Competitive Acquisition Program (CAP) Interim Final Rule Released under The Centers for Medicare and Medicaid Services

• CMS Releases Third Quarter Payment Rates for Drugs and Biologicals
• HOPPS Payment Rate Change
• Competitive Acquisition Program (CAP) Interim Final Rule Released under The Centers for Medicare and Medicaid Services
• Plasma-Derived and Recombinant Therapies

The Centers for Medicare and Medicaid Services (CMS) released its’ interim final rule with comment period on June 27, 2005. CMS will allow a comment period on the ruling for a period of sixty (60) days following the release of the ruling in the Federal Registrar, which was on July 6, 2005. Comments may be submitted in one of three ways; 1) Electronically – http://www.cms.hhs.gov/eRulemaking/ (Attachments should be in Microsoft Word, Word Perfect, or excel), 2) By Mail – Written comments (One original and two copies) should be mailed to: Centers for Medicare and Medicaid Services, Department of Health and Human Services, Attention: CMS-1325-IFC, P.O. Box 8013, Baltimore, MD 21244-8013, 3) By hand or courier (One original and two copies) to one of the following addresses: Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201, or 7500 Security Boulevard, Baltimore, MD 21244-1850.

BACKGROUND

The Medicare Modernization Act (MMA) of 2003 revised the drug payment methodology by creating a new pricing system based on a drug’s Average Sales Price (ASP). The MMA also provides for a program beginning January 1, 2006, to give physicians a choice between; 1) Obtaining these drugs from vendors selected through a competitive bidding process (referred to as the Competitive Acquisition Program (CAP); or 2) Directly purchasing these drugs and being paid under the ASP system. If a physician were to choose option (1), the selected vendor would be responsible for billing Medicare for the cost of the drug, as well as obtaining the 20% co-payment from the patient. With option (2), the physician would continue to bill Medicare and collect the co-pay from the patient, and still receive the Medicare reimbursement of ASP plus 6%. The CAP program was put in place to provide opportunities for Federal savings, due to the fact that the competitive bid process would reimburse at a rate lower than ASP plus 6%.

One of the foreseen drawbacks from the CAP is that vendors are not required to provide ALL therapies within a certain therapeutic class of drugs. For instance, if a physician were to choose the CAP for Factor VIII therapies, the contracted vendor selected to provide the drugs would not be required to stock all brands of recombinant and plasma-derived FVIII therapies. This would obviously affect a patient’s choice of therapy, which is problematic in that brands of clotting factor are not necessarily interchangeable. It’s important to note that Congress explicitly stated in the MMA that intravenous immune globulins (IVIG) therapies were to be excluded from the CAP. However, blood clotting factors and Alpha1- proteinase inhibitor therapies were not statutorily excluded from the competitive bidding program. Since blood clotting factors and Alpha1 therapies are not deemed to be interchangeable, a strong lobbying effort comprised of industry, trade associations, and consumer groups advocated against the inclusion of these therapies within the CAP.

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Reimbursement Alert June / July 2005

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