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How Part B Drug Changes Could Impact Provider Reimbursement

Switching some Part B drugs to Part D would create provider reimbursement issues, especially since Part D does not reimburse for inventory management, experts contended.

Medicare Part B and provider reimbursement

Source: Thinkstock

By Jacqueline LaPointe

- Healthcare industry experts are warning the Trump Administration that its proposal to transfer some drugs covered by Medicare Part B to Part D would have a negative impact on provider reimbursement and care quality.

In the Trump Administration’s recent blueprint to lower drug costs, policymakers promised to examine which Medicare Part B drugs, which are mostly physician-administered medications, could be negotiated for a lower price by Part D plans.

The administration proposed to transfer drugs that can negotiated for a lower price to the Part D program to reduce incentives to deliver these medications in the most expensive setting.

However, experts at Avalere Health say that the proposed move would have an effect on provider reimbursement.

“Few details are available on the parameters for the proposed shift of Part B drugs under Part D, but such a policy modification would likely present a significant change for providers in terms of revenues and their role in purchasing, storing, and billing for physician-administered drugs,” they explained.

READ MORE: Leveraging Group Purchasing for Hospital Supply Chain Management

“This transition could also result in unintended patient access barriers caused by differences in payment, cost-sharing, reimbursement, and settings of care in Part B and Part D.”

Under Medicare Part B, providers administer the drug and submit a claim to their Medicare Administrative Contractor for reimbursement that covers both the medication and its administration.

Conversely, standalone Prescription Drug Plans in the Part D program usually contract with pharmacies to make the medications available directly to consumers.

This divide in how Medicare pays for prescription drugs spells trouble for providers who may have to administer Part D-covered drugs, the experts explained.

“Even Medicare Advantage organizations, which manage both medical and prescription benefits, generally include physicians in their networks for medical services only, and therefore physicians may not be able to bill the plan directly for Part D vaccines,” they wrote. “When providers are unable or unwilling to file Part D vaccine claims, this places the burden on patients to pay their prescriber up front and submit a claim to their Part D plan for reimbursement.”

READ MORE: 85% of Hospitals to See Part B Increase Despite 340B Payment Cuts

Providers who prescribe and administer drugs covered by a pharmacy, rather than medical, benefit may also be unable to verify beneficiary coverage and cost-shared liability, researchers added.

A Government Accountability Office (GAO) survey found that 80 percent of physicians said the time needed to identify beneficiary cover and submit claims was a barrier to administering Part D vaccines.

And while third-party vendors have tried to fill this gap by offering benefit verification and billing, another recent survey showed that only 9 percent of family physicians and general internists knew of these services. Furthermore, only 46 percent of this small group reported using the services.

In light of these challenges, more than one-half of providers who do prescribe Part D-covered drugs to Medicare beneficiaries refer their patients to pharmacies to purchase the medication, a cited 2016 study found.

Patients can then receive the drug administration at the pharmacy depending on state laws, or the patient or pharmacy can deliver the drug to the provider for administration in the office.

READ MORE: 3 Most Common Healthcare Supply Chain Management Challenges

“This added step can serve as a barrier to access and adherence and can be particularly challenging in rural areas with provider and pharmacist shortages,” the experts wrote. “Moreover, medications may be inadvertently damaged or compromised during shipping or patient transit, leading to safety concerns, liability issues, and potential waste.”

Relying on white-bagging, or allowing a pharmacy to ship the drug to a provider on demand, also poses reimbursement challenges because providers who administer Part B drugs may be considered out-of-network with Part D plans.

Additionally, provider reimbursement may suffer under new storage, handling, and inventory management rules if the proposal is finalized.

Medicare pays providers the average sales price plus six percent for Part B-covered specialty drugs. The added reimbursement covers the proper storage, management, and handling of the medications.

But Part D reimbursement does not cover the inventory management aspect of physician drug administration. Therefore, negotiated drug prices may not be as low as policymakers hope they will be under the proposal.

“Shifting Part B drugs to Part D would eliminate this add-on payment that covers storage, handling, and inventory management. Under such a scenario, the Part D negotiated price would have to adequately compensate for both the drug administration and the administrative overhead, or else physicians may face financial barriers to administering these vital medications, potentially creating access issues,” the experts elaborated.

These provider reimbursement concerns could negatively impact adult vaccination rates as evident Medicare’s current split coverage policies for vaccines, the experts added.

Medicare covers vaccinations for influenza, pneumonia, and hepatitis B under the Part B program, while all other commercially available adult vaccines (e.g., shingles, Tdap, and hepatitis A) are available under the Part D program.

Experts pointed out that adult vaccination rates are still lower than public health targets. However, immunization rates for Part B-covered vaccines exceed those of Part D-covered vaccines, according to recent CDC data.

“It is important to note that among Medicare beneficiaries, immunization levels are significantly higher for the products covered under Part B, such as influenza and pneumococcal (70.4 percent and 66.9 percent respectively), than those offered under Part D, like shingles (33.4 percent) and Tdap (26.6 percent). This potentially signals that access challenges associated with Part D coverage of vaccines present a barrier to uptake,” they wrote.

Transferring some Part B-covered drugs to Part D plans could create similar issues as the split coverage method for vaccines, the experts warned.

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