CMS needs to improve oversight of Medicare Part B drug payment calculations, OIG report finds

CMS needs better strategies to ensure proper oversight of Medicare Part B drug payment calculations, according to a Dec. 3 report from HHS' Office of the Inspector General.

Medicare members spend about $40 billion every year on Part B prescription drugs and biologicals. CMS uses the manufacturer-reported average sales price for the drug from quarterly sales to calculate provider payments for the drug.

Because drug manufacturers have been able to report inaccurate ASPs, it's led to incorrect Part B drug payment amounts from CMS, meaning Medicare enrollees may be paying the wrong price for drugs. CMS also said that late ASP submissions also slows its oversight abilities.

According to the OIG, incorrect or missing ASP data can stem from negative or no quarterly sales by the manufacturer. Because of incorrect or missing data, CMS was unable to calculate costs for 8 percent of drug codes between 2016 and 2020. As well, the alternative calculation method that is used when correct data is unavailable often leads to incorrect drug payment amounts.

"In total, we found that 24 percent of drug codes were missing ASP data for one or more specific drugs within that code in at least one quarter between 2016 and 2020," the report said.

According to the report, CMS' oversight procedures do not check the accuracy of the manual processes the agency uses to analyze ASP data and calculate payments. CMS also doesn't use its ASP data collection system to produce watchdog reports.

"CMS concurs with this recommendation and is committed to ensuring the accuracy of Medicare Part B drug payments," the agency wrote in the report. "While we believe that ASP reporting is consistent with statutory requirements and results in the determination of accurate payment limits under section 1847A of the Social Security Act, we understand and share OIG's concerns about the potential impact that missing or inaccurate ASP data could have on Medicare Part B payment amounts."

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