CMS forum offers no ASP solace

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Sunday, April 25, 2004

April 26, 2004

WASHINGTON - Critics of the transition from an AWP to ASP reimbursement model for respiratory medication aired out their concerns at an Open Door Forum April 20, just 10 days ahead of the date that manufacturers are to begin submitting sales data to CMS.
The new model will reduce to the ASP of drugs sold by manufacturers, plus six percent, a construct that continues to alarm many in the industry.
"My concern is that pharmacies don't get their drugs directly from the manufacturer," said Lisa Smith, an attorney with Brown & Fortunato. "So, to the extent that reimbursement is going to be based on the ASP of the manufacturer plus 6%, that is effectively cutting out the price increase the drug distributor or wholesaler puts on the provider."
CMS is only collecting data on drug manufacturer's prices to wholesalers and providers, said CMS officials during the forum. That information will directly determine reimbursement for Part B drugs starting in 2005.
This could handicap respiratory providers who purchase drugs from wholesalers when the ASP takes effect.
"Someone buying from a wholesaler could possibly be paying more than the government allows for the drug," said an industry source.  "In which case you would be hard pressed to find anyone to distribute it."
"You're dead in the water," said Don White, president of Associated Healthcare, which buys its respiratory medications from wholesalers.
However, with a profit margin of just 6% over ASP, providers who generate enough volume to buy direct from the drug manufacturer say they too may exit the market.
"If the reimbursement truly goes to an ASP plus 6%, even if we have an additional 5-6 points because we buy from the manufacturer, you just can't support that," said Todd Christopher, CEO of Home Care Supply in Beaumont, Texas. "You can't support the kind of services that are required at that margin."
The final rule on manufacturer sales data submissions was released April 17, and CMS will be accepting comment on the rule until June 7.

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