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ASP Making Perscription Drugs More Transparent

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ASP Making Perscription Drugs More Transparent

Medicare Part B Introduced ASP Making Injectable Drug Prices More Transparent And Less Variable

vials and syringe.thumbnail ASP Making Perscription Drugs More TransparentIn 2005, the way Medicare Part B reimbursed physicians and clinics for biologics and other physician-administered injectable drugs changed fundamentally. Medicare Part B, the nation’s largest payer of injectable drugs started to use Average Sales Price (ASP) to base payments for most drug products covered by the Plan B fee-for-service.

ASP requires the drug manufacturers to report the average sales prices of each of their products. CMS through its Part B claims processing contractors reimburses physicians for covered drug products administered to Medicare benies at 106% of ASP, adjusted for volume.

The ASP reforms another way that drug prices are becoming transparent and flatter or less variable. The transformative effect on business practices and strategy should not be underestimated.

Physician offices have seen a significant drop in Medicare revenue but the impact on drug makers is mixed. Overall the switch to ASP has tightened profit margins and required many manufacturers to revise projections.

medicare save money with asp.thumbnail ASP Making Perscription Drugs More TransparentMedicare Part B have saved billions of dollars in the switch to ASP-based payments and have dramatically slowed down the growth in Part B prescription drug spending. Beneficiaries have also benefited since they now pay the 20% Part B co pay on lowers prices.

However there is some evidence that some doctors are switching drug therapies or forcing patients to receive injections from other places such as outpatient hospitals, whilst this may save money it is certainly not optimal for patients. The effect on physician practices is still hard to discern but is worth monitoring closely, especially in the light of low Medicare rates for professional fees.

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