Total Sales - (Price Concession percentage x Total Sales) = ASP |
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Average Sales Price: Calculating ASP for Medicare "Part B" Reimbursement
Beginning in 2005, an amendment to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) required manufacturers to report Average Sales Price (ASP) data to the Center for Medicare Services (CMS) for Medicare Part B drugs and biologics paid under the act. CMS uses the data to determine payment allowance for drugs furnished incident to a physician's service at 106 percent of the calculated ASP.
To calculate the ASP, a manufacturer sums the volume discounts, prompt pay discounts, cash discounts, free goods that are contingent on any purchase requirement, chargebacks, and rebates for the most recent 12-month period available associated with all sales included in the ASP reporting requirements. However, the manufacturer then calculates a percentage using this summed amount as the numerator and the corresponding total sales data (that is, the total in dollars for the sales subject to the ASP reporting requirement for the same 12-month period) as the denominator. This results in a 12-month rolling average price concession percentage of Total Price Concession/Total Sales (12-month). This percentage is then applied to the total in dollars for the sales subject to the ASP reporting requirement for the quarter. The price concession amount is then applied as a reduction to the total sales dollar amount, and that result minus the numerator used in calculating the quarterly ASP for that National Drug Code (NDC).
This information is sent to CMS, that then follows five steps:
1 For each billing code, CMS calculates a weighted ASP using the ASP data submitted by manufacturers.
2 Manufacturers submit ASP data at the 11-digit NDC level.
3 Manufacturers submit the number of units of the 11-digit NDC sold and the ASP for those units
4 CMS converts the manufacturer's ASP for each NDC into the ASP per billing unit by dividing the manufacturer's ASP for that NDC by the number of billing units in that NDC. For example, a manufacturer sells a box of 4 vials of a drug. Each vial contains 20 milligrams (mg). The billing code is per 10 mg. The conversion formula is (4 vials x 20 mg)/10 mg = 8 billable unites per NDC
5 Then the ASP per billing unit and the number of units (11-digit NDCs) sold for each NDC assigned to the billing code are used to calculate a weighted ASP for the billing code. CMS sums the ASP per billing unit times the number of 11-digit NDCs sold for each NDC assigned to the billing code, and then divides by the total number of NDCs sold. The ASP per billing unit for each NDC is weighted equally regardless of package size.