately for them, costs will remain the same.

We’re modeling and digging into this and will continue to bring you what we find. Each time we read the proposal, we end up with additional questions (and a few more answers).


Things We Learned From the MPFS and OPPS Final Rules

  1. Even without the IPI model, the Trump Administration is reducing drug spending. The Centers for Medicare & Medicaid Services (CMS) finalized reducing reimbursement for new Part B drugs—those paid based on wholesale acquisition cost (WAC)—from WAC plus 6% to WAC minus 3% in the 2019 Medicare Physician Fee Schedule (MPFS) final rule. CMS also extended last year’s payment cut for 340B-acquired drugs to non-excepted, off-campus provider-based departments (PBDs). As of January 1, 2019, CMS will reimburse those facilities for 340B drugs at ASP minus 22.5%.
  2. CMS is serious about a site-neutrality payment but provided a glide path for hospitals. CMS had proposed to reduce payment for clinic visits performed at off-campus PBDs by 60% (from $116 to $46). The final rule implemented that change, but over 2 years. In calendar year (CY) 2019, the payment reduction is halved, with facilities being paid 30% less (from $116 to $81). In CY 2020, CMS will reduce payment another 30%.
    In addition, CMS is soliciting comments to help identify other items and services furnished at PBDs that should also receive similar payment reductions.
  3. CMS recognized it needs to nurture the biosimilars market, reversing policies that could have made it dead on arrival. CMS built on its market-saving policy last year that granted each biosimilar its own Healthcare Common Procedure Coding System (HCPCS) billing code by making all biosimilar biological products eligible for pass-through payment—not just the first biosimilar biological product for a reference product.
    Additionally, it finalized its proposal to pay nonpass-through biosimilars acquired under the 340B program at the biosimilar’s ASP minus 22.5% of the (presumably lower) biosimilar’s ASP, instead of the biosimilar’s ASP minus 22.5% of the (presumably higher) reference product’s ASP.
  4. CMS rewarded care provided at the patient’s home. The 21st Century Cures Act created a new permanent Medicare benefit for home infusion therapy services beginning January 1, 2021, but it also changed Medicare’s reimbursement for home infusion therapies from an average wholesale price model to an ASP model starting in 2017. This drastic cut in home-infusion payment threatened the viability of home-infusion services until the new payment scheme started in 2021. The Bipartisan Budget Act of 2018 creates a transitional services reimbursement structure for 2019 and 2020, which CMS implemented in the home health final rule.
    The final rule also sets a new definition for remote patient monitoring and makes it easier to receive Medicare payment for the service, which may improve patients' ability to maintain independence, thus improving their quality of life.
  5. CMS updated the evaluation and management (E/M) coding and payment system for the first time in 20 years. In the MPFS proposed rule, CMS suggested collapsing the payment rate for E/M visit levels 2 through 5. In the final rule, CMS delayed changes to E/M until 2021 and “only” collapsed levels 2 through 4, while maintaining the payment rate from E/M visit level 5, which is the highest-paying code. Receiving 15,314 comments—many about the proposed E/M changes—seemed to revise CMS’ thinking on the topic.
    CMS finalized a number of other changes to E/M related to documentation requirements in an effort to streamline physician reporting and eliminating duplicative steps, based on feedback from a number of medical associations and physicians.
  6. CMS might be entering the 21st century. CMS will pay separately for 2 newly defined physician services furnished using communication technology: (1) Brief communication technology-based service (eg, virtual check-in; HCPCS code G2012), and (2) Remote evaluation of recorded video and/or images submitted by an established patient (HCPCS code G2010).
    CMS also finalized reimbursement for interprofessional internet consultation (Current Procedural Terminology codes 99452, 99451, 99446, 99447, 99448, and 99449) to cover interprofessional consultations performed via communications technology. CMS intends for these services to support a team-based approach to patient care.
  7. Physicians practicing in the office setting will need to rely on the Quality Payment Program (QPP) for any payment increases. Due to the Medicare Access & Chip Reauthorization Act of 2015, fee-for-service payment increases are negligible for the foreseeable future. Instead, physicians will need to rely on Merit-based Incentive Payment System (MIPS) or Advanced Alternative Payment Models (APM) incentive payments.
    Physicians reporting to MIPS can realize an incentive payment adjustment of up to 4% (in 2019) to 9% (2022 and beyond), while physicians participating in an Advanced APM may have a much wider payment adjustment.

ASHP Midyear Clinical Meeting and Exhibition | Personnel Placement Services

December 2–5 | Anaheim, California
Xcenda is proud to participate at this year's Personnel Placement Services at the 2018 ASHP Midyear Clinical Meeting and Exhibition from December 2–5 in Anaheim, California. Xcenda consultants will be on hand to meet and interview pharmacy candidates for our fellowship programs in Health Outcomes and Market Access and Medical Communications. Meet Xcenda at PPS booth #7783. Learn more


2018 San Antonio Breast Cancer Symposium

December 4–8 | San Antonio, Texas
Xcenda is proud to be presenting a poster titled, Evolving Treatment Patterns in Hormone Receptor-Positive, HER2-Negative Metastatic Breast Cancer, at this year's San Antonio Breast Cancer Symposium. This Symposium is designed to provide state-of-the-art information on the experimental biology, etiology, prevention, diagnosis, and therapy of breast cancer and premalignant breast disease to an international audience of academic and private physicians and researchers. Contact us to set up a meeting at the symposium. Learn more


Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.


Jennifer Snow
Vice President,
Reimbursement and
Policy Insights,

Scott Shields
Associate Director,
Health Policy



Amy Grogg, PharmD
Senior Vice President | Commercialization Solutions | AmerisourceBergen Corporation

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Commercial Consulting | Xcenda


Scott Shields | Jennifer Snow


Kylie Matthews | Ellen Olson


Nov. 16, 2018


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