The Department of Health and Human Services Office of Inspector General (HHS OIG) published a report that found while the Centers for Medicare and Medicaid Services (CMS) has an established procedure to oversee data on the average sales price of medicines, the agency does not have a process to review manual analysis. This has potentially impacted how much Medicare Part B beneficiaries pay for coverage.
Drug manufacturers are required to submit the quarterly average sales price (ASP) for their prescription medications. If the data for a specific drug is incomplete, then CMS uses the wholesale acquisition cost (WAC) for that drug. Drug manufacturers submit the ASP information to CMS via an online data submission system, which is subject to quality checks by CMS.
At least in part because of quarterly changes in sale prices and volume, manufacturers occasionally submit pricing data for a drug that shows as equal to – or even less than – zero. While this can be an error, it can also be truthful in certain situations, such as when a manufacturer had no sales of the drug for that specific quarter. However, irrespective of whether the zero – or negative – prices are accurate, CMS does not include them in calculations for Part B payments. When the data is inaccurate, therefore, Medicare and its beneficiaries may make improper payments for the drugs.
HHS OIG found that this resulted in a loss of $2.8 million in savings from the first quarter of 2016 to the last quarter of 2020.
HHS OIG notes that invalid or missing ASP data resulted in CMS being unable to determine payment amounts for 8% of products from 2016 to 2020. In total, HHS OIG found that 24% of drug codes were missing ASP data for one or more specific drugs within that code in at least one quarter from 2016 to 2020. CMS also noted that delayed ASP data submissions from manufacturers “substantially hindered” its ability to perform effective oversight.
HHS OIG Recommendations
HHS OIG stated that while CMS does have some oversight procedures in place for reviewing ASP data, gaps still exist which can allow inaccurate data to impact Medicare Part B payment amounts. One such gap is that the procedures do not include checks to ensure the accuracy of manual processes nor does it leverage its ASP data collection system to produce reports to monitor data quality and maximize oversight capabilities.
HHS OIG recommended that CMS develop a strategy of internal controls to ensure Medicare Part B payments are accurate and complete. CMS said it had “legitimate reasons” for not calculating payment amounts for certain drugs and said its current system fell within “statutory requirements,” though it admitted to sharing HHS OIG’s concerns regarding Part B payments.
Additional HHS OIG Report Regarding Additional Guidance
HHS OIG also issued a second report finding that manufacturers may need additional guidance to ensure consistent ASP calculations. The Agency recommended that CMS review current guidance and determine whether additional guidance would help ensure more accurate and consistent ASP calculations, specifically looking at nine areas identified in the report. CMS concurred with the recommendation.