The Medicare Payment Advisory Commission (MedPAC) reported to Congress in January that Medicare’s switch to a payment method known as ASP, or Average Sale Price, has reduced spending on drugs in the Medicare Part B program. This system reflects actual market spending, rather than wholesale prices.
Explore this issueApril 2007
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MedPAC reported that Medicare spending on Part B drugs fell by $800 million—from $10.9 billion in 2004 to $10.1 billion in 2005. Although there is evidence that drug use overall declined between 2004 and 2005, the year the ASP system was implemented, MedPAC found that much of the decreased spending occurred because of lower drug prices.
For rheumatologists, average drug spending decreased only 1%, as compared with a 52% decline for urologists, for example. These results suggest that rheumatologists were paying market prices before the new system was implemented.
The ASP system was created under the Medicare Modernization Act of 2003 because Congress was concerned that Medicare was losing billions of dollars in drug payments under the old system. At the time, there was physician opposition to the ASP system because physicians believed quality of care and drug access could be in jeopardy. Another physician concern was that the higher costs of drugs helped them cover the cost of administering the drugs. The MedPAC study found no evidence that patient quality of care has been affected under ASP, or that patients have trouble accessing Part B drugs.
MedPAC suggested that the decline in drug use might be from physicians treating cancer with surgery instead of using drugs that produced unproven benefits or harmful side effects, among other things.
In December, MedPAC recommended that the Department of Health and Human Services clarify how average sale prices are reported for bundle products. The ACR will continue to update members as the situation evolves.
Drug Denials? Write Part D on Your Scripts
Many prescription drug providers (PDPs) still request prior authorization for Part D drugs. The ACR has been working diligently with Robert Bennett of the Physician Regulatory Issues Team (PRIT) to fix these denial problems in 2007. Rheumatologists should write “for Part D” along with the diagnosis on relevant prescriptions so that PDPs can waive the need for a new prior authorization. PDPs need verification that the drugs are for Part D diagnoses and should not be paid under Part B. Questions or concerns? Contact the ACR’s practice advocacy department at (404) 633-3777 or PRIT at PRIT@cms.hhs.gov.