Posted on March 29, 2011 by Debra A. McCurdy

Medicare Part B Drug ASP Files - Second Quarter 2011

CMS has posted the Medicare Part B average sales price (ASP) payment files for the second quarter of 2011. CMS continues to characterize drug prices in the market as “stable,” with prices for the top Part B drugs decreasing by an average of 0.4%. CMS attributes decreased prices to "a number of competitive market factors at work – multiple manufacturers, alternative therapies, new products, recent generic entrants, or market shifts to lower priced products."

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Posted on January 13, 2011 by Debra A. McCurdy

OIG Report on Medicare Payments for Newly Available Generic Drugs

The HHS Office of Inspector General (OIG) has issued a report entitled “Medicare Payments for Newly Available Generic Drugs.” The report notes that because of the timing of manufacturer reporting of quarterly average sales price (ASP) data to CMS and when those data are used to calculate payment amounts, there is a two-quarter lag between when sales occur and when Medicare payment amounts reflect those sales.  This lag can have a significant impact when newly-available generic drugs enter the market, since their ASPs can be substantially lower than their brand counterparts but Medicare payment can remain at the higher brand level for two quarters or more. According to the OIG, Medicare could have saved an estimated $111 million if “payment amounts reflected actual sales prices during the initial generic availability of 16 drugs,” representing 25% of total expenditures for these drugs during the period. The OIG recommends that CMS: (1) work with Congress to require manufacturers of first generics to submit monthly ASP data during the period of initial generic availability, and (2) if effective in alleviating the financial impact of the two-quarter lag, consider requiring monthly ASP submissions for all Part B-covered drugs. CMS did not concur with the OIG, noting increased administrative burdens associated with monthly ASP reporting requirement and the potential that it actually would result in price increases.

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Posted on September 28, 2009 by Debra A. McCurdy

Medicare ESRD PPS Proposed Rule

On September 29, 2009, CMS is publishing its proposed rule to implement a prospective payment system (PPS) for Medicare end-stage renal disease (ESRD) services, as mandated by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). The proposed ESRD PPS would provide a single bundled payment to dialysis facilities covering services now included in the ESRD composite rate in addition to items and services that are now separately billable, including training and home dialysis costs, laboratory services and all ESRD-related Part B and former Part D drugs. The rule would establish a per-treatment base rate of $198.64 for all of the services related to a dialysis session, which would be subject to patient-specific and facility-specific adjustments, including adjustments for case mix and comorbidities, geographic cost differences, low-volume facilities, and certain outlier cases. As required by MIPPA, the rate is estimated to result in payments that equal 98% of the estimated payments that would have been made absent the statutory changes. The new payment system would apply to dialysis services furnished to Medicare beneficiaries on or after January 1, 2011, although the rule establishes a four-year phase in-period (note that facilities may elect to be paid entirely under the new system beginning January 1, 2011). CMS also is proposing to apply a “transition budget neutrality adjustment factor” of -3.0% to all payments during the phase-in, plus a $14 per treatment adjustment to the composite rate portion of the blended payment amount to reflect ESRD-related Part D drug costs. The proposed rule also describes three quality measures pertaining to hemodialysis adequacy and anemia management that CMS plans to use for its quality incentive program (QIP), and it lays out a conceptual model for tying payment to quality performance (CMS plans to adopt the QIP through a separate rulemaking process). CMS will accept comments on the proposed rule through November 16, 2009. CMS is hosting a town hall meeting on October 23, 2009 to discuss its proposed Medicare ESRD PPS rule; the registration deadline is October 2, 2009.

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