AWP Settlement Impact

Do you update your average wholesale prices for drugs each month?  (Correct answer is Yes)  Do you get this information from Medispan or First DataBank?  (99% of home infusion providers will answer Yes)  Do you get a list of drugs whose AWP changed when you run the update?  (Correct answer is Yes)  Was the list of drugs changed on the September 26th update bigger than you’ve ever seen before?  (Probable answer is Oh My God!)

In the aftermath of a class-action lawsuit brought against First DataBank (FDB) and McKesson Corporation by a third-party payor class accusing the two companies of conspiring to inflate the average wholesale price (AWP) of hundreds of drugs, there was a reduction in f AWP values that is one one of the largest single drops in AWP prices on a given day ever.  As 2009 draws to a close, many home infusion providers have not been significantly impacted by this change since their average DSO (days sales outstanding in A/R) is 75-90 days.  However, the impact is coming like a dark cloud on the horizon.  The payers have reduced their AWP prices and any of the contracts that are based on AWP will see reduced reimbursement.   If bills sent in October are typically paid 75-90 days out, the impact is about to be felt most dramatically.

Rock-Pond Solutions is working with providers to analyze the impact based on their payer / therapy mix.  NHIA is working hard to stay ahead of the developments related to home infusion providers.  As a provider you must know the impact the reduction AWP pricing implemeted on September 26, 2009 will have on your company.  You may be in the calm before the storm.  The question is, will you be able to handle the storm when it hits?

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