Xcenda Original Research: Do Providers Choose Treatment Based on Payment Amount?

September 19, 2018

Our new report, conducted on behalf of the Part B Access for Seniors and Physicians (ASP) Coalition, found that drug payment rates through the Medicare Part B program have almost no significant impact on the utilization of high cost drugs.

Medicare Physician-Administered Drugs: Do Providers Choose Treatment Based on Payment Amount?

Over the past few years, there has been an increased focus on how the Medicare Part B benefit reimburses providers for physician-administered (via infusion or injection) drugs and biologics. The benefit, which sets payment rates based on the average sales price (ASP) negotiated for the drugs in the market, has been criticized as creating a financial incentive for physicians to prescribe more expensive drugs rather than less expensive alternatives. 

Xcenda examines the current criticism of the ASP-based Medicare Part B payment rate that prescribing is driven by the reimbursement differences among drugs that have similar clinical effects. We tested the hypothesis that prescribers of physician-administered drugs disproportionately prescribe therapies with higher reimbursement rates to financially benefit from larger add-on payments. We analyzed claims data for Medicare Part B fee-for-service beneficiaries receiving physician-administered drugs for rheumatoid arthritis, breast cancer, and non-small cell lung cancer in the office setting. 
 
The lack of a strong, positive correlation between drug payment and utilization suggests that physician prescribing is not driven by payment-per-drug administration. These findings call into question claims made by some that the ASP+6% add-on payment rate for prescription drug reimbursement in Medicare Part B distorts prescribing decisions.