CMS Should Bolster Its Oversight of Manufacturer-Submitted Average Sales Price Data To Ensure Accurate Part B Drug Payments

KEY TAKEAWAY(S)

Gaps in the Centers for Medicare & Medicaid Services' (CMS's) oversight of manufacturer reported average sales price (ASP) data may continue to limit its ability to ensure the accuracy of ASP data and result in inaccurate Part B drug payment amounts.

WHY WE DID THIS STUDY

Medicare and its enrollees spend nearly $40 billion annually to cover a limited number of Part B outpatient prescription drugs and biologicals. (Part B drugs are generally drugs that are injected or infused in physicians' offices or hospital outpatient settings.) CMS uses manufacturer-reported ASPs—which are based on manufacturers' actual quarterly drug sales—to calculate provider payment amounts for these drugs. When drug manufacturers' data are not accurate, Medicare and its enrollees may make inappropriate payments for these drugs. The Consolidated Appropriations Act, 2021, directed OIG to review manufacturer-reported ASP data. We conducted this evaluation to provide insight into CMS's oversight of ASP data, including assessing their accuracy before using them to calculate Medicare Part B payment amounts.

HOW WE DID THIS STUDY

To determine how CMS oversees the accuracy of manufacturer-submitted ASP data, we (1) collected and reviewed CMS's standard operating procedures for oversight of ASP data; and (2) interviewed CMS staff regarding CMS's oversight processes and challenges to conducting effective oversight. We reviewed 5 years of Medicare Part B ASP and drug payment data from the first quarter of 2016 to the fourth quarter of 2020. We determined the number of drug codes for which CMS calculated a payment amount using a payment methodology other than ASP because the ASP data were either unavailable or invalid (i.e., the ASP data were equal to or less than zero). We also identified the number of drugs that CMS categorized as having data values missing.

WHAT WE FOUND

While CMS has some oversight procedures in place to review ASP data (e.g., system edits in the ASP data collection system and CMS's internal reviews of manufacturer data), gaps exist in its oversight that allowed inaccurate data to impact Medicare Part B payment amounts. CMS's quality assurance procedures do not include checks to ensure the accuracy of manual processes it employs to analyze the data used to calculate Part B payment amounts. CMS also does not leverage its ASP data collection system to produce analytical reports that would monitor ASP data quality and maximize its oversight capabilities.

Because of invalid or missing ASP data, CMS could not calculate an ASP-based payment amount for 8 percent of drug codes at least once between 2016 and 2020. CMS was unable to calculate an ASP-based payment amount for several reasons, including that (1) the manufacturer reported a negative sales or ASP value; or (2) the manufacturer had no sales to report for that quarter. The alternative payment methodology that CMS uses when ASP data are either unavailable or deemed invalid often results in higher drug payment amounts for Part B drugs. 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. In addition, CMS reported that late ASP data submissions from manufacturers substantially hindered its ability to conduct effective oversight.

WHAT WE RECOMMEND

To bolster its oversight of manufacturer-reported ASP data, we recommend that CMS build a strategy to strengthen its internal controls for ensuring the accuracy of Part B drug payments. CMS concurred with our recommendation.