PhRMA Opposes Part B Reimbursement

Last week, the Centers for Medicare & Medicaid Services (CMS) released a proposed demonstration through the Innovation Center to change how Medicare Part B drugs are reimbursed. The Pharmaceutical Research and Manufacturers of America (PhRMA) has the following objections:

  1. Limits would be placed on patient access and provider choice by allowing the government to make one-size-fits-all decisions about health care. Selecting the right treatment depends on a variety of clinical factors, as well as needs, characteristics and preferences specific to an individual patient. Medicare Part B was set up to allow physicians to make the best decisions for their patients, offering a wide range of treatment options for patients suffering from serious illnesses, including cancer, rheumatoid arthritis, autoimmune disorders and more. This proposal would come between providers and patients by allowing the government to make one-size-fits all value judgments about the best care for Medicare patients. As new medicines become available, especially new targeted and personalized medicines, like President Jimmy Carter’s recent cancer treatment, Medicare physicians and patients should have those options available to them.
  1. Mandating broad changes for the majority of Medicare beneficiaries is government overreach. The Center for Medicare & Medicaid Innovation (CMMI) has the authority to test alternative payment models and new ways of paying for care. But it is just that: for testing promising new practices in small controlled groups. This proposal is mandatory and nationwide, which marks a dramatic departure from CMMI’s usual, voluntary testing approach. Rather, this model flies in the face of testing by making changes to payment for nearly all Part B medicines and mandating participation for three in four Medicare Part B providers in diverse settings, including hospital outpatient departments, physician offices and pharmacies. As a result, this model will affect care for Medicare patients across the country. Physicians treating the sickest patients could have their reimbursement cut dramatically, disproportionately impacting specialists who treat complex diseases. To test this model, CMMI will waive several provisions of Medicare law. Mandating broad changes to laws established by Congress without a thoughtful stakeholder process before and during development is a government overreach – and sets a bad precedent for establishing Medicare coverage and reimbursement policy.
  1. Broad changes that fail to recognize the value of innovative, targeted therapies could hinder future innovation. While policymakers are emphasizing accelerating personalized medicine, cancer cures and more, this proposal has the opposite effect. It could discourage investment in future treatment advances, many of which are expected to be Part B medicines, as well as have a negative impact on the adoption of novel targeted therapies that benefit patients. Medicare Part B already uses an effective, market-based mechanism to pay for medicines, and research shows Part B medicines are a small and stable share of Medicare Part B spending. Mandating nationwide, sweeping changes to this program without thoughtful consideration and process puts Medicare patients at risk. For more information, visit

Law Limits Self-Insured Plans for Small Employers

legal settlementA new law in California, CA SB 161, limits the ability of small employers (under 100 employees) to self-insure their health benefits. Beginning January 1, 2014, insurers cannot issue stop loss insurance with deductibles below $35,000 to groups with one to 100 employees.

The attachment point increases to $40,000 in 2016. (The attachment point is the amount of claim dollars a company will be responsible for paying before the stop loss carrier reimburses any payouts). Also under the law, stop-loss policy cannot exclude any employee or dependent who is eligible for coverage under the employer’s self-funded group health plan.

These restrictions do not apply to stop-loss policies that were in effect for small employers before September 1, 2013. These policies may be renewed or reissued, or a stop-loss policy may be issued by another stop-loss insurer to maintain continuity of stop loss coverage. Also, SB 161 does not affect the ongoing operations of certain multiple employer welfare arrangements if they comply with small group health reforms.

Last Updated 05/25/2022

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