Lawmakers look to slash AWP reimbursement

Sunday, November 2, 2003

November 3, 2003

WASHINGTON - Lawmakers trying to hammer out Medicare reform legislation have discussed reducing Part B drug reimbursement to 85% of the AWP or to the widely available market price (WAMP), whichever is less, according to AAHomecare.

Medicare currently reimburses 95% of the average wholesale price for Part B drugs.

WAMP is defined as the wholesale price a prudent physician or provider would pay a wholesaler for a Part B drug. WAMP would be determined by a CMS review of prevalent prices.

Some lawmakers and CMS officials - particularly Administrator Tom Scully - are hot to slash drug reimbursement, arguing that drug manufacturers greatly inflate the AWP. The result is that AWP is significantly higher than a provider’s acquisition price, claims Scully and others.

HMEs say they need the spread between acquisition price and AWP to cover the expense of Medicare’s burdensome regulatory requirements.

If lawmakers reduce reimbursement on drugs so much that providers stop supplying them, an access problem could develop for beneficiaries, say industry watchers.

Lawmakers have also discussed giving the Department of Health and Human Services authority to make a one-time adjustment to high-cost drugs whose AWP is well above the acquisition price. Such reductions would be capped at between 20% and 30%, according to AAHomecare.

If in the end, lawmakers opt for 85% of AWP, that would be “a gift,” said one industry watcher, pointing out what appears to be the most palatable alternative for HMEs.