CHA News Article

HHS Advances Payment Model to Lower Drug Costs for Patients

The Centers for Medicare & Medicaid Services (CMS) has issued the attached advance notice of proposed rulemaking seeking input on a potential mandatory model to test payment changes for certain separately payable Part B drugs and biologicals. CMS is considering issuing a proposed rule in spring 2019 on the potential model — called the International Pricing Index (IPI) Model — which would start in spring 2020 and operate for five years.

Under the model, CMS would contract with private-sector vendors to supply physicians, hospital outpatient departments, and other included providers and suppliers with the drugs and biologicals in selected geographic areas. CMS would align Medicare payments for drugs in the model with prices paid in foreign countries. Medicare would continue to pay providers a drug administration payment and is considering several alternatives to the current add-on payment, such as a fixed amount per encounter rather than an add-on payment tied to the drug’s price. Hospitals in the non-model areas would continue to be subject to outpatient prospective payment system payment rates for their Part B drugs.

Additional information is available in a CMS fact sheet. Comments are due Dec. 31. CHA is currently reviewing the notice; members that would like to provide feedback should contact Alyssa Keefe, CHA vice president, federal regulatory affairs, at or (202) 488-4688.