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Flawed Medicare Part B Reimbursement Calculation Formula

Multiple studies have illustrated that flawed Medicare reimbursement policies are causing community-based practices to close or integrate with larger health systems, in many cases increasing costs for patients and payers. According to the Community Oncology Alliance, more than 1,300 community cancer care centers have closed, consolidated, or reported financial problems since 2008. As patients lose access to community-based care and are forced to seek care elsewhere, Medicare’s cost-sharing requirements result in higher out of pocket exposure for patients for identical treatment regimens; additional transportation and lodging costs may also be incurred as community-based practices close. Legislation has been introduced to exclude distributor prompt pay discounts from Medicare Part B reimbursement methodologies to ensure community-based providers are appropriately reimbursed and are able to continue treating patients with cost-effective, high quality care.

Direct and Indirect Remuneration (DIR) Fees

CMS allows Part D plans to charge Direct and Indirect Remuneration Fees (DIR) to providers and pharmacists. Often percentage based, DIR fees are a barrier to community-based providers’ ability to dispense innovative, life-saving therapies to their patients and, as such, can interfere with continuity of care. DIR fees take several forms, such as a fee tied to specific performance metrics which don’t necessarily apply to specific specialties (e.g. generic dispensing rates); fees to be part of a preferred cost share pharmacy network; or to reconcile point-of-sale reimbursement with contracted rates. Some DIR fees are not negotiable. When Part D plans impose these fees, costs paid by Medicare beneficiaries for prescription drugs are artificially inflated, pushing them into the Medicare Part D “donut hole” faster and adding to the burden on taxpayers. Congress and the Trump Administration have expressed concern with DIR fees and we expect to see both legislative and regulatory action increase as we near year’s end.