CMS is considering a demonstration project to test switching drug coverage from Medicare Part B to Part D, HHS Secretary Alex Azar said in congressional testimony Tuesday.
Speaking to the Senate Health, Education, Labor and Pensions Committee, Azar acknowledged the need to address concerns raised by lawmakers that switching drugs from Part B to D would impose higher out-of-pocket costs on patients.
Part B covers drugs that are administered under a physician’s supervision, typically in a physician’s office or hospital outpatient facility. While Part B imposes a 20% copay, most Part B beneficiaries have private insurance that eliminates or reduces copays. This kind of insurance is not legal for Part D, and out-of-pocket costs for Part D can be as high as 30%.
Azar said savings from shifting drugs to Part D would be high enough to eliminate out-of-pocket costs for beneficiaries. “Right now we are paying sticker price for these drugs [covered by Part B with] no discounting. We ought to be able to get 20-40% discounting as we do in Part D on those drugs.” He added, “If we look at the savings we get from that kind of negotiating in Part B, that would leave money that we could use to cover any out-of-pocket spending.”
Azar said HHS wants to start with a “demonstration, figure out how to make this work, make it work for patients, make it work for the Treasury.” A demonstration could be run by CMS’s Center for Medicare & Medicaid Innovation (see BioCentury, May 18).
Based on experience with a demonstration, “Congress could effectively legislate in this space on how we can get the best deals and negotiate in Part B,” Azar said.