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Reimbursement to cover both acquisition, overhead

Pharmacy Regulation Resource, November 16, 2005

Varying slightly from the proposed rule, the final 2006 Outpatient Prospective Payment System (OPPS) Part B reimbursement formula will include both acquisition and overhead costs at a rate of average sales price (ASP) plus 6%, the Centers for Medicare & Medicaid Services (CMS) announced in November.

CMS originally proposed to have a separate ambulatory payment classification provide a 2% reimbursement for pharmacy overhead costs, including labor, transportation, and supplies.

Medicare claims data have shown that the average sales price plus 6% will adequately cover both acquisition and overhead costs, Joan Sanow of the CMS Center for Medicare Management said during a November 8 conference call.

The Medicare Payment Advisory Commission noted in a June report to Congress that overhead accounts for 25% to 28% of a pharmacy's direct costs. The Medicare reforms of 2003 required CMS to determine a reimbursement rate for overhead costs.

"CMS has had nearly a year's experience with this payment method for drugs administered in physician offices," Medicare Administrator Mark McClellan, MD, said in a statement. "During that time, we have found that drug prices generally have been stable and Medicare's payment rates now more accurately reflect market prices."

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