Medicare Monday: Did you know Medicare Part B uses a market-based system to pay for medicines?
A closer look at the market-based changes that the MMA made to Medicare Part B with the creation of Average Sales Price (ASP).
A closer look at the market-based changes that the MMA made to Medicare Part B with the creation of Average Sales Price (ASP).
We often discuss the creation of Part D when we talk about the market-based changes that the Medicare Modernization Act (MMA) made to Medicare, but that’s just one example. Today, let’s take a closer look at the market-based changes that the MMA made to Medicare Part B with the creation of Average Sales Price (ASP).
As you may recall, Medicare Part B covers a subset of outpatient prescription drugs that are often relied on by some of the sickest and most vulnerable patients with conditions such as cancer, rheumatoid arthritis, mental illness and autoimmune conditions. Unlike medicines covered by Part D that patients take on their own, most Part B medicines are administered in a doctor’s office or hospital outpatient setting. Given the complexities of acquiring, storing and administering many Part B medicines, they can’t often be treated the same as Part D pharmacy medicines. Most Part B medicines are purchased by physicians rather than being picked up by the patient at a retail pharmacy.
Prior to the MMA, physicians were reimbursed at 95 percent of the average wholesale price – which is essentially a list price prior to any discounts or rebates negotiated with the manufacturer. The MMA changed the basis for reimbursement of drugs under Part B so that providers are now reimbursed at ASP+6%. Congress made these changes to ensure that Part B reimbursements are market based and to align Part B reimbursements with the price at which drugs are purchased by providers. ASP factors in all of the discounts that are privately negotiated by providers, group purchasing organizations, pharmacies and others when they purchase Part B medicines. ASP ensures that the payment rate reflects these discounts and, as a result, ensures that the Medicare program and its beneficiaries benefit from negotiation in the market. Although the types of products, distribution and handling needs, and patient and clinical needs are usually very different between Part D and Part B, both have achieved considerable success as market-based approaches to providing Medicare beneficiaries with affordable access to needed treatments.
Here’s what you need to know about how ASP works:
Access to medicines under Part B is crucial for vulnerable patients who suffer from serious illnesses. Learn more about Medicare Part B at PhRMA.org/PartB.