The Obama administration has dropped its contentious push to overhaul how it pays doctors and hospitals for drugs they administer under Medicare Part B.
Pitched as a way to rein in drug costs while putting patients first, the proposed payment structure had been blasted by lobbying groups and Republicans as a dangerous “experiment” with seniors’ care.
Even some wary Democrats expressed relief Friday, after the administration reversed its plans.
“While the proposed Medicare Part B demonstration had admirable goals, our members raised a number of concerns, and we are pleased the Center for Medicare and Medicaid Innovation has decided not to move forward,” House Minority Leader Nancy Pelosi, California Democrat, said.
Under the current system, health care providers are paid the sales price of a drug, plus 6 percent for handling the treatments, which include things like cancer drugs, injectables such as antibiotics and eye treatments.
That scheme compelled some health systems to push for more expensive drugs and reap a higher reimbursement rate, even when a different drug might be better for the patient, the administration said last March, when it rolled out its plan.
Under the proposed model, providers would have received an add-on payment of 2.5 percent of the drug’s cost, plus a flat fee of $16.80 per drug.
The administration said its proposal would be budget neutral and fits into its broader efforts to put the quality of care over how many services doctors provide.
The Health and Human Services Department deflected early criticism from the pharmaceutical lobby and top Republicans, saying it would fashion their input into its final plans. Yet it beat a retreat this week, as the Obama administration prepares to hand the reins to President-elect Donald Trump.
“The proposal was intended to test whether alternative drug payment structures would improve the quality of patient care and the value of Medicare drug spending,” said Aaron Albright, spokesman for the Centers for Medicare and Medicaid Services. “While there was a great deal of support from some, a number of stakeholders expressed strong concerns about the Model. While CMS was working to address these concerns, the complexity of the issues and the limited time available led to the decision not to finalize the rule at this time.”
The Part B proposal had sprung from an innovation center created as part of Obamacare, but congressional Republicans and Mr. Trump have vowed to scrap the 2010 law.
Mr. Trump’s pick to lead HHS — Rep. Tom Price, Georgia Republican — last spring said the proposal would “experiment with the lives of vulnerable seniors and the nation’s sickest patients.”
Beyond Capitol Hill, medical groups such as the American Medical Association rejoiced at CMS’ decision to drop the idea, after stakeholders revolted.
“This is a model for how Washington should — but often doesn’t — work,” AMA President Andrew W. Gurman said.