CMS Calculations for Average Sales Pricing ASP

by  Christine Woolstenhulme, QCC, QMCS, CPC, CMRS
June 9th, 2016

Because Drugs are not a part of the Medicare fees schedule, Drug pricing by Medicare is done according to Average Sales pricing (ASP) and is used to pay Part B claims.  Average Wholesale pricing was used for part B Medicare payments until 2005, then ASP pricing/payment structure was implemented. 
 
How ASP pricing works: 
 
For each billing code, CMS calculates a weighted average sales price using the Average Sales Price (ASP) data submitted by manufacturers.
 
• Manufacturers submit ASP data at the 11-digit National Drug Code (NDC) level.
 
• Manufacturers submit the number of units of the 11-digit NDC sold and the ASP for those units.
 
• The number of billing units in an NDC is determined by the amount of drug in the package. 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 number of billing units in this NDC for this billing code is (4 vials X 20 mg)/10 mg=8 billable units. Beginning April 1, 2008, CMS uses the following weighting methodology to determine the payment limit.
 
• CMS sums the product of the manufacturer’s ASP and the number of units of the 11-digit NDC sold for each NDC assigned to the billing and payment code, and then divides this total by the sum of the product of the number of units of the 11-digit NDC sold and the number of billing units in that NDC for each NDC assigned to the billing and payment code.
 
• CMS weights the ASP for an NDC by the number of billing units sold for that NDC. Prior to April 1, 2008, the following weighting methodology applies.
 
• CMS converts the manufacturer’s ASP for each NDC into the average sales price per billing unit by dividing the manufacturer’s ASP for that NDC by the number of billing units in that NDC. • CMS
sums the product of the ASP per billing unit and the number of units of the 11-digit NDC sold for each NDC assigned to the billing code, and then divides this total by the sum of the number of units of the 11-digit NDC sold for each NDC assigned to the billing code.
 
• CMS weights the ASP per billing units equally for each NDC regardless of package size. 

References:

CMS Calculations for Average Sales Pricing ASP. (2016, June 9). Find-A-Code Articles. Retrieved from https://www.findacode.com/articles/cms-calculations-for-average-sales-pricing-asp-31595.html

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