Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
L M
IMI TATIONS IN  ANUFACTURER 
 
R A S
EPORTING OF  VERAGE  ALES 
 
P   D P B D
RICE  ATA FOR  ART    RUGS 
 
Suzanne Murrin  
Deputy Inspector General  for  
Evaluation and Inspections 
 
July 2014 
OEI-12-13-00040   
   
EXECUTIVE SUMMARY:  LIMITATIONS IN MANUFACTURER REPORTING OF 
AVERAGE SALES PRICE DATA FOR PART B DRUGS 
OEI-12-13-00040 
 
WHY WE DID THIS STUDY 
 
Manufacturer-reported average sales prices (ASPs) serve as the basis for most Part B drug 
payment amounts.  Complete ASP data ensure that payment amounts are accurate and are 
reflective of all manufacturer sales prices.  Previous Office of Inspector General (OIG) work has 
shown that the Centers for Medicare & Medicaid Services (CMS) lacks complete ASP data for 
certain drugs because (1) not all manufacturers that are required to report ASPs are doing so and 
(2) not all manufacturers of Part B drugs are required to report ASPs.  OIG has previously 
recommended that CMS consider seeking a legislative change to require all manufacturers of 
Part B drugs to submit ASPs.  In response, CMS stated that it would be helpful if OIG provided a 
full analysis of the policys implications.   
 
HOW WE DID THIS STUDY  
 
We compared data in CMSs background and crosswalk filesthe agencys two ASP-related 
fileswith two national drug compendia to determine the number of manufacturers that did not 
report required ASPs in the third quarter of 2012.  We then determined the number of additional 
manufacturers that would be required to submit ASPs if reporting requirements were extended to 
all manufacturers of Part B drugs.  We also identified national drug codes (NDCs) with incorrect 
product and pricing information in CMSs ASP files.  Finally, we surveyed CMS officials and 
reviewed CMS policies to determine whether the agency has improved ASP collection and 
verification processes since the publication of OIGs prior work. 
 
WHAT WE FOUND 
 
At least one-third of the more than 200 manufacturers of Part B drugs did not submit ASPs for 
some of their products in the third quarter of 2012, despite being required to do so.  
An additional 45 manufacturers of Part B drugs were not required to report ASPs that quarter.  
Furthermore, for a small number of drugs, inaccuracies in CMSs ASP files may have affected 
Medicare payments.  Finally, CMS has improved its ASP-related processes and procedures; 
however, challenges remain.  
 
WHAT WE RECOMMEND   
 
We recommend that CMS (1) continue to assist OIG in identifying and penalizing manufacturers 
that do not meet ASP reporting requirements; (2) seek a legislative change to directly require all 
manufacturers of Part B drugs to submit ASPs; (3) ensure the accuracy of product information 
for NDCs listed in the background and crosswalk files; and (4) finalize the implementation of 
automated ASP-related procedures by using processes related to average manufacturer price as a 
model, and subsequently require all manufacturers to submit ASPs through the automated 
system.  CMS concurred with our first, third, and fourth recommendations, but did not concur 
with our recommendation to seek a legislative change. 
   
   
TABLE OF CONTENTS  
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................4 

Findings........................................................................................................7 

At least one-third of manufacturers did not submit ASPs for some
  
of their Part B drugs in the third quarter of 2012, despite being 

required to do so...............................................................................7 

At least 45 manufacturers of Part B drugs were not required to 
report ASPs for 443 NDCs in the third quarter of 2012 ..................8 

For a small number of drugs, inaccuracies in CMSs ASP files  

may have affected Medicare payments ..........................................10 

CMS has improved its ASP-related processes and procedures; 

however, challenges remain ...........................................................11 
 
Conclusion and Recommendations ............................................................13 

Agency Comments and Office of Inspector General Response .....16 

Appendixes ................................................................................................17 

A: 	Descriptions and 2012 Medicare Part B Spending for Sample 

of 87 High-Expenditure HCPCS Codes...................................17 

B: 	 Detailed Methodology for Identifying Part B Drug NDCs Not 
 
Listed in the Background File..................................................19 

C: Agency Comments  ...................................................................20 

Acknowledgments......................................................................................23 

 
   
   
OBJECTIVES 
1. 	  To determine whether manufacturers reported average sales prices 
(ASPs) for all Part B drugs in the third quarter of 2012. 
2. 	  To determine the effect on ASP reporting if all manufacturers of Part B 
drugs were required to submit ASPs. 
3. 	  To assess the validity and accuracy of data contained in the Centers for 
Medicare & Medicaid Services (CMSs) ASP files. 
4. 	  To determine whether CMS has improved its processes for collecting 
and analyzing ASPs. 
BACKGROUND 
ASPs serve as the basis for most Part B drug payment amounts.  However,  
previous OIG work has shown that not all manufacturers are reporting the 
required ASP data to CMS.1  Furthermore, because ASP reporting 
requirements are linked to Medicaid drug rebate agreements, some  
manufacturers of Part B drugsi.e., manufacturers that do not have such 
agreementsare not required to submit ASP data.  The nonreporting of 
ASPs may result in Medicare payment amounts that are inaccurate and not 
reflective of all manufacturer sales prices.  
Recent OIG reports recommended that CMS consider seeking a legislative 
change to require all manufacturers of Part B drugs to submit ASPs.  In 
response to one such report, CMS stated that for a legislative change to be 
considered, it would be helpful if OIG provided a full analysis of the 
policys implications (e.g., the number of additional drugs for which 
manufacturers would be reporting ASPs).2  
Previous OIG work also found issues with the product data compiled by 
CMS (e.g., potentially inaccurate strengths or package sizes) for certain 
Part B drugs.3  Inaccurate product data could result in incorrect Medicare 
payment amounts and incorrect beneficiary coinsurance.  Further, OIG 
found that CMSs processes for collecting and analyzing ASPs could be 
improved.  For example, unlike the automated system in place to collect  
average manufacturer price (AMP) data under Medicaid, CMS manually 
 
1 OIG,  Comparison of Average Sales Prices to Widely Available Market Prices for 
Selected Drugs, OEI-03-10-00280, January 2012. 

2 OIG,  Comparison of Average Sales Prices and Average Manufacturer Prices:  An
  
Overview of 2010, OEI-03-11-00410, November 2011. 

3 OIG,  Comparison  of  Second-Quarter 2012 Average Sales Prices and  Average 

Manufacturer  Prices:  Impact on Medicare Reimbursement for Fourth  Quarter 2012, 

OEI-03-13-00100, December 2012. 

 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   1   
   
imported ASP data, which could lead to data errors.  OIG recommended 
that CMS develop an automated system for collecting ASP data.4  
Medicare Part B Coverage and Payment for Prescription Drugs 
Medicare covers a limited number of outpatient prescription drugs and 
biologicals (hereinafter referred to as drugs) under its Part B benefit, 
including injectable drugs used in the treatment of cancer, certain 
vaccines, oral anticancer drugs, and inhalation drugs used in conjunction 
with durable medical equipment.5   To obtain payment for Part B drugs, 
providers submit claims to Medicare contractors using Healthcare 
Common Procedure Coding System (HCPCS) codes.  Each HCPCS code 
defines the drugs name and the amount of drug represented by one unit of 
the code but does not specify manufacturer or package size information. 
Payments for most Part B drugs are equal to 106 percent of the 
volume-weighted ASP among all drugs represented by the HCPCS code 
(or, if lower, the actual charge billed on the claim).6 Medicare 
beneficiaries are responsible for 20 percent of this amount in coinsurance.7   
Medicare and its beneficiaries spent $13.6 billion for Part B drugs in 2012.  
Although Part B paid for more than 700 drug HCPCS codes that year,     
95 percent of spending was concentrated on just 100 HCPCS codes.   
Manufacturer Reporting Requirements for ASPs 
Pursuant to section 1927(b)(3) of the Act, manufacturers with Medicaid 
rebate agreements must provide CMS with the ASP  and sales volume for  
each of their Part B drugs on a quarterly basis.8 Manufacturers typically 
report ASPs by national drug code (NDC), an 11-digit code that is divided 
into three segments identifying (1) the firm that manufactures, distributes, 
 
4 OIG,  Average Sales  Prices:  Manufacturer Reporting and  CMS Oversight,                
OEI-03-08-00480, February  2010. 

5 42 CFR   414.900(b) and Medicare Benefit Policy Manual, ch. 15  50; 68 Fed Reg.  

50428 (August 20, 2003). 

6 Section 1847A(c)  of the Social Security Act (the Act)  defines ASP as a  manufacturers 
 
sales of a drug  (with certain exceptions) to all purchasers in the United States in a quarter 

divided by the number of units of the drug sold  by the manufacturer in that same quarter. 
 
The ASP is net of any price concessions other than those obtained through the Medicaid 

drug rebate  program (MDRP). 
   
7 Section 1847A(b)(1)  of the Act.  Part B claims dated on or after April 1,  2013, incur 

a 2-percent reduction in  payment in accordance with the Budget Control Act of 2011 and 
 
the American Taxpayer Relief Act of 2012  (i.e., sequestration).  This mandatory payment 

reduction is applied after the beneficiarys coinsurance has  been determined, resulting in 
 
a payment rate for most Part B drugs of 104.3 percent  of the  volume-weighted ASPs.  See 

CMS Medicare FFS Provider  e-News,  Mandatory Payment Reductions in the Medicare 

Fee-for-Service (FFS) ProgramSequestration, March 8, 2013. 
 
8 For Federal financial participation to  be available for covered outpatient drugs provided 
 
under Medicaid, manufacturers must enter into  rebate agreements with the Secretary of 

Health and Human Services and pay quarterly rebates to State Medicaid agencies.  

Sections 1927(a)(1) and (b)(1) of the Act.   

 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   2   
   
or repackages the drug product (i.e., the labeler code); (2) the specific 
strength, dosage form, and formulation of the product; and (3) the 
products package size.9     
Manufacturers may face civil money penalties (CMPs) or suspension of 
their rebate agreements if they knowingly provide false information about 
their ASPs or fail to report ASP data within the required timeframe (i.e., 
within 30 days of the close of a quarter).10 OIG has coordinated with CMS 
to identify manufacturers that do not submit ASP (or AMP) data in a 
timely fashion and has initiated actions against certain manufacturers that 
failed to satisfy their submission requirements.  
CMS Calculation and Publication of Payment Amounts 
Because payments for Part B drugs are based on HCPCS codes rather than 
on NDCs and because more than one NDC may meet the definition of a 
particular HCPCS code, CMS must first crosswalk manufacturers  
NDCs to their matching HCPCS codes.  In addition, because the amount 
of a drug represented by an NDC may differ from the amount of a drug 
specified by a HCPCS code, CMS staff often must convert NDC units to 
HCPCS code units to determine the amount of the drug contained within 
a given HCPCS code. Each quarter, CMS publishes a crosswalk file that 
lists the NDCs matching each Part B drug HCPCS code as well as the 
number of NDC units within the HCPCS code.  CMS also develops a 
nonpublic quarterly ASP background file for internal use, which lists the 
ASPs and number of units sold for all NDCs that meet the definition of  
each Part B drug HCPCS code paid under the ASP  methodology.11   
CMS performs numerous checks on the data in the background file, and 
may seek clarification or correction regarding submitted data if the data do  
not pass CMSs checks.  CMS then determines whether to include the 
submitted ASP for each NDC in its calculation of the volume-weighted 
ASP for the HCPCS code.12  Finally, CMS calculates a payment amount by 
multiplying the volume-weighted ASP by 106 percent.   
There is a two-quarter lag between the sales period for which ASPs are 
reported and the effective date of the reimbursement amounts.  For 
 
9 One manufacturer may have  multiple labeler codes.  Labelers will hereinafter be  
referred to as manufacturers.  In addition,  a small number of Part B  drugs are identified 
using alternative IDs, which  do not necessarily include a labeler code, rather than  NDCs.  
10 Sections 1927(b)(3)(C)(i) and  (ii) of the Act and 42 CFR  414.804(a)(5).   
11  A quarterly background  file will include an NDC if its ASP has been previously 
reported  by the manufacturer,  regardless of  whether its ASP was reported in that  
particular  quarter.  The background  file also contains a few  NDCs for which ASPs have 
not  been  reported but that CMS contractors have identified to  be in the market.  
12 CMS assigns a status indicator in the ASP background file for each NDC that specifies 
whether the NDCs ASP was  included in the calculation of volume-weighed ASP. 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   3   
   
example, ASPs reported by manufacturers for the third quarter of 2012 
served as the basis for first-quarter 2013 payment amounts.  CMS posts an 
ASP payment amount file and an ASP crosswalk file on its Web site in the 
weeks before the start of the applicable quarter.   
METHODOLOGY 
Data Collection 
Total Part B Expenditures and Utilization. We obtained expenditure and 
utilization data for all Part B drug HCPCS codes in all quarters of 2012 
and the first quarter of 2013 from CMSs Part B Analytics Report (PBAR). 
ASP Data Files.  We obtained from CMS (1) the first-quarter 2013 
payment amount file; (2) the third-quarter 2012 ASP background file (i.e., 
the ASPs on which first-quarter 2013 payment amounts were based) for 
drugs paid in noninstitutional Part B settings13; and (3) the third-quarter 
2012 ASP crosswalk file.   
MDRP-Participating Drug Manufacturer File. We obtained from CMS 
the list of manufacturers participating in the MDRP in the third quarter of  
2012 and their associated labeler codes. 
Drug Compendia. We obtained product information (e.g., strength, 
package size, and package quantity) for the third quarter of 2012 for all 
drugs under review from two national drug compendia:  Truven Health 
Analytics  Red Book and First Databanks  National Drug Data File.    
External Web Sites and 2012 HCPCS Code Level II Reference Book. We  
referred to external  Web sites, including those of the U.S. Food and Drug 
Administration (FDA) and individual pharmaceutical manufacturers, as 
well as the HCPCS code reference book, to confirm product and coding 
information when there were discrepancies between CMSs 
background/crosswalk files and the two national drug compendia. 
CMS Documents and Interviews with Officials. We surveyed CMS staff in 
August 2013 and March 2014 and reviewed CMS policies regarding ASP  
submission procedures.  The survey and document review identified 
whether CMS had automated the data collection process and made other 
improvements in collecting, entering, and verifying ASP data.  We also 
asked CMS officials regarding challenges they face in improving these 
processes. 
 
13 Our analysis does not include drugs paid for under the hospital outpatient  prospective 
payment system, many of which are also paid  on the basis of ASPs.  CMS publishes a  
separate ASP file for hospitals.  There is substantial overlap in the HCPCS codes listed in  
both files, and the same ASP data are used to  derive payment amounts.   We do not  
believe that including  hospital files in  our analysis would have affected  our findings.  
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   4   
   
Data Analysis  
Selection of Drugs. We used CMSs first-quarter 2013 payment amount 
file to identify all 539 HCPCS codes that were paid on the basis of ASPs 
that quarter.14  Because there is a two-quarter lag between the sales period 
for which ASPs are reported and the effective date of the reimbursement 
amounts, the ASPs reflected sales from the third quarter of 2012.  We also 
obtained from CMS third-quarter 2012 ASP background file a list of all 
4,330 active NDCs that CMS associated with the 539 HCPCS codes.  
We selected a purposive sample of drugs for a portion of our analysis.  We  
used PBAR to select 87 high-expenditure Part B drug HCPCS codes that 
constituted 86 percent of total Part B spending in 2012 (see Appendix A).15    
Identifying NDCs Listed in the Background File with Unreported ASPs. 
We examined the status indicator variable for all 4,330 NDCs listed in the 
third-quarter 2012 background file to identify NDCs for which 
manufacturers did not submit ASP data.  We matched the labeler codes for 
these NDCs to the participating-manufacturer file to determine whether or 
not the associated manufacturers had Medicaid rebate agreements and 
were thus required to report ASPs.  
Identifying Part B Drug NDCs Not Listed in the Background File. For the 
87 sampled HCPCS codes, we also identified NDCs with unreported ASPs 
that met the definition of a HCPCS code but were not included in the 
background file. Using Red Book and the National Drug Data File, we 
developed a list of all NDCs associated with the 87 HCPCS codes and 
matched this list against the background file.  For NDCs that appeared in 
the compendia but not the background file, we used other external 
resources (such as the HCPCS Code Level II Reference Book) to determine 
whether the NDC should have been listed in the background file.  Please 
see Appendix B for a detailed description of this comparison. 
Identifying NDCs with ASPs Reported by Manufacturers Without Rebate 
Agreements. For all 539 HCPCS codes, we used the background file and 
the manufacturer file to determine the number of manufacturers that did 
not have rebate agreements yet still submitted ASPs in the third quarter of  
2012.  Although manufacturers without rebate agreements are not required 
to report ASPs, such reporting helps ensure that CMS has the information 
needed to calculate payment amounts that are reflective of all sales in the  
 
14 We  excluded HCPCS  codes that  represent Not Otherwise Classified (NOC) drugs.   
15  We initially selected 100 HCPCS codes with the highest total expenditures in  2012  
(constituting  95  percent of  spending).  We removed 3 of the 100 codes because they were 
paid for on the basis of average wholesale prices, 5 codes because they were priced by 
individual Medicare contractors, and 5 codes because they represented NOC drugs.  
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   5   
   
marketplace.  We estimated the effect on payment amounts if these 
manufacturers had chosen not to report ASPs that quarter.16    
Assessing the Accuracy and Validity of  ASP Data in CMSs ASP Files. We  
identified any NDCs for which the product information (e.g., strength, 
package size, and package quantity) listed in the third-quarter 2012 ASP  
background and crosswalk files did not match the information published in 
the national drug compendia.  We  used external sources, such as 
manufacturer  Web sites, to resolve any conflicts between CMSs files and  
the compendia.  Using this product information, we also verified CMSs 
conversions of NDC units to HCPCS units for each code.  Incorrectly 
converted units could result in inaccurate Medicare payment amounts and 
beneficiary coinsurance. In addition, many Medicaid State agencies use 
CMSs conversions on the crosswalk file to adjust the HCPCS units listed 
on Medicare crossover claims.17   
Assessing Improvements in CMSs ASP-Related Processes. We reviewed 
CMS policies and surveyed CMS officials to determine whether the 
agency had automated manufacturer  ASP submissions, as recommended 
by OIG, or had made other improvements to its collection, entry, and 
verification processes since the publication of OIGs earlier report.18  
Limitations 
We did not determine whether manufacturers calculations of ASPs were 
correct. In addition, we did not verify the accuracy or completeness of 
drug product information listed in the national drug compendia, the FDA  
Web site, or in any of the other sources we used to evaluate CMSs ASP  
files. We also did not verify that NDCs listed in the compendia 
represented drugs that were actually manufactured and sold in the third 
quarter of 2012. Findings related to the purposive sample of 
87 high-expenditure HCPCS codes cannot be generalized to all Part B 
drug HCPCS codes paid on the basis of ASPs in 2012. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
 
16 To do this, we removed any nonrequired NDCs (i.e.,  NDCs for which manufacturers 
were not required to report ASPs) and recalculated the volume-weighted ASP for each 
HCPCS code.  We then calculated the percentage difference between the actual payment  
amount  and new payment  amount.  
17 Crossover claims are claims in which both Medicare and Medicaid pay  a portion.   
Incorrect conversions are a frequent source of Medicaid drug rebate  disputes. 
18 OIG,  Average Sales  Prices:  Manufacturer Reporting and  CMS Oversight,                
OEI-03-08-00480, February  2010. 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   6   
   
FINDINGS 
At least one-third of manufacturers did not submit 
ASPs for some of their Part B drugs in the third 
quarter of 2012, despite being required to do so 
In the third quarter of 2012, at least 207 manufacturers of Part B drugs 
were operating under Medicaid drug rebate agreements and were thus 
required to report ASPs.19   At least 74 of these manufacturers did not 
report ASPs for one or more of their Part B NDCs that quarter (see 
Table 1). 
Table 1: Impact of Nonreporting by Manufacturers With Rebate Agreements  
Number of   Number of  Affected 
Presence in Background File   Number of NDCs  
Manufacturers   HCPCS Codes 
NDC listed in background file, 
63  176  80 
but ASP not reported  
NDC not listed in background 
file but met HCPCS code  21  81  17 
definition (from sample) 
Overlap in above categories  (10)   (0)   (4)  
Totals  74  257  93 
Source:  OIG analysis of CMSs third-quarter 2012 background file, national drug compendia, CMSs MDRP-participating manufacturer file, 
the HCPCS Code Level II Reference Book, and external  Web sites. 
Sixty-three manufacturers that had rebate agreements did not 
report ASPs for one or more NDCs listed in the third-quarter 
2012 background file 
In the third quarter of 2012, 63 manufacturers did not report ASPs for 
176 NDCs listed in the background file (6 percent of the total number of 
required NDCs in the background file) despite being required to do so.  
The majority of manufacturers associated with the missing ASPs failed to 
report for only a small percentage and/or small number of their NDCs.20, 21   
However, 24 manufacturers that had rebate agreements did not report 
ASPs for any of their NDCs listed in the third-quarter 2012 background 
file.   
 
19  We  use the term at least throughout the first two findings because a portion  of the 
total number  of manufacturers in  question was identified through our purposive sample of  
high-expenditure  HCPCS codes.  Because we cannot extrapolate this sample to all 
HCPCS codes, there may be additional manufacturers of Part B drugs that we did  not 
identify. 
20 For example, one manufacturer failed to  report  ASPs for  only  20 of its  304 NDCs  (i.e.,  
7 percent).   Another manufacturer  failed to report  ASPs for one of its NDCs but had only  
two  NDCs in the marketplace that quarter (i.e., 50 percent). 
21 As a result, the Medicare payment amount  for 80 of the associated HCPCS codes did 
not reflect all market prices. 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   7   
   
At least 21 manufacturers that had rebate agreements should 
have reported ASPs for additional NDCs not listed in CMSs 
background file 
Based on our purposive sample of high-expenditure drugs, 
21 manufacturers that had rebate agreements should have reported ASPs 
for 81 additional NDCs not listed in the third-quarter 2012 background 
file.22, 23  Because this portion of our analysis reflects only a subset of 
high-expenditure drugs, there are likely other NDCs for which 
manufacturers have never reported the required ASPs.  This would result 
in additional HCPCS codes having payment amounts that are not 
reflective of all marketplace sales prices.  
At least 45 manufacturers were not required to report 
ASPs for 443 Part B NDCs in the third quarter of 2012 
Current law requires manufacturers to report ASPs to CMS only if they 
have signed a Medicaid drug rebate agreement.  However, for many 
reasons, not all manufacturers of Part B drugs participate in the rebate 
program.24  In the third quarter of 2012, at least 45 manufacturers of Part B  
drugs did not have rebate agreements and thus were not required to report 
ASPs for any of their NDCs.  
That quarter, 22 of the 45 manufacturers that did not have 
rebate agreements voluntarily reported ASPs 
In the third quarter of 2012, 22 manufacturers reported ASPs for 272 of 
their 274 Part B NDCs despite not being required to do so under current 
law.  Manufacturers reported ASPs for an additional 73 products 
represented by alternative IDs rather than NDCs. 25 ASPs associated with 
these NDCs and alternative IDs were included in payment amount 
calculations for 86 HCPCS codes. 
Payment amounts for 36 of 86 HCPCS codes were calculated solely on the 
basis of ASPs submitted by manufacturers that did not have rebate 
agreements.   If these manufacturers had elected not to report ASPs for 
 
22 Ten manufacturers are included among the 63 with NDCs  in the background  file for  
which ASPs  were not reported in  the third  quarter of  2012.   

23 These NDCs matched the definition of 17  HCPCS codes included in  our purposive 

sample of 87  high-expenditure drugs selected  for additional review. 

24 For example, manufacturers of products paid as drugs under Part B but considered 
 
devices and not drugs by Medicaid and FDA typically do not have rebate agreements and 

therefore are not required to report ASPs.   

25 Because these products did not have NDCs (and thus no labeler codes), we could not 

determine the exact number of manufacturers represented.  The products were skin 
 
substitutes (used to aid in  wound closure and  wound healing) and certain injections for 

knee pain, which are not classified as drugs by FDA. 
 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   8   
   
their products, Part B payment amounts for the 36 HCPCS codes could not 
have been calculated on the basis of  ASPs.  CMS would typically have 
calculated payment amounts using list prices published in compendia, 
which OIG has found do not accurately reflect actual market prices.26, 27  
For example, NDCs associated with a high-expenditure device HCPCS 
code representing hyaluronan (HCPCS code J7321) were associated solely 
with manufacturers that did not have rebate agreements.  If these 
manufacturers had chosen not to report ASPs for their NDCs in the third 
quarter of 2012, payment amounts for the HCPCS code could not have 
been based on ASPs.  Part B spent a total of $67 million for this HCPCS 
code in 2012. If the payment amount were calculated on the basis of 
WACs, Part B expenditures would have substantially increased because 
the associated WACs were much greater than the ASPs.28    
Payment amounts for 50 of 86 HCPCS codes were calculated on the basis 
of third-quarter 2012 ASPs submitted both by manufacturers that had 
rebate agreements and by manufacturers that did not. If the 
manufacturers without rebate agreements had chosen not to report ASPs 
for their products, payment amounts for the corresponding HCPCS codes  
could have still been based on ASPs (because other manufacturers were 
still required to report). However, the payment amounts for 5 of the codes 
would have increased (between 3 and 40 percent) and those for 7 of the 
codes would have decreased (between 1 and 49 percent). For the 
remaining 38 codes, payment amounts would have remained the same.  
The remaining 23 manufacturers did not report ASPs for any of 
their NDCs in the third quarter of 2012 
At least 23 manufacturers that did not have rebate agreements did not 
report ASPs for any Part B NDCs in third quarter of 2012.29  If these 
manufacturers had been required to report ASPs that quarter, CMS could 
have received data for 169 additional NDCs associated with 36 HCPCS 
codes. In total, 124 of the 169 nonrequired NDCs were already listed in 
the ASP background file.  The remaining 45 NDCs were not listed in the 
 
26 CMS used  published prices to set  payment amounts for four HCPCS codes in the first  
quarter of 2013 because none  of the  manufacturers were required to report ASPs  and 
(1) the manufacturers did  not submit ASPs; (2) the manufacturers submitted  unusable 
ASPs; or (3) the NDCs were obsolete, near obsolete, or represented terminated drugs.  In  
three of the cases CMS used wholesale acquisition costs (WACs) as the basis for 
payment amounts, and in the other case it  used average wholesale prices.  
27 OIG,  Medicaid Drug Price Comparisons:  Average Manufacturer Price to Published 
Prices, OEI-05-05-00240, June 2005.   
28  The WACs of associated NDCs exceeded ASPs by  between 52  and 96 percent.  
29 Twenty of the twenty-three  were repackagers.  Repackagers purchase drugs  from  
manufacturers to resell in smaller packages.  Many do  not participate in the MDRP, and  
their drugs are not eligible for Federal financial participation  under Medicaid. 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   9   
   
ASP background file but matched the definition of at least one 
high-expenditure HCPCS code. 
For a small number of drugs, inaccuracies in CMSs 
ASP files may have affected Medicare payments 
The product information (e.g., package sizes and billing units per package 
size) listed in the background and crosswalk files for an NDC sometimes  
differed from the product information listed in the national compendia.30   
After performing numerous checks, we believe that inaccurate product 
information for 27 NDCs may have affected payment amount calculations 
for 23 HCPCS codes in the third quarter of 2012.  For 19 of these 
23 codes, the discrepancies had little impact on Part B payments, with the 
overall effect on first-quarter 2013 expenditures being less than $7,500 per 
code.31  For the remaining four codes, the impact was likely more 
substantial, ranging from $15,000 to $203,000 per code in that quarter. 
For example, because of incorrectly listed package sizes and package 
quantities for NDCs crosswalked to HCPCS code Q3025, Medicare may 
have inadvertently underpaid providers by 9 percent in the first quarter of 
2013; the Part B payment amount for the HCPCS code should have been 
$319.09 instead of $291.64. Part B expenditures for this code were 
$2.2 million in the first quarter of 2013.  In contrast, Medicare apparently  
overpaid providers by 12 percent for HCPCS code J1170 in the first 
quarter of 2013 as a result of an incorrect unit conversion for one NDC.  
Medicare should have paid providers $1.42 per unit instead of $1.61 per 
unit. Part B expenditures for this code were $898,330 that quarter.         
For an additional 161 NDCs, potential discrepancies in the ASP files had 
zero effect on payment amountsin many cases, because of CMSs 
quality control efforts.  For example, half of the 161 NDCs represented 
contrast agents, for which manufacturers have consistently reported their 
ASPs by vial rather than by NDC.  CMS took this reporting anomaly into 
account when calculating the payment amount.32 In other cases, the NDCs 
in question were excluded altogether from the payment amount 
calculations or the data was incorrect in the crosswalk file but correct in 
the background file. 
 
30  When there were differences in the product information listed in CMSs files and the 
national  compendia, we reviewed information from other sources (such as  drug  package 
labels from FDAs Web site) to  determine the reasons for the discrepancies.   
31 In these cases, either the corrected payment amount changed only slightly (less than  
1 percent for 9 codes) and/or the HCPCS code was associated with minimal expenditures.  
32 For example, an NDC may represent  10 vials of a drug, but the manufacturer  reports  
the ASP for a single vial.  If CMS recognizes this, the background file would then  
incorrectly list a package size of 1 rather than 10 so that the issue is accounted for 
when CMS calculates the volume-weighted  ASP for the HCPCS code. 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   10   
   
Because the crosswalk file is often used by State Medicaid agencies when  
invoicing manufacturers for rebates, inaccuracies in the published 
crosswalk file may impact the amount of rebates paid to States even when 
payment amounts were not affected.  However, CMS staff informed us 
that users of the crosswalk file, such as State Medicaid agencies, should be 
aware that crosswalk data are intended solely for Part B drug payment 
purposes and that some of the data as presented in the crosswalk may not 
be suitable for other uses. 
CMS has improved its ASP-related processes and 
procedures; however, challenges remain 
A previous OIG study found that CMSs procedures for collecting, 
entering, and verifying manufacturer-reported ASP  data for Part B drugs 
reduce efficiency and lead to potential errors.  As a result, OIG 
recommended improvements to ASP-related processes, including the 
development of an automated system for submitting ASP data.33  CMS has 
made progress in addressing OIGs recommendation; however, certain 
areas of concern still remain. 
CMS has yet to implement an automated system for 
manufacturer submission of ASP data 
Unlike with its system for reporting AMP data under Medicaid, CMS does 
not have a fully automated system for collecting ASP data from  
manufacturers.  Previously, we found that manufacturers instead typically 
mailed disks containing ASP data to CMS.34  CMS staff then manually 
transferred every data element from the submissions into the ASP files.  
CMS now gives manufacturers the option of emailing the data to agency 
staff.  CMS also provides manufacturers with a template to complete prior 
to submitting ASP data.  CMS staff no longer manually transfer 
manufacturer-reported data, but instead use software such as Microsoft 
Excel and SAS to partially automate importation. 
When we surveyed CMS in August 2013, the agency expected an 
automated system for ASP submission to be ready for manufacturer testing 
in the first quarter of 2014, with full implementation in the second quarter 
of the year. However, as of March 2014, CMS had not begun testing the 
automated system.  Rather, the project was still in the pre-production 
phase and prototypes had been presented to CMS staff.  CMS staff stated 
that testing with manufacturers had been postponed because of budget 
constraints and that the agency could not commit to a new implementation 
 
33 OIG,  Average Sales Prices:  Manufacturer Reporting and CMS Oversight, 

OEI-03-08-00480, February  2010. 

34 Ibid. 

 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   11   
   
date at that time.  According to CMS staff, the agency may not wish to 
preclude alternative methods for submitting ASP data once the new system 
is implemented, meaning that manufacturers may still have the option of 
sending files by mail or email. 
CMS staff still conduct many data validation procedures 
manually 
The efficiency of the ASP collection process should be substantially 
improved by an automated data collection system similar to the one that  
manufacturers use to report AMPs.  However, once the data are submitted, 
CMS staff will still need to validate the manufacturer-reported data, group 
the appropriate NDCs into their associated HCPCS codes, and calculate 
volume-weighted ASPs. 
According to CMS, staff manually check manufacturer-reported ASPs 
(with the assistance of Microsoft Excel and SAS) and seek clarification 
from manufacturers that submitted ASP data with certain errors.35 If CMS 
receives corrected data, the agency incorporates it into payment amount 
calculations as soon as it is available.  If data are not resubmitted prior to 
the payment-amount files being put into use by claims processing 
contractors, CMS may reissue new files to be used by pricing contractors.   
CMS staff stated that although the planned automated reporting system  
will better structure some of the data verification procedures, some  manual 
checks are unlikely to be fully automated because they require 
interpretation using specialized experience and knowledge of 
pharmaceutical packaging and clinical drug use.   
CMS does not maintain a comprehensive list of manufacturers 
that are required to submit ASP data  
All drug manufacturers that have rebate agreements are required to report 
pricing data to CMS. However, a 2010 OIG study found that CMS does 
not have a list of all manufacturers that have rebate agreements and 
produce Part B drugs.36  CMS still does not maintain such a list.  Instead, 
CMSs quarterly background files list only those NDCs for which 
manufacturers have previously reported ASPs and NDCs that have been 
identified by CMS contractors. 
 
35 Staff check ASP data for issues including,  but  not limited to, incorrect NDCs; aberrant  
ASPs and  number of units sold; incorrect  product information; terminated NDCs; 
over-the-counter products;  non-FDA-approved products; and non-Part B products.  CMS  
seeks clarification if manufacturers submit ASPs with the following errors:  incorrect 
NDCs; aberrant number of units sold and ASPs; and incorrect product information.  
36 OIG,  Average Sales Prices:  Manufacturer Reporting and CMS Oversight, 
OEI-03-08-00480, February  2010. 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   12   
   
CONCLUSION AND RECOMMENDATIONS 
When setting payment amounts for drugs covered under Medicare Part B, 
CMS relies on ASP data and product information reported by 
manufacturers.  Our findingslike those of OIGs previous studies in this  
areademonstrate that a number of manufacturers are not reporting the 
required ASP data for all of their drugs.  Furthermore, because ASP  
reporting requirements are linked to Medicaid drug rebate agreements, 
some manufacturers of Part B drugs are not required to submit ASP data 
because they do not have a rebate agreement in effect.  Even when ASPs 
were reported, we identified a small number of instances in which product 
and pricing information listed in CMSs background and crosswalk files 
were incorrect.   
Unreported ASPs (whether required or not) and incorrect product and 
pricing information may result in Medicare payment amounts that are 
inaccurate and not reflective of all manufacturer sales prices.  To improve 
the process for collecting  ASP data and calculating ASP-based payment 
amounts, CMS is developing an automated system for manufacturer 
submissions, as previously recommended by OIG.  However, even when 
this system has been implemented, certain issues may still present the 
potential for errors and inefficiencies. 
Therefore, we recommend that CMS: 
Continue to assist OIG in identifying and penalizing 
manufacturers that do not meet ASP reporting requirements  
Pursuant to the Act, manufacturers may face CMPs or suspension of their 
rebate agreements if they fail to report  ASP data in the required timeframe.  
CMS has worked with OIG to identify manufacturers that do not submit 
pricing data in a timely fashion, and OIG has initiated actions against 
certain manufacturers that failed to satisfy their submission requirements. 
Seek a legislative change to directly require all manufacturers 
of Part B drugs to submit ASPs  
The ASPs included in payment amount calculations for 86 HCPCS codes  
in the third quarter of 2012 were associated with manufacturers that were 
not required to provide  ASPs under the current system because they did 
not have Medicaid rebate agreements in effect.  Payment amounts for 
36 of the 86 HCPCS codes were based solely on data reported by 
manufacturers that did not have rebate agreements, meaning that payment 
amounts would not be calculated on the basis of ASPs if the manufacturers 
chose to stop reporting ASPs for their Part B-covered products.  Instead, 
payment amounts would be calculated on the basis of other pricing 
methodologies that do not reflect actual marketplace prices.  
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   13   
   
Also, additional manufacturers of Part B drugs are not submitting ASP  
data because they do not have a rebate agreement in effect, yet their 
products meet the definition of at least one Part B HCPCS code.  Under 
the current system, CMS has no recourse to obtain pricing data from these 
manufacturers, even though this nonreporting results in Part B payment 
amounts that are not reflective of all marketplace prices.   
As OIG similarly recommended in 2010, legislation that would directly 
require all manufacturers of Part B drugs to submit ASPs, regardless of 
whether the manufacturers have Medicaid drug rebate agreements in 
effect, should be included in the Presidents budget for a future year.  Any 
provision should also include corresponding penalty language that mirrors 
the language in section 1927(c) of the Act to clearly allow for enforcement 
actions against manufacturers who fail to timely report information or 
provide false information.  This would ensure that Medicare payment 
amounts are reflective of all Part B drugs.  
Ensure the accuracy of product information for NDCs listed in 
the background and crosswalk files  
According to our analysis, CMSs background and crosswalk files listed 
incorrect product information for a small portion of NDCs in the third 
quarter of 2012. In the vast majority of these cases, payment amounts 
were either unaffected or minimally affected.  However, for 4 HCPCS 
codes, incorrect product information had a larger impact, ranging from  
$15,000 to $203,000 per quarter.  We have provided CMS with a list of the 
NDCs for which we believe product information may be incorrect.  
Finalize the implementation of automated ASP-related 
procedures by using  AMP-related processes as a model, and 
subsequently require all manufacturers to submit ASPs 
through the automated system 
When manufacturers electronically enter drug product data and AMP data 
for each of their covered NDCs into the automated system used in 
Medicaid, the system electronically reviews manufacturers pricing 
submissions for data errors, notifies manufacturers about potential 
problems, and may reject files with detected errors.  In other words, the 
processes for collection, entry, and validation of data occur simultaneously 
upon data collection with minimal manual steps for CMS staff, allowing 
for more timely and accurate Medicaid payment amount calculations. 
In 2010, OIG recommended that CMS establish automated processes for 
collecting ASP data to, among other goals, limit the possibility of data 
entry errors and to increase efficiency.  CMS concurred with the 
recommendation and stated that it was working with contractors to 
improve the efficiency of ASP-related processes.  As of March 2014, an 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   14   
   
automated system for the collection of  ASP data was still in the 
development phase and CMS could not estimate when the system would 
actually be implemented.  
Furthermore, according to CMS staff, the agency may still allow 
manufacturers to submit ASP data files by mail or email even when the 
automated system has been fully implemented and functions reliably.  This 
could greatly limit the systems efficiency and ability to prevent potential 
errors. CMS also stated that it has not determined the extent to which data 
verification will be automated, but there will likely be no substantial 
changes to the overall checks. According to CMS, many of the processes 
that are automated in AMP collection, such as verifying NDCs prior to 
accepting the associated pricing data, may not be automated in ASP  
collection.  
Many manufacturers that submit ASPs already submit AMPs and thus are 
familiar with the concept of an automated price-reporting system.  
Therefore, we believe that CMS should finalize the implementation of 
automated ASP-related processes as soon as possible and should use the 
AMP data system as a model for automated ASP-related systems.  
   
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   15   
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
In its comments on the draft report, CMS concurred with our first, third, 
and fourth recommendations.  CMS stated that it will continue to assist 
OIG with ongoing efforts to identify and penalize manufacturers that do 
not meet ASP reporting requirements.  Further, the agency stated that it 
either has corrected or will correct the product information errors OIG 
identified. Finally, CMS stated that it is continuing its plans to implement 
an automated system for collecting ASPs.  However, the agency has not 
yet set an implementation date and is reluctant to eliminate manual data 
collection processes.  
In nonconcurring with our second recommendation, CMS stated that 
a proposal to require manufacturers of Part B drugs to submit ASPs was 
not included in the annual Presidents budget.  We continue to recommend 
that CMS draft, and submit for review, such a legislative proposal for 
consideration for inclusion in future budget and legislative agendas.  
While CMS cannot dictate what legislative proposals are included in the 
Presidents budget, CMS does have the authority to develop legislative 
proposals for Medicare. 
For the full text of CMSs comments, see Appendix C. 
   
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   16   
   
APPENDIX A 
Descriptions and 2012 Medicare Part B Spending for Sample of 
87 High-Expenditure HCPCS Codes 
HCPCS Code   Description   HCPCS Dosage   2012 Part B Spending  
J0129  Abatacept injection  10 mg   $206,136,065 
J0152  Adenosine injection  30 mg   $23,708,630  
J0475  Baclofen injection  10 mg   $19,208,292  
J0490  Belimumab injection  10 mg   $20,634,278  
J0585  Botulinum toxin type a   1 unit   $127,779,481 
J0641  Levoleucovorin injection  0.5 mg   $57,932,049  
J0718  Certolizumab pegol injection   1 mg  $32,045,412  
J0775  Collagenase, clost hist injection   0.01 mg   $18,281,400  
J0878  Daptomycin injection  1 mg  $23,614,809  
J0881  Darbepoetin alfa  1 mcg   $224,915,934 
J0885  Epoetin alfa  1000 units   $233,726,603 
J0894  Decitabine injection  1 mg  $85,857,807  
J0897  Denosumab injection  1 mg   $347,264,989 
J1300  Eculizumab injection  10 mg   $44,153,474  
J1325  Epoprostenol injection  0.5 mg   $23,924,996  
J1440  Filgrastim injection  300 mcg  $31,108,731  
J1441  Filgrastim injection  480 mcg  $73,962,548  
J1453  Fosaprepitant injection  1 mg  $30,406,416  
J1459  Immune globulin (privigen) injection  500 mg   $17,461,364  
J1559  Hizentra injection  100 mg   $131,956,964 
J1561  Gamunex injection  500 mg   $87,051,809  
J1568  Octagam injection  500 mg   $43,113,356  
J1569  Gammagard liquid injection   500 mg   $100,888,948 
J1745  Infliximab injection  10 mg   $704,243,666 
J1786  Imuglucerase injection  10 units  $19,257,388  
J2260  Milrinone lactate injection  5 mg  $97,917,244  
J2323  Natalizumab injection  1 mg  $96,127,091  
J2353  Octreotide depot injection   1 mg   $161,290,474 
J2357  Omalizumab injection  5 mg  $74,723,773  
J2469  Palonosetron hydrochloride injection  25 mcg   $142,771,327 
J2505  Pegfilgrastim injection  6 mg   $642,878,567 
J2778  Ranibizumab injection  0.1 mg   $1,220,360,809 
J2785  Regadenoson injection  0.1 mg   $126,757,965 
J2796  Romiplostim injection  10 mcg  $62,699,749  
J3262  Tocilizumab injection  1 mg  $66,021,878  
J3285  Treprostinil injection  1 mg   $158,706,362 
J3315  Triptorelin pamoate  3.75 mg   $17,143,907  
J3487  Zoledronic acid  1 mg   $163,850,642 
J3488  Reclast injection  1 mg   $115,147,875 
J7187  Humate-P, injection  1 IU   $16,768,045  
J7189  Factor viia  1 mcg   $104,920,500 
J7190  Factor viii  1 IU   $30,207,228  
J7193  Factor IX non-recombinant  1 IU   $17,760,145  
    (continued on next page) 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   17   
   
Descriptions and 2012 Medicare Part B Spending for Sample of  
87 High-Expenditure HCPCS Codes (continued) 
HCPCS Code   Description   HCPCS Dosage   2012 Part B Spending  
J7195  Factor IX recombinant  1 IU   $43,404,226  
J7198  Anti-inhibitor  1 IU   $40,190,843  
J7308  Aminolevulinic acid hydrochloride   354 mg   $19,006,023  
J7321  Hyalgan/supartz injection  per dose   $67,142,161  
J7323  Euflexxa injection  per dose   $47,210,237  
J7324  Orthovisc injection  per dose   $56,618,033  
J7325  Synvisc or Synvisc-One   1 mg   $144,640,590 
J7507  Tacrolimus oral  1 mg   $195,177,053 
J7517  Mycophenolate mofetil oral  250 mg   $81,812,303  
J7518  Mycophenolic acid  180 mg   $111,639,367 
J7520  Sirolimus oral  1 mg  $48,927,996  
J7605  Arformoterol inhalation solution   15 mcg   $110,200,481 
J7606  Formoterol fumarate inhalation solution  20 mcg  $54,001,470  
J7613  Albuterol non-comp unit  1 mg  $26,604,246  
J7620  Albuterol and ipratropium bromide  2.5 mg/0.5 mg   $45,068,105  
J7626  Budesonide inhalation solution  up to 0.50 mg   $214,727,879 
J7682  Tobramycin non-compounded unit   300 mg   $28,084,657  
J7686  Treprostinil inhalation solution  1.74 mg   $127,959,381 
J9025  Azacitidine injection  1 mg   $141,956,248 
J9033  Bendamustine injection  1 mg   $160,131,900 
J9035  Bevacizumab injection  10 mg   $624,753,554 
J9041  Bortezomib injection  0.1 mg   $278,371,303 
J9043  Cabazitaxel injection  1 mg  $51,432,612  
J9055  Cetuximab injection  10 mg   $153,516,065 
J9070  Cyclophosphamide injection  100 mg   $18,900,266  
J9171  Docetaxel injection  1 mg   $123,393,142 
J9179  Eribulin mesylate injection   0.1 mg   $31,799,237  
J9201  Gemcitabine hydrochloride injection  200 mg   $44,953,525  
J9217  Leuprolide acetate suspension  7.5 mg   $233,311,653 
J9228  Ipilimumab injection  1 mg  $85,176,620  
J9263  Oxaliplatin  0.5 mg   $308,803,693 
J9264  Paclitaxel protein bound   1 mg  $86,545,808  
J9303  Panitumumab injection  10 mg   $30,394,295  
J9305  Pemetrexed injection  10 mg   $291,644,303 
J9310  Rituximab injection  100 mg   $876,309,447 
J9330  Temsirolimus injection  1 mg  $20,141,980  
J9355  Trastuzumab injection  10 mg   $272,619,113 
J9395  Fulvestrant injection  25 mg   $96,635,702  
Q0138   Ferumoxytol, non-ESRD   1 mg  $21,218,364  
Q2037   Fluvirin vaccine  0.5 ml  $60,260,767  
Q2038   Fluzone vaccine   0.5 ml  $40,468,584  
Q2043   Sipuleucel-T  minimum 50 million cells   $156,176,155 
Q4074   Iloprost inhalation solution  up to 20 mcg   $59,385,872  
Q4106   Dermagraft skin substitute  1 SQ CM   $22,869,459  
Total   $11,798,273,705  
  Source:  OIG analysis of 2012 PBAR data. 
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   18   
   
APPENDIX B 
Detailed Methodology for Identifying Part B Drug NDCs Not 
Listed in the Background File 
CMSs background file generally includes an NDC only if an ASP for the 
drug has been previously reported by the manufacturer.   Therefore, in 
addition to determining the number of NDCs listed in the third-quarter 
background file for which ASPs were not reported, we also identified 
NDCs that met the definition of a HCPCS code but were not included in 
the background file.  Because of the complex steps required to identify 
these NDCs, we focused this segment of the analysis on our purposive 
sample of 87 high-expenditure HCPCS codes. 
Using CMSs third-quarter background file, we first created a list of all 
known NDCs associated with the 87 HCPCS codes.  For these NDCs, we 
then obtained the generic formulation code (GFC) from  Red Book and the 
generic code number (GCN) from the National Drug Data File. GFCs 
and GCNs are unique six-digit codes that identify drugs with common 
active ingredients, master dosage forms, strengths, and routes of 
administration.  A HCPCS code may be associated with more than one 
GFC or GCN, and multiple HCPCS codes may be associated with the 
same GFC or GCN.   We developed a list of all NDCs in Red Book and the 
National Drug Data File with GFCs or GCNs associated with the 
87 HCPCS codes and identified the NDCs that were not included in the 
background file. We used the HCPCS Code Level II Reference Book to 
confirm that each of the NDCs we identified actually met the definition of  
the HCPCS code. 
Manufacturers associated with the remaining NDCs have likely never 
reported ASPs for the drugs to CMS, even though the NDCs represent 
drugs that are in the market and meet the definition of at least one Part B 
HCPCS code. We matched the labeler codes for these NDCs to the 
MDRP-participating manufacturer file to determine whether the associated 
manufacturers were required to report ASPs.  We also counted the number 
of manufacturers that did not have rebate agreements to estimate the 
additional number that would be required to report ASP data if previous 
OIG recommendations had been implemented.  
   
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   19  APPENDIXC 
Agency Comments 
Centers tor Medicare & Medicaid Se rvi ces 
Administrator 
Washington, DC 20201 
DATE:  JUN 19 Z014 
TO: 	 Daniel R. Levinson 
Inspector General 
FROM: 	 Marilyn Tavtnner 
Administratm1 
SUBJECT:  Office oflnspector General (OIG) Draft Report: Limitations in Manufacturer 
Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to re view and 
comment on the above subject OIG draft report. OIG's objectives were to determine whether 
manufacturers reported average sales prices (ASPs) for all Part B drugs in the third quarter of 
2012 ; to determine the effect on ASP reporting if all manufacturers of Part B drugs were required 
to submit ASPs ; to assess the validity and accuracy of data contained in CMS ' s ASP files ; and to 
determine whether CMS has improved its process for collecting and analyzing ASPs since the 
publication ofOIG's earlier report. 
The OIG compared CMS data from internal ASP data files and the public ASP crosswalk file 
against national price compendia data. CMS ' s files were associated with payment limits that 
were in effect during the first quarter of2013 . Using these files, OIG determined how many 
manufacturers did not report ASP data to CMS, and OIG determined if CMS and compendia 
information for specific drug products as identified by National Drug Codes (NDCs) were 
consistent. OIG also conducted a survey of CMS 's policies to determine if ASP data collection 
processes were being improved. 
Based on the data comparison described above , OIG determined that up to one-third of 
manufacturers with Medicaid drug rebate agreements (that is, manufacturers that must report 
ASP data to CMS) did not submit ASP data for at least some of their Part B drugs. OIG also 
noted that 45 manufacturers without Medicaid drug rebate agreements submitted ASP data . 
OIG ' s assessment ofCMS' s ASP-related processes and procedures found improvements 
compared to previous studies. However, OIG also found potentially inaccurate product 
information for 27 NDCs that may have affected ASP payment limit calculations. OIG believes 
that little impact on payment amounts has resulted in most of these cases. However, for NDCs 
associated with four Healthcare Common Procedural Coding System (HCPCS ) codes, OIG 
estimated a payment impact ranging from $15,000 to $203 ,000 per code during the study period . 
The report also discussed the impact of information that is published on the ASP cro sswalk . 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)  20   
   
   
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   21   
   
 
   
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   22   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Dave Tawes, Regional 
Inspector General for Evaluation and Inspections in the Baltimore regional 
office.  
Bahar Adili served as the lead analyst for this study.  Central office staff  
who provided support include Mandy Brooks, Althea Hosein, 
Meghan Kearns, and Christine Moritz.  
 
Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040)   23   
   
Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as  
amended, is  to protect the integrity of the Department of  Health and Human Services  
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components: 
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  conducting  
audits  with its own audit resources or by  overseeing  audit work done by others.  Audits  
examine the performance of HHS programs and/or its grantees and contractors in carrying  
out their respective responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office of Evaluation and Inspections 
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of  fraud and misconduct  related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office of Counsel to the Inspector General 
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and abuse cases involving HHS programs,  including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In  connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program  guidance, publishes fraud alerts, and provides other  
guidance  to  the health care industry concerning the anti-kickback statute and other  OIG  
enforcement authorities.