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Why does CMS reimburse less (sometimes substantially less) than the cost of providing IVIG? - Timothy Tyler, PharmD, FCSHP
The Medicare Modernization Act (MMA) of 2003 (P.L. 108-173) was the impetus for the change in reimbursement rates to the current formula, which is the average sales price (ASP) plus 5 percent in the hospital outpatient setting, and plus 6 percent in the physician office. There are really two cost issues this formula does not adequately address. The first is the wholesale cost of the product, and the second is the additional costs associated with providing/administering IVIG.
Regarding the cost of product, you may like to refer to an article that was posted in the October 2009 issue of BioSupply Trends Quarterly, published by FFF Enterprises. The article titled Immune Globulin: The Long and Short of It addresses how the current reimbursement model, once based on average wholesale price (AWP), was changed to an average sales price (ASP) rate which, though it changes each quarter, is based on data from sales reports from the previous two quarters. This can mean that the rate at which IG providers are being reimbursed can lag behind the economic realities of current prices. In a rising price environment brought on by a short market, providers are often paying more, sometimes substantially more, than the Medicare reimbursement rate, and therefore, are not fully reimbursed.
Regarding the additional costs associated with providing/administering IVIG, it should be noted that after MMA went into effect and because of feedback from the medical community, the Centers for Medicare and Medicaid (CMS) temporarily added an administration payment per infusion, however this has since expired and was not replaced.
CMS does not have the authority to establish an additional payment for other services associated with providing immunoglobulin that impact its overall cost. To read what the Clinical Immunology Society has to say on the matter, go to http://www.clinimmsoc.org/educational-resources/ivig/medicare-ivig-access-act-summary.