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Understanding the CMS Data Release

On June 1, 2015, CMS released claims data on all Medicare Part B services and administered drugs in 2013. Unfortunately, the CMS raw data tells only half the story. For a clear understanding of the data, one needs to understand the whole story, including:

  • The data represents gross payments, not net income.
  • A significant share of the Medicare payments is used to cover costs such as office overhead, employee salaries, supplies, and equipment.
  • Reimbursement for Medicare Part B drugs, purchased in advance on behalf of patients and administered by physicians, is co‐mingled with other physician payments. As depicted in Figure 1, in 2012, 80% of payments for the average retina specialist (in a non‐academic setting) were reimbursements for expensive Part B drugs. This is in stark contrast to other physician practices where drugs account for only 13% of expenses.
  • Several of the costliest drugs in medicine are the FDA‐approved anti‐VEGF drugs used by retina specialists to treat wet age‐related macular degeneration (AMD), the leading cause of blindness in older Americans, diabetic retinopathy, the leading cause of blindness in the working aged population, and retinal vascular occlusion. Prior to the advent of these drugs, two‐thirds of wet‐AMD patients could expect to be legally blind within 2 years of diagnosis. These medications have significantly improved vision and avoided blindness in diabetic patients as well, allowing them to work and remain independent.
  • CMS sets the payment for drugs and only a very small portion of that payment is to cover administrative expenses.
  • No context (such as the total number of Medicare patients treated by the physician, patient mix or demographics, complexity of cases, practice type, etc) is provided to enable comparisons between specialties and even within a specialty.
  • The data covers only Original Medicare, not Medicare Advantage plans.
  • Care quality cannot be assessed from the payment data reported.

Treatment options for Retinal Diseases

  • Today there are 3 highly effective anti‐VEGF options‐‐Lucentis and Eylea which are FDA‐ approved, costing between $1,500 and $2,000 a dose, and off‐label Avastin (cancer medication) at $50 a dose.
  • We are fortunate to have outstanding treatments for macular degeneration and diabetic retinopathy that help us preserve vision for our patients, but it is a problem that the only FDA‐approved drugs for treatment‐‐Lucentis and Eylea‐‐are so extraordinarily expensive for Medicare. In addition, the quality of Avastin used in comparative published clinical trials is not available to most physicians.
  • Ultimately, drug selection is dependent on:
    • Patient choice in partnership with physicians
    • Individual response to medication
    • Availability of Avastin due to state compounding restrictions
    • Many argue that requiring the use of Avastin could save Medicare hundreds of millions of dollars a year, but in reality, this would work only if FDA rules continue to allow the compounding of Avastin with manageable "use by" dates and do not require individual prescriptions.

Changes in the Practice Landscape 2012‐2013

  • The long‐term viability of Avastin was shaken in 2012‐2013 by turmoil in the compounding industry and remains uncertain today:
    • Physician and patient confidence was eroded by the New England Compounding Center's meningitis outbreak and other repackaging‐associated tragedies, as well as statements from the then‐FDA commissioner voicing opposition to the repackaging of biologics.
    • Many compounding pharmacies closed or elected to stop supplying Avastin due to heightened scrutiny and FDA warning letters.
    • The new patient‐specific prescription requirement has delayed care and leaves physicians liable for the cost of drugs that go to waste due to missed appointments. These requirements have impacted prescribing practices.

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