Policy updates: From the Inflation Reduction Act to the Enhancing Oncology Model
AmerisourceBergen’s U.S. Policy and Advocacy team provides a summary of the newly passed Inflation Reduction Act of 2022, and Christopher Brunner, Senior Regional Manager of Oncology Supply at AmerisourceBergen, walks us through the upcoming Enhancing Oncology Model and steps practices can take to ensure a strong start in 2023.
What are some key sections of the Inflation Reduction Act and its potential impact on the industry?
AmerisourceBergen U.S. Policy and Advocacy team: In early August, Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV) reached an agreement on an expanded Build Back Better/reconciliation bill, now known as the Inflation Reduction Act of 2022.1 The reconciliation bill adds back tax and climate/energy provisions to prescription pricing with an extension of the enhanced Affordable Care Act (ACA) health insurance premium subsidies to 2025.
Drug pricing provisions include the original $2,000 cap on beneficiary out-of-pocket costs that might save over 860,000 Medicare Part D beneficiaries an average of some $900 per year (over 775 million each year over the 10 years scored—with no expiration date), while the three-year extension of the enhanced premium subsidies costs the federal government roughly $64 billion over 10 years.2 These provisions may impact patients through increased prescription medication utilization and adherence.
Changes from the agreement Democrats reached last November include:
- Moves implementation back a year
- Requires the Department of Health and Human Services (HHS) Secretary to negotiate a graduated schedule of 60 Part D and B drug prices from 2026–2029 (previously at the Secretary’s discretion)
- Marginally adjusts language regarding the additional two-year window for biosimilars to launch
The cap on out-of-pocket costs and the extension of ACA premium subsidies would make it more affordable for patients to take their medications, thus increasing medication utilization. But criticism of the drug pricing provisions from sectors of the pharmaceutical industry— including from manufacturers, specialty physicians,3 and the generic/biosimilars sector—include concerns about anticipated impacts on revenue, new drug development, and patient care.
What is the Enhancing Oncology Model, and how might it impact participating practices?
Christopher Brunner: In June, the Centers for Medicare & Medicaid Services (CMS) Innovation Center (CMMI) announced the development of the Enhancing Oncology Model (EOM), which will go into effect in July 2023.4 The EOM is the successor to the Oncology Care Model (OCM), and CMMI took patient and practice feedback from OCM into account in developing this new model. One of the lessons learned involved revenue loss (CMMI did not make any money from the OCM), so the EOM is designed to help ensure CMMI does not lose money on this new program—which is why some cuts are involved.
The EOM is a voluntary five-year model that starts in July 2023, with an enrollment period open to practices through the end of September 2022. Our team has been carefully reviewing the details of the EOM, and distilling what it means for practices to choose this option versus the Merit-based Incentive Payment System (MIPS).
One critical change under EOM is the types of cancer covered under this new model. OCM covered a broad range of cancer types, which allowed practices to pick and choose what they wanted to drill into. EOM will focus on those receiving systemic chemotherapy for seven cancer types: lung cancer, breast cancer, prostate cancer, chronic leukemia, colorectal cancer, multiple myeloma, and lymphoma.4 As with OCM, EOM will follow a six-month episode-based payment model (starting with each patient’s first qualifying treatment).
It’s also worth noting that EOM presents an immediate two-sided risk for participating practices. CMMI started with a one-sided risk which gave practices time to acclimate. In a lower risk model, practices could expect a 4 percent upside and up to a 2 percent downside in year one. Or the more aggressive two-sided risk can gain up to 12 percent in upside on claims for these specific patients and up to 6 percent downside in year one.5 So again, risk starts from the very beginning of this model for participating practices, with the mindset that they’ve been under a risk model with OCM so those choosing to participate in EOM likely already understand those ramifications.
Are there other changes practices should know about before enrolling in EOM?
CB: One sizable change is the reduction in Monthly Enhanced Oncology Services (MEOS) payments. That MEOS payment is a monthly payment given for each patient practices opt to include in EOM. Under the OCM model, practices received $160 per enrolled patient per month.6 Under this new model, the MEOS payment drops to $70 per patient per month. The MEOS payment may be higher for beneficiaries dually enrolled in both Medicare and Medicaid—up to $100 per month.4
AmerisourceBergen offers various levels of MIPS consulting and support. So, if practices are considering making the move to MIPS, AmerisourceBergen’s consultants are able to offer critical guidance in the first year and beyond.
Can you tell us a little about the proposed Medicare fee schedule for 2023?
CB: In July, CMS issued a document detailing the new Medicare rule and proposed fee schedule.7 Initially, CMS indicated a proposed 1 percent cut in the fee schedule for hematology-oncology and radiation oncology, but that did not account for the 4 percent conversion factor reduction.
It’s worth noting that when assigning for practices that use relative value units (RVU), that’s how they’re paying their doctors based on the number of patients they’re seeing—and the makeup of the patients they’re seeing. So, each case is given an RVU, and there’s a conversion factor involved that basically says this is how we build up what the actual RVU is; it has this conversion factor reduction piece in it. And that’s what CMS uses to calculate the payment for a specific drug, a specific treatment, an office visit, a bloodwork injection, and so forth. So, with the conversion factor’s upcoming 4 percent reduction, hematology-oncology and radiation oncology practices are looking at a 5 to 6 percent overall payment reduction for services, which could be as high as 7 to 8 percent for infusions.8
Part of that, or a great chunk of this conversion risk factor that’s dropping, is that throughout the COVID-19 pandemic Medicare covered a little over 3 percent in added assistance during that time. Practices were then getting the average sales price (ASP) plus 6 percent, and there was a lot of subsidizing from the government to do that—and that’s going away for 2023.
What does this mean for practices as we move toward 2023?
CB: When you marry the implications of the EOM model with the new proposed Medicare fee schedule and the ASP plus 6 percent going away, this could present a heavy financial hit for practices. September 2022 through the end of the year will be a critical time for practices to get the support they need to get the new year off to a strong start. That’s why it’s important for practices to be prepared for the start of 2023. Healthy practices will benefit from having funds ready for the start of the year to cover their costs. This will be especially critical for those receiving, for example, 80 percent Medicare while waiting for 20 percent of their payments.9
With the Community Oncology Alliance’s Payer Exchange Summit coming up October 2022, look to our team’s takeaways from this event in future policy updates.
AmerisourceBergen is here to support physician practices through these changes
Our MIPS consulting team can assist your practice with various levels of MIPS reporting needs. For more information, call 877.570.8721, ext. 2, or email firstname.lastname@example.org .
Inflation Reduction Act of 2022. Accessed September 7, 2022. Source: https://www.democrats.senate.gov/inflation-reduction-act-of-2022
Capping Medicare Beneficiary Part D Spending at $2,000: Who Would It Help and How Much? March 1, 2022. Source: https://www.rwjf.org/en/library/research/2022/02/capping-medicare-beneficiary-part-d-spending-at-2000.html
Community Oncology Alliance Statement on the Medicare Drug Pricing Negotiation in Reconciliation Bill. July 7, 2022. Source: https://communityoncology.org/news/press-releases-media-statements/community-oncology-alliance-statement-on-medicare-drug-pricing-reconciliation-bill/
Enhancing Oncology Model. June 27, 2022. Source: https://www.cms.gov/newsroom/fact-sheets/enhancing-oncology-model
What you need to know about CMS’ new Enhancing Oncology Model. July 1, 2022. Source: https://www.advisory.com/blog/2022/07/enhancing-oncology-model
Oncology Care Model. Accessed September 8, 2022. Source: https://innovation.cms.gov/innovation-models/oncology-care
Physician Fee Schedule. Accessed September 6, 2022. Source: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched
Coding concerns: Providers decry proposed cuts to infusion services in 2023 fee schedule. August 9, 2022. Source: https://www.fiercehealthcare.com/providers/coding-concerns-providers-decry-proposed-cuts-infusion-services-2023-fee-schedule
Center for Medicare Advocacy: Part B. Accessed September 8, 2022. Source: https://medicareadvocacy.org/medicare-info/medicare-part-b/