CMS considers linking Medicare drug payment rates to international prices

On October 25, 2018, the Centers for Medicare & Medicaid Services (CMS) issued an advance notice of proposed rulemaking (ANPRM) describing a potential mandatory model to test Medicare reimbursement based on an "International Pricing Index" (IPI).

Medicare would pay private sector vendors for Part B drugs at rates established using the IPI, and participating physicians and hospitals would receive an "add-on" payment. Under the IPI model, U.S. drug prices would be benchmarked against the reportedly lower drug prices in 14 other countries. The IPI model would seek to permit Medicare to more closely align its Medicare payment amount for selected Part B drugs with prices in other nations, reduce out-of-pocket costs for Medicare beneficiaries, increase access and adherence, and create greater competition in the acquisition process for Part B drugs. According to the CMS, the model would save taxpayers and beneficiaries US$17.2 billion over five years (2020-2025), with Medicare's total spending on the selected drugs dropping by as much as 30 percent.

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