Federal Register, Volume 75, Number 226, November 24, 2010, Pages 71519-72652 Page: 71,958
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71958 Federal Register/Vol. 75, No. 226/Wednesday, November 24, 2010/Rules and Regulations
insufficient to enable us to isolate the
portion of the uncoded packaged drug
and biological cost that is pharmacy
overhead cost. In order to isolate the
portion of uncoded packaged drug and
biological cost that is pharmacy
overhead cost, we believe that we would
need more drug specific information
reported to us by hospitals, either
through more reporting of packaged
drugs on claims or through more
granular cost centers on the cost report.
As indicated in the CY 2011 OPPS/ASC
proposed rule we also evaluated claims
data in an effort to assess how much
uncoded packaged drugs resemble
coded packaged drugs (75 FR 46278).
We found that most uncoded packaged
drug costs appear with surgical services
and that most coded packaged drug
costs appear with medical services. In
light of this information, we are not
confident that the drugs captured by
uncoded drug costs are the same drugs
captured by the coded packaged drug
cost. Therefore we do not agree that we
can assume that they are the same
drugs, with comparable overhead and
handling costs. Without being able to
calculate an ASP for these drugs and
without being able to gauge the
magnitude of the overhead complexity
associated with these drugs, we do not
believe we should assume the same or
a greater proportional overhead is
appropriate for redistribution. Third, we
also do not believe the commenter's
assertions that pharmacy services and
overhead costs for all uncoded packaged
drugs are similar to the costs associated
with coded packaged drugs and are a
sufficient basis for redistributing equal
or close to equal amounts of dollars
from uncoded packaged drugs as from
coded packaged drugs to separately paid
drugs under this overhead adjustment
policy. As we have stated elsewhere, we
remain committed to using hospital data
as reported to us by hospitals to set
OPPS payment rates. Therefore, we
continue to believe that it would be
inappropriate to assume that the costs
reported under uncoded pharmacy
revenue code lines are for the same
drugs and biologicals with the same
ASPs, as the costs of packaged drugs
and biologicals reported with HCPCS
codes. Therefore, for the reasons set
forth above, we continue to believe that
we should not make broad assumptions
that the same overall charge markup
exists for both coded and uncoded
packaged drugs or that we should
redistribute a similar or greater amount
of cost from both coded and uncoded
packaged cost to separately payableWe also do not agree that our
pharmacy overhead adjustment
methodology is arbitrary. The basis for
the proposed and final pharmacy
overhead adjustment methodology is the
same as our CY 2010 final policy. The
CY 2010 policy for redistributing $150
million from coded packaged drugs and
biologicals to separately payable drugs
and biologicals was based on our
assessments using both industry and
MedPAC data (74 FR 60505 through
60507). We believed and continue to
believe that between approximately one-
third and one-half of the overhead cost
in coded packaged drugs could be
attributable to charge compression due
to our cost estimation methodology and
our choice of a packaging threshold. We
continue to believe that an amount of
packaged drug cost attributable to
charge compression cannot be precisely
known, but we do not believe we should
distribute more than $150 million from
coded packaged drugs. The proposed
and final CY 2011 policy of
redistributing $150 million from coded
packaged drugs and biologicals to
separately payable drugs and biologicals
roughly approximates one-third to one-
half of overhead cost in the coded
packaged drugs with updated ASP data,
and the CY 2009 claims and most
current cost report data used in this
final rule with comment period.
The proposed and final CY 2011
policy of redistributing $50 million of
the total cost of uncoded packaged
drugs and biologicals to separately
payable drugs and biologicals falls in
the approximate 8 percent range of total
uncoded drug and biological cost using
the CY 2009 claims and most currently
available cost report data used in this
final rule with comment period. As
indicated in the CY 2010 OPPS/ASC
final rule with comment period, this is
a conservative estimate, as compared to
the case of coded packaged drugs and
biologicals with an ASP and for which
we have a specific pharmacy overhead
cost estimate in relationship to their
known ASPs. As explained previously
in this response we remain unwilling to
make sweeping assumptions that
uncoded packaged drug and biological
cost included a pharmacy overhead
amount comparable to those of coded
packaged drugs and biologicals with an
ASP. We continue to be confident that
this conservative estimate of $50 million
for redistribution from the cost of
uncoded packaged drugs and biologicals
to separately payable drugs and
biologicals is an appropriate amount in
light of our uncertainty about the
relationship between ASP andpharmacy overhead costs for the
uncoded drugs and biologicals. We also
do not believe this policy is arbitrary
because we finalized our CY 2010
policy for an overhead adjustment
methodology in response to public
commenter consensus that this
approach was an appropriate avenue for
addressing charge compression in the
drug and biological payment rates for
separately paid drugs. We believe that
the consensus among commenters on a
redistribution methodology is further
evidence that the policy adopted last
year and which we are continuing for
CY 2011 has a rational basis and is not
arbitrary.
After careful consideration of the
comments and reassessment of the most
current claims data, cost report data and
ASP data, for the reasons discussed
above, we are finalizing our proposal to
continue the CY 2010 pharmacy
overhead adjustment methodology as set
forth at 74 FR 60500 through 60512. We
are redistributing $150 million from the
pharmacy overhead cost of coded
packaged drugs and biologicals with an
ASP and redistributing $50 million from
the cost of uncoded packaged drugs and
biologicals, for a total redistribution of
$200 million from costs for coded and
uncoded packaged drugs to separately
payable drugs, with the result that we
will pay separately paid drugs and
biologicals at ASP+5 percent for CY
2011. For the reasons stated above, we
also are not accepting the APC Panel's
recommendation to pay for acquisition
and pharmacy overhead costs of all
separately payable drugs at no less than
average sales price plus 6 percent for CY
2011.
After applying our longstanding
methodology for calculating the total
cost of separately payable drugs and
biologicals in the claims on which the
CY 2011 final rule payment rates are
based, compared to the ASP dollars for
the same drugs and biologicals and
without applying the proposed
overhead cost redistribution using
updated claims, cost report, and ASP
data, we determined that the estimated
aggregate cost of separately payable
drugs and biologicals (status indicators
"K" and "'G"), including acquisition and
pharmacy overhead costs, is equivalent
to ASP-1 percent (compared to ASP+0
percent in the proposed rule). Therefore,
under our standard drug payment
methodology, if we did not adopt our
proposed redistribution of $200 million,
we would pay for separately payable
drugs and biologicals at ASP-1 percent
for CY 2011, their equivalent average
ASP-based payment rate. During our
assessment of the final rule data, we
also determined that the estimateddrugs and biologicals.
aggregate cost of coded packaged drugs
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United States. Office of the Federal Register. Federal Register, Volume 75, Number 226, November 24, 2010, Pages 71519-72652, periodical, November 24, 2010; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc52807/m1/447/: accessed May 6, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.