PPAC: pricing system needs correction plan.(Practice Trends)

WASHINGTON -- Physicians should be reimbursed retroactively for any payment miscalculations that occurred under Medicare's new system for in-office infusions, the Practicing Physicians Advisory Council recommended.

The average sales price (ASP) is something federal regulators "are concocting, and they don't know how accurate it's going to be," said PPAC member Barbara L. McAneny, M.D., an oncologist from Albuquerque, N.M., who drew up the recommendation.

For that reason, the Centers for Medicare and Medicaid Services should establish a correction factor for each quarter it updates pricing on the ASP, to prevent physicians from treating patients at a loss or being put in the position of denying them medical treatment, she said. PPAC is an independent panel that advises CMS on issues related to physician payment.

The ASP was authorized by the Medicare Modernization Act of 2003, replacing the former system of overpayments for drugs and underpayments for their administration. The intent was to make fair payments for both services.

This year and next, Medicare will pay physicians the ASP plus 6%, although in 2006, physicians will have the option of obtaining the drugs directly from a supplier selected by Medicare through a competitive bidding process.

CMS officials told the panel that the agency would update pricing for the ASP on a quarterly basis. However, Dr. McAneny argued that this would not allow for any mistakes in pricing made along the way.

"Suppose the ASP is set at $60 for a drug, but you can only purchase that drug for $100," she later said in an interview. This means physicians would be getting paid only $60 for that drug from January through April--and losing $40 every time they administer the drug.