The Office of the Inspector General (OIG) has issued its second report this year stating that the Centers for Medicare & Medicaid Services (CMS) has been paying too much for some Part B medications—by at least $161 million during the period evaluated.
CMS appeared to dispute some of these findings in a letter appended to the OIG report. It noted that the OIG analyzed data from third-quarter 2004. By CMS analysis, more than 92% of the OIG’s estimated savings do not persist when examining data from later periods. CMS did not indicate whether it plans to act on the OIG findings.
CMS reimburses physician practices for most Part B drugs at 106% of the volume-weighted average sales price (ASP) for the code corresponding to each medication. The law requires that the OIG compare ASPs to average manufacturer prices (AMPs) in order to identify medications for which the ASP exceeds the AMP by at least 5%. For any such medications, the Department of Health and Human Services (DHHS) can reimburse based upon 103% of the AMP rather than 106% of the ASP.
The OIG analyzed ASPs and AMPs for 364 Healthcare Common Procedure Coding System (HCPCS) codes. It found that volume-weighted ASPs exceeded volume-weighted AMPs for 34 of those codes. Reimbursement based on the higher ASP amount led to CMS overpaying physician practices by $161 million, according to the OIG. The amount of overpayment rose when the OIG considered its earlier finding that CMS is miscalculating the ASP.
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