Congress addressing IVIG reimbursement

August 21, 2006

The formula being used by Medicare to determine the reimbursement rates for intravenous immune globulin (IVIG) is creating serious problems for patients, physicians, hospitals, and pharmacists. The formulas used were changed for physicians' offices and homecare settings in 2005 and for hospital-based settings at the beginning of 2006. Reimbursement rates for almost all approved IVIG products are now below the costs of the products and this, combined with periodic supply shortages, has had patients and hospitals scrambling.

The formula being used by Medicare to determine the reimbursement rates for intravenous immune globulin (IVIG) is creating serious problems for patients, physicians, hospitals, and pharmacists. The formulas used were changed for physicians' offices and homecare settings in 2005 and for hospital-based settings at the beginning of 2006. Reimbursement rates for almost all approved IVIG products are now below the costs of the products and this, combined with periodic supply shortages, has had patients and hospitals scrambling.

Fifty-five members of the House of Representatives have signed onto a letter asking the Department of Health & Human Services to declare a public health emergency to resolve problems with IVIG reimbursement rates. Such a declaration would give the Center for Medicare & Medicaid Services the authority to make an emergency adjustment to the reimbursement formulas without Congressional approval. HHS' Advisory Committee on Blood Safety and Availability has also recommended that HHS declare a public emergency, but the department has not done so.

The changes in reimbursement are due to the Medicare Modernization Act of 2003, said Cynthia Robbins, R.Ph., director of pharmacy contracting at Premier Inc., a group purchasing organization in Charlotte, N.C. Reimbursement rates for IVIG were sufficient previously, but in 2005, the new law mandated using an average sales price (ASP) model rather than an average wholesale price (AWP), said Fred Pane, R.Ph., senior director of pharmacy affairs with Premier. The supply of IVIG has been fluctuating because the products take a long time to manufacture from blood plasma. Some IVIG manufacturers have been forced out of the market in the past few years because of pricing problems and reimbursement rates.

The current reimbursement levels for some brands of IVIG are below the cost of the product, Robbins and Pane reported. For example, the AWP for liquid IVIG is $3,227.20 for a 40-gm patient dose, but the actual 2006 ASP is $2,252.00, a 30% difference in the reimbursement rate, Pane reported. There are some administration fees that Medicare reimburses that can make up some of this shortfall, he added.

Part of the problem is that IVIG and other blood plasma products are volatile both in price and supply, said Schmidt. There is a six-month lag time between the price data being used to generate the ASP and when reimbursements based on that data go into effect, he explained. "Reimbursement rates issued in June reflect the prices in January," he said.

When reimbursement rates for IVIG are down, manufacturers see the potential for demand dry up and they reduce production or just maintain current output. The long manufacturing time in turn causes shortages and even more volatility, said Robbins. "Supply has been a roller coaster."

Another factor in the IVIG situation is that many patients can use only one brand of IVIG and either cannot or should not be switched to another IVIG. One possible solution to this would be for Medicare to create specific J codes to identify each brand of IVIG, said Premier's Robbins. The six IVIG products are divided into two codes for reimbursement. Assigning each IVIG product its own J code would help, she said.

The 2005 changes in IVIG reimbursement to doctor's offices and homecare settings forced a migration of patients to hospital-based programs, Schmidt noted. Now patients are being further disenfranchised, he said. The newest changes mean that hospitals are being forced to create committees to determine which diseases will be treated, a situation that existed in the late 1990s when there were dramatic shortages in IVIG supply. It is a triage situation, he said.