WHY WE DID THIS STUDY
CMS uses average sales price (ASP) and average manufacturer price (AMP) product data to determine overall reimbursement in both Medicare and Medicaid. Medicare Part B and Medicaid expenditures for prescription drugs total nearly $100 billion each year. (Drugs covered by Part B are generally those that are injected or infused in physicians’ offices or hospital outpatient settings.) In Medicare Part B, CMS uses ASP to directly calculate drug reimbursement amounts paid to providers. When these data are not accurate, Medicare and its beneficiaries may make inaccurate payments for drugs. In addition, legislation requires OIG to conduct a comparison of quarterly ASP and AMP product data-the results of this comparative analysis can trigger reductions in Part B reimbursement for certain drugs. If the ASP and AMP data-which include the prices and product data such as package size and package quantity-are incorrect, this can lead to inaccurate comparisons or the exclusion of certain drugs from the comparative analysis, which can, in turn, potentially lead to fewer price substitutions and higher costs.
HOW WE DID THIS STUDY
OIG conducted a targeted review of the accuracy of ASP product data and AMP product data for 1,345 National Drug Codes (NDCs) associated with drugs covered by Medicare Part B for 2018. To assess the accuracy of ASP and AMP product data, we compared the following: (1) the package size and package quantity that manufacturers reported as part of the ASP product data against the drugs’ labels, drug package inserts, and drug manufacturers’ websites (hereinafter referred to as “publicly available sources”); (2) the unit type and units per package size that manufacturers reported as part of the AMP product data against the information listed in publicly available sources; and (3) the package size that manufacturers reported as part of the ASP product data against the unit type reported with the AMP product data.
WHAT WE FOUND
Manufacturers reported inaccurate drug product data for 14 percent of reviewed NDCs associated with Part B-covered drugs. Most of these errors were associated with only AMP product data, e.g., the unit type and/or units per package size reported with AMP data did not correspond to the package size and/or package quantity from publicly available sources. Twenty-four percent of manufacturers-43 of 182- were associated with inaccurate drug product data.
WHAT WE RECOMMEND
To ensure the accuracy of manufacturer-reported data, Part B reimbursement amounts, and Medicaid rebate amounts, CMS should work with manufacturers associated with errors to correct and resubmit accurate product data. Although CMS did not explicitly state whether it concurred or nonconcurred with the recommendation, it outlined actions it has taken and actions that it plans to take to achieve the recommendation’s goal of ensuring that manufacturers submit accurate product data. OIG appreciates the efforts that CMS has taken to work with manufacturers to ensure that pricing and rebate data are accurate. We agree with CMS that inaccurate ASP and AMP product data may not always result in incorrect Part B payment amounts or rebate amounts. However, the results of CMS’s review indicate that in some instances these product data inaccuracies did result in incorrect payment amounts being established by CMS. OIG encourages CMS to continue its efforts to ensure that all manufacturer-reported product data are accurate. We ask that CMS specify in its Final Management Decision whether it concurs with our recommendation and how it plans to continue its efforts to address inconsistencies in the AMP data.