Lucio Gordan, MD and Michael Diaz, MD Are Co-Authors of In-Depth Review on Medicare Part B Reimbursement

Fort Myers, Fla., June 24, 2021-  Lucio Gordan MD, President and Managing Physician of Florida Cancer Specialists & Research Institute (FCS) and Michael Diaz, MD, Assistant Managing Physician of FCS, are two of the authors of a comprehensive and detailed review on the advisability and efficiency of the current reimbursement methodology in use for Medicare Part B.  The article, entitled “Observations Regarding the Average Sales Price (ASP) Reimbursement Methodology,” is featured on the June 2021 cover of “Evidence-Based Oncology,” a peer-reviewed publication of the “American Journal of Managed Care.”

For most Part B drugs, Medicare reimbursement is based on the drug’s average sales price (ASP) plus six percent (6%) minus sequestration (4.3%). For a new drug, the Centers for Medicare & Medicaid Services (CMS) uses wholesale acquisition cost (WAC) until there is a full quarter of ASP data available, with a two-quarter lag. According to a Medicare Payment Advisory Commission (MedPAC) report* to Congress in January 2007, “The move to ASP in 2005 resulted in substantial price savings for Medicare on nearly all drugs and those payment rate changes drove decreased spending.”

The review article by Drs. Gordan and Diaz points out that, due to additional legislation over the past decade and intervention such as sequestration, “… Part B drug reimbursement resulted in a drop in ASP from 6% to 4.3% and WAC from 3% to 1.35%, resulting in the reimbursement methodology currently in use for Medicare Part B. Additionally, due to a known error surrounding prompt-pay discounts provided to distributors but not passed on to providers, actual realized reimbursement is likely closer to ASP + 2.3%.”

In their review, Drs. Gordan, Diaz and their co-authors stated, “With the recent focus on drug price controls, such as International Pricing Index, and criticism of the current ASP reimbursement method, we investigated alternative ASP-based reimbursement methods to determine if they may be worth pursuing.” The co-authors further defined the desired objectives to accomplish these alternatives as:

•  Incentivizing the use of generics and biosimilars when available

•  Continuing to support the sustainability of specialty practices of all sizes

•  Supporting stability over time

•  Allowing providers to select appropriate therapies to meet individual patient needs

The review continued, “Despite a paucity of published data, the Medicare Payment Advisory Commission (MedPAC) provided a report to Congress in 2017 detailing their concerns with ASP, including lack of competition creation and the potential for incentivizing providers to choose higher-priced drugs.” Drs. Gordan, Diaz and their co-authors reported, “These publications continue the perception that physicians are incentivized and driven by increased prices of drugs and that higher prices indicate higher profit and margin. In this review, we will explore recent literature that provides evidence directly contradicting these concerns.”

The topic of ASP and Medicare Part B reimbursement is of critical concern in community oncology. Ted Okon, Executive Director of the Community Oncology Association (COA), said, “As the frontline providers of care for most Americans battling cancer, community oncologists are highly aware that the trend of continuously rising cancer care costs are unsustainable and unacceptable. Ensuring patient access to affordable life-saving cancer treatments is a top concern for oncologists, oncology nurses, practice administrators, pharmacists, and other cancer care professionals. COA believes that every stakeholder in our incredibly complex health care system must come together and selflessly collaborate to reduce medical costs.”

The review by Drs. Gordan, Diaz and their co-authors concluded, “Medicare Part B reimbursement utilizing ASP methodology has qualities worth preserving in future systems … Incorporating a reimbursement model that engenders strong constraints rather than regulating absolutely allows for benefits for patients and providers … Overall, ASP is a market-based tool that can be leveraged in the future to create a sustainable reimbursement model that is beneficial to patients, payers and providers.”

To read the full review: https://www.ajmc.com/view/observations-regarding-the-average-sales-price-reimbursement-methodology

* Source: Biotechnology Healthcare https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3541838/