Bustin' a CAP: The Competative Acquisition Program - Pharmaceutical Executive


Bustin' a CAP: The Competative Acquisition Program

Pharmaceutical Executive

What ultimately happens with waste and unused drug is unclear. In a CMS response in a vendor Q&A, the agency offered hope for relief: "We expect that vendors will be able to bill the program for unused drugs under the CAP program in a similar fashion if physicians and vendors act in good faith with respect to the ordering and use of drugs." However, it is not clear how this will translate into the final CAP regulations, nor how good-faith consideration conforms to state and federal drug diversion laws, particularly if a physician administers a prescription product labeled for one patient to another. But this system of dealing with waste, returns, and unused drug creates a rich environment for potential fraud, abuse, and kickback arrangements.

If the vendor is publicly traded, the ownership of unused drugs could threaten its compliance with Sarbanes-Oxley. The vendor owns the drug, but doesn't know whether to post it as revenue. This situation could easily lead to manipulation by management (much the way channel-stuffing has in the past).

No Compensation for Clerical Burden

CAP is supposed to make life easier for physicians. They no longer have to finance a Medicare buy-and-bill operation, but they must still order, handle, and bill for drugs—a time-consuming and uncompensated job. Physicians who choose CAP have significant clerical responsibilities. They must submit a written prescription order to the CAP vendor for every drug ordered for each patient, including complete patient information as specified by CMS. Within 14 days after administering the drug, doctors must submit a bill for the drug to a regional administrator hired by CMS. If the drug is not administered as ordered, they must notify the CAP vendor. Each physician must maintain a separate electronic or paper inventory of CAP drugs, and participate in the payment appeals process.

Healthcare professionals expect the clerical burden to be high, but CMS does not. In the IFR, the agency writes: "[We do] not believe that the clerical and inventory resources associated with participation in the CAP exceed the clerical and inventory resources associated with buying and billing drugs under the ASP system...[W]e proposed not to make a separate payment to physicians for the clerical and inventory resources associated with participation in the CAP program."

Co-pay Collection Nightmares

Submitting CAP claims is hard work. Adjudicating disputes is worse. And even before things go wrong, there are plenty of reasons for everyone involved in a CAP transaction to worry.

The CAP vendor, for example, may not bill the patient co-pay until CMS has paid its share of the drug claim, and in the event of a denial, the CAP vendor may not bill the co-pay at all.

Physicians are nervous about co-pay collection under CAP. Their patients will receive a bill for the co-payment from the CAP vendor, a company they do not know. Physicians also worry that CAP vendors may not offer payment terms, and that they are unlikely to forgive a co-pay for patients who have trouble paying. (This was a common practice among physicians, at least in buy-and-bill practices under AWP, when margins were frequently high.) That said, even physicians remaining under buy-and-bill can't easily forgive co-pays for Medicare patients, because they have the same six-percent gross margin, while co-pays reach 20 percent.

CAP vendors may indeed refuse to supply drugs to a patient with outstanding co-pays. The IFR allows vendors to refuse to supply a drug to a CAP physician on behalf of a patient, if a patient invoice goes unpaid. After 45—or in some instances 60—days, the CAP vendor may stop shipments for the patient. However, the bad debt may not be added to CAP vendors' pricing offer to CMS.

A physician office working under buy-and-bill may offer extended payment terms to patients who have trouble making co-payments, even if it does not forgive them. But it is likely that CAP vendors, who rely entirely on drug income, will take a harder line. Doctors are understandably worried that CAP bill collectors may disturb their relationships with patients. But CAP vendors have strong motives to collect, whether or not the doctors like it. A CAP vendor that cannot collect a copay may not break even on the transaction.


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