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Table 1 – Average Wholesale Price (AWP), Average Sales Price (ASP),
and Average Acquisition Cost (AAC) |
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Drug Type |
Hospital Outpatient |
Physician Office / Freestanding Clinic |
|
Sole source drugs (brand
name w/o generic equivalent) |
88% - 95% of AWP, 2004 <83% of AWP in 2005 |
85% of AWP* in 2004 Avg sales price + 6% in 2005 |
|
Mult source drugs, innovator (brand name with generic equivalent) |
68% of AWP, 2004 & 2005 |
85% of AWP* in 2004 Avg sales price + 6% in 2005 |
|
Mult source drugs, noninnovator (generic) |
46% of AWP, 2004 & 2005 |
same as above |
|
Pass thru drugs |
85% of AWP (same as phys fee sched) |
same as above |
|
Packaged drugs |
Drugs costing over $50 per encounter will be unbundled; if under $50, drugs are bundled |
same as above |
|
New drugs |
95% of AWP (drugs without a C code) |
95% of AWP (“C” codes not allowed for physician use) |
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In 2006, all covered drugs will be subjected to new reimbursement methodologies: |
Average acquisition cost, or if AAC is not available, physician fee schedule fee will be used. |
Physicians choose whether to purchase drugs and be paid ASP, or to obtain drugs through Mandatory Vendor Imposition in which the competitive bidding contractor bills directly to Medicare & pt. |
|
Brachytherapy seeds - no longer bundled |
Paid according to hosp cost-to-charge ratio in 2004-2006 |
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*Exceptions to the 85% AWP rule include 29 common (and most frequently billed) OIG/GAO survey drugs, which are to be paid to physicians or free-standing clinics at generally lower rates (80%-81% of AWP, with a few higher exceptions).
Sources: ACCC
Additional Information for all above: