Medicare could save up to $67 million this year by lowering the reimbursement rate for 5 Part B oncology drugs, according to a report by the Department of Health and Human Services Office of the Inspector General (OIG). This is the third time this year that the OIG has told the Centers for Medicare & Medicaid Services (CMS) that it is overpaying for Part B drugs. This report specifically focused on 9 oncology medications.
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 the widely available market price in order to identify medications for which the ASP exceeds the market price by at least 5%. For any such medications, the Department of Health and Human Services (DHHS) can reimburse based upon 103% of the average manufacturer price (AMP) rather than 106% of the ASP. The OIG did this in April and found that volume-weighted ASPs exceeded volume-weighted AMPs for 34 of 364 Healthcare Common Procedure Coding System (HCPCS) codes.
The June 28 OIG report focused on HCPCS codes for 9 oncology Part B medications. For 5 of these codes, the difference between the ASP and the widely available market price ranged from 17% (granisetron HCl) to 185% (carboplatin). Paying the AMP rather than the ASP for these drugs could save as much as $67 million this year, according to the OIG report. The other 3 drugs for which ASP exceeded market pricing by at least 5% according to the OIG are vinorelbine tartrate, dolasetron mesylate, and dexamethasone sodium phosphate.
As with the April OIG report, CMS disputed these findings. This is because the OIG analysis focused on fourth-quarter 2005 reimbursement amounts and therefore does not reflect the subsequent downward trend in drug pricing and Medicare reimbursement for some drugs. Medicare payment rate for carboplatin has declined by 60% in the 2 quarters since the OIG examination. This is the drug for which the OIG found the largest difference between ASP and market pricing.
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