Full Plate

December 10, 2001

ASCP discusses its political agenda with emphais on a new reimbursement formula.

 

LONG-TERM CARE

FULL PLATE

ASCP proposes payment formula for Rx services as part of its political action agenda

Thousands of consultant pharmacists attending the ASCP Senior Care Pharmacy '01 meeting, held in Chicago last month, were offered the usual complement of clinical education sessions. One particularly well attended session gave consultant pharmacists an eye-opening look at ASCP's political activities on Capitol Hill, which, they learned to their dismay, could impact negatively on their professional and personal financial futures.

Opening the session, S. Leigh Davitian, J.D., ASCP's director of government affairs, cautioned the crowded room of consultant pharmacists that since Sept. 11, it isn't business as usual on Capitol Hill. "I would like to establish that different times dictate a different focus. For the most part, the issues being discussed on Capitol Hill relate pretty much to the events post-September 11, with only a trickle of information having to do with health care."

While she admitted that President Bush's priorities have changed since September 11, Davitian applauded the President's attention to health care early in his administration, exhibited by his eagerness to forge "solid relationships with congressional members."

She said that while ASCP supports a Medicare outpatient Rx drug benefit, she believes the Medicare drug discount plan proposed by the Bush Administration is "bad news," and she does not believe it will move forward. "The reason we don't like it," she told the audience, is that "the majority of the impact will be placed on the pharmacies; it is not a comprehensive benefit; it creates no incentives for pharmacy services whatsoever; and it really does not create savings for the seniors."

Another issue of great concern to ASCP is the reduction of AWP under Medicaid and Medicare programs.

"The cost of prescription drug benefits under Medicaid is just skyrocketing, so this issue is critical to understand and to be on top of on both a state and federal level," said Mary Jo Carden, ASCP's assistant director of government affairs. Carden is both a pharmacist and a lawyer.

The government has trained its sights on the reimbursement formula being used for all drugs dispensed under the Medicaid program. This focus stems from a recent study conducted by the General Accounting Office (GAO), which centered on physician providers but acknowledged the role of pharmacists and pharmacy providers. The study revealed that certain classes of products, particularly chemotherapeutic agents, had inflated average wholesale prices (AWP) and these have become the standard used for calculating pharmacy program reimbursements.

"I promise you that the AWP issue with cancer drugs, inhalants, and injectables is not the end," warned Carden. "This is simply one way to tackle what are perceived as overpayments in drug pricing, with the hope of reducing payments."

According to Carden, Congressional leaders in the House of Representatives have recommended using average sales price (ASP) as a benchmark for Medicare Part B. "This price would be a weighted sales price across all payers for a product that would include discounts, rebates, and other prudent purchasing incentives," she explained. "The ASP was arrived at as a result of the corporate integrity agreement between the federal government and Bayer and other pharmaceutical companies."

Carden told the pharmacists that ASCP rejected the ASP as "not an appropriate benchmark for pharmacy." It "doesn't reflect actual costs to pharmacy in acquiring drugs; it is inappropriate to calculate across all pharmacy providers; it is a retrospective price that lacks real time value for payment purposes; and it does not provide appropriate incentives for prudent purchasing."

Calling the current reimbursement formula of AWP minus a percent plus a dispensing fee a "flawed approach," ASCP drafted its own reimbursement formula to be used by prescription drug programs.

Basically there are three elements to the proposed formula: product cost, overhead, compounding/dispensing cost, and a professional service fee. Carden admitted that there are still many details to be worked out, especially as they relate to the definition of product cost. According to an ASCP government affairs resource packet outlining the proposed payment formula for prescription services, product cost "would be based on some information element other than AWP. AWP has lost all credibility with Congress, the Centers for Medicare and Medicaid Services (CMS), and state Medicaid programs and won't be acceptable as a cost basis going forward. Some possibilities for the basis of product cost might be actual acquisition cost, wholesale acquisition cost plus a percentage, estimated acquisition cost, average manufacturer's price plus a percentage, or some definition of cost yet to be determined."

Harold E. Cohen, R.Ph.

 



Harold Cohen. Full Plate.

Drug Topics

2001;23.