Life Sciences

ASP: Is there an ideal reimbursement rate?

Medicare & Reimbursement Advisor Weekly, November 6, 2009

There may be more incentive under an average sales price (ASP) reimbursement model to prescribe branded drugs, but life for many of your customers under ASP is hurting access to community care and driving physicians and patients to hospitals. Some private payers appear to be staying with average wholesale price (AWP) or some version of it before committing to ASP reimbursement. In oncology, most practices have told MRAW that some payers are using AWP, and others are using ASP.

Great-West Health Plan reimburses ASP +20% to one oncology group. Unicare pays 115% of AWP to some Houston practices, says Katherine Grigsby, director of contracting and practice development for oncology groups in that area. Grigsby says larger practices tend to have more favorable positions for better rates. Lawrence Shombert, the administrator at a Rockville, MD, practice, says it is paid between 85%–90% of AWP by its private payers.

Payers tend to be willing to give to the administration side of the equation, which offsets your customers drug-side payments. For larger practices, you can generally get 150% of Medicare’s conversion factor.

Ideal ASP?

An ideal reimbursement percentage seems to hover around ASP +15% to +18%, although some practices MRAW spoke with said they would be okay with ASP +9%, provided clean claim payments were made within 30 days. “The [payers] have to allow us to electronically send records for audit instead of having us have to pull charts for them,” says Barbara Palermo, CPHQ, CWCP, an administrator at Georgia Cancer Specialists, a large multisite provider in Atlanta. Practices are exploring multiple avenues to manage their bad debt and financial challenges, including redirecting patients who are on high-dollar drugs with low margin, joint ventures with hospitals and cancer centers, cutting out add-on services such as psychologists, and closing community sites.