Update on Proposed Changes to AWP Reimbursement

CMS Proposed Rule Delayed - CMS Administrator Tom Scully has announced that he will delay release of the final rule governing how Medicare pays for Part B drugs and defer to congressional action. Last August, CMS had proposed four options for revising the current AWP formula and had indicated plans to issue a new rule November 1, 2003, and implement the reimbursement formula January 1, 2004.

AWP Changes in Medicare Reform Legislation - House and Senate Medicare conferees continue to work toward an agreement on the pending Medicare reform and prescription drug legislation. We understand that negotiators have agreed on a new phased-in reimbursement formula that would require Medicare to reimburse providers the lesser of 85 percent of AWP or the Widely Available Market Price (WAMP) for one year, and then rely on Medicare officials to establish a new market-oriented price system based on the Average Sales Price (ASP) plus 4 percent. In addition, the Medicare legislation will include approximately $300 - $400 million per year to increase the accompanying practice expense for administering chemotherapy services. The final amount will be determined after the Congressional Budget Office determines the cost of the legislation.

Please note that the new AWP reimbursement would apply to drugs provided in physician offices and freestanding centers. The new formula does not apply to drugs provided in hospital outpatient settings.

Contact Congress - There is still time to contact Congress and share your concerns. However, because many assumptions need to be made to calculate the proposed formula, the exact impact on hematology practices is not clear.

Therefore, when contacting Congress, it is best to describe:

• your practice (type, size, number of patients treated);
• your concerns about the effect of the proposed reimbursement changes on your practice; and
• the need to ensure that any reductions in Medicare reimbursement for drugs be minimized and the need to provide substantial increases in payment for chemotherapy administration services and other patient management care.

Senate Majority Leader Bill Frist (R-TN) predicts that negotiations over the most controversial issues in the legislation (the structure and delivery of the drug benefit, cost containment, and reimportation) will occur during the next several days and predicts final congressional action by November 21, 2003, when Congress plans to adjourn for the year.

We will continue to keep the Society informed of any developments on this important issue and provide information on how ASH members can help influence the development of the new reimbursement formula.

If you have any questions, please contact Mila Becker, Director of Government Affairs and Practice, at 202-776-0544 or mbecker@hematology.org.