Centers for Medicare and Medicaid Services

The Centers for Medicare and Medicaid Services' Proposed Changes to Part B Pricing

The Centers for Medicare and Medicaid Services has recommended a significant change to their Part B pricing and payment scheme. This drug category primarily comprises those provided by hospital outpatient departments or by a physician's office. CMS indicated that the new model will be tested for five years and would essentially consist of two phases.

Reduction in ASP Add-On and Introduction of Fixed Fee

Currently, Medicare Part B paid outpatient departments and physicians the ASP plus 6%. Nevertheless, the new model advocated lowering the add-on to 2.5% and charging a set $16.80 per medicine each day. The institution supposes that the fixed fee would significantly change prescribing incentives, hence, result in greater value and quality. Additionally, the fee was designed to inject budget neutrality into the payment process. The model was projected to result in a -.17% change in cash disbursements to ophthalmologists as a consequence of the reduction in cost of retinal muscular regeneration treatment. The second, and perhaps most controversial aspect of the new model was its implementation of a value-based pricing scheme.

Opposition to the New Model

Opponents viewed provisions such as discounting or the elimination of patient cost sharing as unfavorable for their conduct of business. The huge price cuts would ensure patients are relieved of the huge costs often associated with the prescription of the medication on an outpatient basis. This would occur at the expense of large pharmaceutical companies. These firms expressed their outrage by backing lobby groups to influence public opinions and encourage political effort against the new change. These entities claimed that quality of care awarded to patients with serious conditions such as cancer would be adversely affected. However, this perspective is misguiding as the interaction of CMS with drug manufacturers is majorly voluntary. As such, pharmaceutical companies would only lose out on the reduced add-on amount with no threat to cancer and other patients. The model aims at instituting further reform to the healthcare sector by championing a culture driven by positive patient outcomes as well as access to medical resource. Thus claiming that it may potentially harm patients is grossly misleading.


CMS Proposes New Medicare Part B Prescription Drug Models for Medicare Beneficiaries. (2017). Retrieved 19 April 2017, from

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