Did you notice the decrease in payment rate in abatacept and certolizumab in the July 2021 quarterly update? They decreased by 22% and 19% respectively, but did you dive into the details?
Changes in payment rates are difficult to track and understand their correlation with the ASP value and the price in which your organization may pay for the drug. ASP values are calculated based on submission of sales price net any price concessions (e.g. volume discounts, prompt pay, cash discounts) by the manufacturer during the quarter and generally have a two quarter lag.
Manufacturers submit the information by NDC, and CMS then later crosswalks the NDC to the HCPCS. The Social Security Act requires that payment be determined without regard to any special packaging, labeling, or identifiers on the dosage form or product or package. The OIG published a report in November 2017, “Excluding Noncovered Versions When Setting Payment for Two Part B Drugs Would Have Resulted in Lower Drug Cost for Medicare and its Beneficiaries”, and determined CMS interprets the inclusion of NDC for ASP calculation to include:
1. All versions of the drug listed under the FDA approval number (e.g. NDA, BLA) must be considered the same drug or biological for payments made under Section 1847A of the Act, and
2. For a product marketed under the same approval number, labeling that indicates that a version may be used primarily when the drug is not covered under Part B cannot be used as a basis to exclude that version from a payment amount calculation.
The OIG evaluated Orencia and Cimzia as having both an IV formulation that would be given as an infusion and a subcutaneous formulation generally self administered. During the time period of 2014-2016, the price of the two drugs was largely driven by the self administered formulation though CMS made payments only on the IV formulation covered under Part B. Had CMS not included the self administered formulation in its ASP/payment calculation it would have saved Medicare and its beneficiaries $366 million over 3 years.
Fast forward in time and the country became overwhelmed by the Covid-19 pandemic, and the “Consolidated Appropriations Act of 2021” was signed into law. This legislation was fill ed with relief funding for Covid-19 among other things that overshadowed the section “special rule for determination of ASP in cases of certain noncovered self-administered drug products”. The legislation amended 1847A of the SSA by determining the payment amount, the lesser of the amount calculated using the current formulation or the calculated amount excluding self-administered drugs thus resulting in the decrease in payment for abatacept and certolizumab.
1. Revenue Integrity and Pharmacy it is time to revisit routine and new regulation to ensure you and your teams have not missed any information.
2. Pharmacy teams to be aware of other drugs that may have an infusion and self-administered formulation and monitor for the impact in revenue and other contracting arrangements.
3. Pharmacy team to evaluate the quarterly payment changes to ensure your formulary is optimized with the cost vs. reimbursement structure.
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