News You Can Use: If You Don't Have Anything Nice to Say About AWP, Say It Anyway

Payers agree on the need for alternative payment methods

Brace yourself for the way you'll get paid for outpatient drugs: Average wholesale price (AWP) gets the thumbs-down from public and private payers alike. Both Medicare and private insurers agree on the lack of solid alternatives to the AWP method of paying for physician-administered drugs, but they say AWP-based reimbursement is littered with overpayment.
 
This dilemma was confirmed once again by two groups of independent analysts in reports recently released by the Medicare Payment Advisory Commission. Of 33 health plans queried by the Washington, D.C.-based consultancy Dyckman & Associates, 20 use a "straightforward AWP pricing approach based on relatively current pricing data" for most of the physician-administered drugs they pay for. Thirteen plans use another method to pay for some drug categories or providers or use older pricing data, the researchers say.
 
Medicare is in search of a new reimbursement method for physician-administered drugs because the AWP doesn't reflect drugs' actual market prices and its use results in gross overpayments, according to many analysts. Medicare spent $8.5 billion on physician-administered drugs in 2002, a nearly 35 percent increase over 2001.
 
Medicare reimburses physicians at 95 percent of a given drug's AWP. For multisource drugs, Medicare pays the average AWP of all generic versions or the AWP of the lowest-cost brand-name drug - whichever is lower.
 
As with Medicare, private plans generally believe that physicians pay less than 95 percent of AWP for drugs, while plans reimburse doctors at an average 98 percent of AWP, survey analysts say. Thirty-one percent of plans pay 100 percent of AWP, while 6 percent pay an amount between 110 and 115 percent.
 
According to the health plans, this makes outpatient drugs "a profit center for physicians." However, physicians complain to about one-fourth of the surveyed plans - as they do to Medicare - that they are underpaid for administering the drugs. About a third of plans said they are considering "a more aggressive pricing approach."
Stick With Mainstream Treatment, CMS Says
Don't count on federally funded coverage for acupuncture, because CMS recently nixed requests for treatment of both osteoarthritis and fibromyalgia.
 
In a pair of recent decision memoranda (CAG-00174N and CAG-00175N), the CMS' Coverage and Analysis Group decided that there wasn't enough evidence to conclude that acupuncture is reasonable and necessary for those conditions. As a result, CMS will continue its existing noncoverage policy for acupuncture.
 
"While acupuncture may play an adjunctive role to medications for the treatment of pain," CMS says in its memo on osteoarthritis, "data from existing [randomized controlled trials] does not conclusively support that real acupuncture is superior to sham acupuncture for the pain associated with osteoarthritis." In [...]

- Published on 2003-11-06