Finally—Good News for Oncology From Congress!
Community Oncology Alliance. 2011 Mar 14, Patrick Cobb, MD; Ted Okon
Dr. Patrick Cobb is immediate past President of the Community Oncology Alliance and Chairman of the COA Policy Committee and Ted Okon is Executive Director, Community Oncology Alliance. View profiles of
Dr. Cobb and
Mr. Okon.
We have done a lot of reporting on the problems with federal legislation adversely impacting oncology over the past year. So, we are happy to announce the introduction of a bill that will help oncology practices deal with the problems of declining Medicare reimbursement. Congressmen Ed Whitfield, a Republican from Kentucky, and Gene Green, a Democrat from Texas, have introduced a bill that would correct the “prompt pay” problem that artificially reduces cancer drug reimbursement. The Congressmen were joined by 15 of their colleagues in the House of Representatives in introducing this important legislation. It could not come in time enough for oncology practices, which are finding that drug reimbursement is increasingly falling below drug costs.
What is the “Prompt Pay” Problem?
When Congress passed the Medicare Modernization Act of 2003, it created Average Selling Price (ASP), with the intention that it be the basis for Medicare Part B drug reimbursement. Every quarter, pharmaceutical manufacturers are responsible for calculating ASP, which is simply the average price of the total quantity of each drug sold during the quarter. Then, manufacturers report the ASP for each drug sold to the Centers for Medicare & Medicaid Services (CMS). The agency then reports Medicare drug reimbursement rates based on ASP plus 6%.
In calculating the ASP for each drug they sell, manufacturers are required to include all discounts and rebates. This is reasonable in arriving at an ASP that truly reflects the average selling price to the end purchaser/user, such as community oncology practices. The problem is that since manufacturers are required to report all discounts, prompt pay discounts are specifically included in the ASP calculation. Unlike other discounts and rebates that reduce the purchase price to the end purchaser/user, prompt pay discounts only exist between the manufacturer and the wholesaler (the distributor of the drug). They are essentially a financing mechanism that provides a discount to the wholesaler for paying promptly for drugs purchased. As such, manufacturer-to-wholesaler prompt pay discounts reduce ASP but do not reduce the cost of the drug itself to the end purchaser/user. Therefore, Medicare drug reimbursement rates of ASP plus 6% are artificially reduced to as low as ASP plus 4%.
And the Problem is Magnified
Unfortunately, there are two issues that magnify this problem. First, when several other problems are factored in, Medicare drug reimbursement, in many cases, is actually pegged at ASP minus 2%, or less. This is because there is a 6-month lag in CMS reporting drug reimbursement rates and oncology practice bad debt in collecting the 20% Medicare copayment. As a result, oncology practices frequently find that reimbursement is less than their cost of the drugs. Second, more private insurers are adopting the ASP-based payment system. Therefore, Medicare has an inordinate influence over all payment for cancer drugs.
What is the Solution in H.R. 905?
The bill that Congressmen Whitfield and Green introduced is very simple—it would eliminate the prompt pay discount from the calculation of ASP, starting with reimbursement rates for 2012. As Mr. Whitfield explained, “This is a national problem that is affecting the delivery of care to our most vulnerable patients. Inadequate Medicare reimbursements are having an adverse impact on physicians, related practitioners, and their patients in communities throughout Kentucky and across the country. I am pleased to join Congressman Green to re-introduce this bipartisan legislation to ensure that patients continue to have access to quality treatment and care.” Mr. Green put the problem in perspective—"We must address the prompt pay issue to preserve the practices providing care in cancer patients' own communities. Advances in treating cancer are meaningless if patients cannot access the care and oncologists cannot provide the care."
Chances for Passage?
Certainly, Congressman Whitfield is intent on getting H.R. 905 passed, most likely as part of a larger legislative vehicle, now that his party controls the House. However, he will need help.
First, there needs to be a companion bill introduced in the Senate. Fortunately, a coalition of oncology organizations, wholesalers, manufacturers, and patient advocacy groups are working on getting support for a Senate bill. Second, it is in the hands of the cancer community. Congressmen Whitfield and Green, as well as any potential Senate advocates, will need their colleagues to cosponsor legislation. This will require that the cancer community reach out to their members of Congress for support. The Community Oncology Alliance has provided information and materials to assist practices in this effort at
http://www.communityoncology.org, as have other organizations.
Several members of Congress have stepped up to do their part in support of cancer care. Now the cancer community has to produce and advocate for itself if it really wants to see this problem fixed.
Hopeful
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