OIG suggests CMS should help drugmakers calculate Medicare Part B drug prices
CMS concurs with OIG's recommendation and says it will determine whether additional guidance would help ensure more accurate ASP calculations.
Photo: Jeff Lagasse/Healthcare Finance News
In the midst of physician concerns that Part B drug reimbursements are too low, the Department of Health and Human Services' Office of Inspector General (OIG) is suggesting the Centers for Medicare and Medicaid Services guide drugmakers in calculating the best prices for those drugs.
In a recent report the OIG reviewed the accuracy of manufacturer-reported average sales price (ASP) data. Ensuring the accuracy of ASPs is vital, said OIG, because CMS uses these prices to directly calculate payment amounts under Medicare Part B.
Comparisons of ASPs to other benchmark prices provided little insight into potential inaccuracies, the OIG said. But through manufacturer surveys, OIG was able to identify a small number of inconsistencies in manufacturer calculations of ASPs, such as in the treatment of TRICARE-related drug sales for military members, and whether certain fees paid to third parties meet the criteria for being considered a "bona fide service fee" to be excluded from ASP.
The 30 drugs included in the OIG review are marketed by 20 different pharmaceutical manufacturers. On February 22, 2022, OIG sent an electronic survey to each manufacturer with questions based on analysis of the benchmark prices. Manufacturers were asked to identify what types of sales, discounts, and fees were and/or were not included in their ASP calculations; to explain how their ASP calculations differed from their AMP calculations; and if they had any concerns about the accuracy of ASPs reported to CMS. All 20 manufacturers responded to the survey.
The manufacturers surveyed also expressed concerns that CMS has published comparatively fewer regulations and less overall guidance regarding the calculation of the ASPs used in Medicare compared to the average manufacturer prices and best prices used in Medicaid. As a result, manufacturers said they have to rely on reasonable assumptions to a much greater degree when calculating ASP than they do with these other payment benchmarks.
There were several areas in which manufacturers would like additional CMS guidance, OIG said, including the treatment of sales and rebates offered through value-based purchasing arrangements.
WHAT'S THE IMPACT?
Comparing the ASPs of the highest-expenditure drugs in Medicare Part B to other benchmark prices provided little insight into potential inaccuracies, the OIG concluded.
OIG noted some specific areas for which manufacturers believe additional guidance may be needed to reduce distortions among reported ASPs and ensure consistency across the industry. CMS, the watchdog OIG said, should review current guidance and determine whether additional clarification may prove beneficial, prioritizing issues that may have greater effects on pricing and payments, such as value-based arrangements.
CMS should also give particular consideration to guidance regarding TRICARE-related sales and determinations of bona fide service fees – two areas in which insufficient guidance may be leading to inconsistencies in manufacturer ASP calculations.
CMS concurred with OIG's recommendation. The agency said it would review current guidance related to the areas identified in the report and determine whether additional guidance would help ensure more accurate and consistent ASP calculations.
The agency went on to note that in some cases, additional guidance could be sub-regulatory, and in others, it may require rulemaking. CMS also briefly described steps it takes to vet and verify the accuracy of ASP data upon their submission by manufacturers.
THE LARGER TREND
Costs for prescription drugs under Medicare Part B continue to rise, with the program and its enrollees spending over $40 billion in 2020, more than double the amount spent a decade ago, according to the OIG.
Ensuring the accuracy of manufacturer-reported ASPs is vital given that CMS uses these prices to directly calculate reimbursement amounts to providers.
Instances in which ASPs do not accurately reflect acquisition costs may result in excessive payments for Medicare and its enrollees, or in contrast, lead to access issues if providers are paid below cost.
Congress has expressed concerns to OIG regarding the accuracy of ASPs. To address this concern, the Consolidated Appropriations Act, 2021, directed OIG to review manufacturer-reported ASP data.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
