Providers prepare for ASP impact

Monday, May 31, 2004

YARMOUTH, Maine - Deciding what to do in the face of an anticipated 80% cut in the respiratory medication reimbursement has been no easy task for providers - it’s either sink, swim or get out of the water.
“This is not just Chicken Little screaming that the sky is falling,” said Associated Healthcare President Don White, who like many in the industry is expecting the worst if the ASP is implemented.

“I’ve seen 6-point plans and new programs left and right, but I have never seen anything like this that left unchanged would totally blow up a distribution channel,” said Todd Christopher, CEO of Home Care Supply.

Respiratory providers shudder at the thought of doing business with an average sales price plus 6% reimbursement that is set to take effect Jan. 1, 2005. Margins are expected to be so tight that many providers are already formulating business plans - including exiting the market entirely. Apria and Lincare have each revealed exit strategies if the ASP model comes home to roost. (See related AWP story)

White said Associated might forge ahead longer to see if a technical correction bill makes its way through Congress in 2005. His other option is to renounce his Medicare number for his retail pharmacy location and go with the drug card program, which will continue to reimburse at a percentage of the AWP.

Not all companies are jumping ship, however. A number of companies are looking to expand their respiratory medication pharmacy, said Jeff Baird, an attorney at Brown and Fortunato.

“[Companies] are trying to build up their volume to a point that it has enough patient base that it can receive good prices on inventory and still have a small margin, that even though it is a small margin it will be made up by volume,” said Baird.

The ambiguity of the ASP model as it stands makes planning for the future more difficult. It also allows for hope of a technical correction bill or a fee for service addition to linger.

“Everyone is positioning for what will be the real end result. In the meantime we are going to continue to grow this business,” said Jim Clark, president of Clark Respiratory and Medical Supply. “It’s not over until it’s over.”