Manufacturers seeking an exemption from the new AWP minus 15% reimbursement formula for drugs covered under Medicare Part B must inform the Centers for Medicare & Medicaid Services by Jan. 1.

The reimbursement cut (from the current AWP-5% rate) goes into effect Jan. 1. However, because of the holiday season, CMS will accept an abbreviated application until Jan. 1, as long as all the necessary information is submitted by Jan. 16.

Any requests for exemptions, however, will have to include pricing data that may be made public, Center for Medicare Management Deputy Director Tom Gustafson told a CMS teleconference Dec. 18.

The AWP-15% payment methodology will be used for just one year. In 2005, the reimbursement formula will be average sales price plus 6%, and an alternative competitive bidding system will start in 2006 (¹ [A#00650470005], p. 8).

The law states that HHS may "substitute" for the 85% percentage "with respect to drugs and biologicals furnished during 2004 on or after April 1, 2004, a percentage that is based on data and information submitted by the manufacturer of the drug or biological...before Jan. 1, 2004."

CMS Acting Deputy Administrator Leslie Norwalk confirmed that the agency plans to issue the AWP and physician fee schedule regulations by the end of 2003, "so we may implement each of them going forward in 2004 without any delay."

"I don't anticipate any problems at all," Norwalk declared. "If for whatever reason our systems haven't caught up to the effective date, we will ensure that implementation of the payment will be the least burdensome for providers, and pay will be accurate as soon as our systems can catch up with that."

The cancer care services company U.S. Oncology recently suggested CMS might not be able to implement the payment changes by Jan. 1 (² Also see "AWP Reform Debate Continues; U.S. Oncology Says Cut Will Hit Profits In ‘05" - Pink Sheet, 8 December, 2003., p. 20). The issue of Part B drug reimbursement is likely to be revisited in 2004 and 2005 (see ³ Also see "Medicare AWP Reform Plan May Be “Politically Untenable,” Amgen Says" - Pink Sheet, 22 December, 2003.).

Medicare AWP Payment Cut Takes Effect Jan. 1; Exemption Requests Due

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