U.S. Department of Health and Human Services  
O  ffice of Inspector General  
Issue Brief  
 
December  2022, OEI-03-21-00390  
CMS  Should  Bolster  Its  Oversight  of  Manufacturer-Submitted  
Average  Sales  Price Data  To Ensure Accurate Part  B  Drug  Payments  
Why  OIG  Did This Review  
Medicare and its  enrollees  spend nearly  $40 billion annually to  
cover a limited number of Part B  outpatient prescription drugs  and   Key  Takeaway  
biologicals.  (Part B drugs are generally drugs that are injected or 
Gaps  in  CMSs oversight  of  
infused in physicians offices or hospital  outpatient settings.)   The 
manufacturer- reported ASP  data  
Centers for Medicare &  Medicaid  Services (CMS)  uses  may  continue  to  limit  its  ability  
manufacturer-reported  average sales prices (ASPs)which are  to  ensure  the  accuracy  of  ASP 
based on manufacturers actual quarterly drug salesto calculate   data  and  result  in  inaccurate  
provider payment amounts for these drugs.  When drug  Part  B  drug  payment  amounts.    
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  CMSs oversight of ASP data, including assessing  their  accuracy before using  them  to 
calculate Medicare  Part  B payment amounts.    
How OIG Did This Review  
To determine how CMS  oversees the accuracy of  manufacturer-submitted ASP data, we  (1) collected  
and reviewed  CMSs  standard operating procedures  for  oversight of ASP data;  and (2)  interviewed  CMS  
staff  regarding  CMSs  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 OIG Found  
While CMS  has some oversight procedures in place to review ASP data (e.g., system edits in the ASP  
data collection system and CMSs internal reviews of manufacturer data), gaps exist in its oversight that  
allowed inaccurate data to impact  Medicare Part B payment amounts.   CMSs 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 OIG  Recommends  
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. 
   
BACKGROUND  
 
 
Medicare and its  enrollees  spend  nearly  $40 billion annually on  a limited  number of  
Part  B outpatient prescription drugs  and biologicals.  CMS uses 
manufacturer-reported ASPswhich are based on manufacturers actual quarterly 
drug salesto calculate  provider payment amounts for these drugs.  When drug 
manufacturers data are  not accurate, Medicare and its enrolleeswho are  generally 
responsible for the  20-percent  coinsurance amountmay pay too much for these 
drugs.  To protect the Medicare program and its enrollees, it is vital that CMS conduct  
robust oversight to ensure the accuracy of ASP data.   The Consolidated  
Appropriations Act, 2021, directed  OIG  to review manufacturer-reported ASP data.1   
We conducted this evaluation to provide insight  into CMSs oversight of  ASP data, 
including assessing  the accuacy of ASP data  before using them to calculate  Medicare  
Part B payment amounts.   
Medicare Part B Coverage  and Payment for Prescription Drugs  
Medicare Part B covers a limited number of outpatient prescription drugs and  
biologicals (hereafter referred to as drugs).   These drugs are usually administered in a  
physicians office or other outpatient setting and include, for example, drugs used to  
treat cancer, autoimmune diseases, and macular degeneration.2   To  obtain payment  
for these drugs, healthcare providers submit  claims to Medicare contractors using  
Healthcare Common Procedure Coding System (HCPCS) codes (hereafter referred to  
as  drug codes).   
Medicare pays healthcare providers for most Part B drug codes on the basis of  ASPs.  
Under the ASP payment methodology, the Medicare payment for a Part  B  drug code 
is 106  percent of the volume-weighted ASP for the Part B drug code.  In general,  an  
ASP  is  calculated  by dividing (1)  the total dollar  amount of  a manufacturers quarterly 
drug sales  to all purchasers in the United  States by (2) the total  number of units sold  
by the manufacturer (hereafter referred to as sales volume)  in  the same quarter.3    
CMS Collection and Oversight of Manufacturer-Reported ASP Data.   To collect  
the data needed to calculate the ASP-based Medicare payment amount for each 
Part  B drug code, CMS requires certain manufacturers to submit quarterly ASPs and  
the sales volume for each of their national drug codes (NDCs).4,  5   Manufacturers 
calculate a quarterly ASP for each NDC by dividing total sales by the sales volume, as 
shown in Exhibit 1.  Manufacturers must also report to  CMS certain product  
information for each NDC, including  product strength as well  as information that CMS  
uses to determine the package size and package quantityeach of which affects  
CMS Should Bolster Its Oversight of Manufacturer-Submitted ASP Data To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Background |  1   the calculation of the Medicare payment amount.6  
Exhibit 1: Manufacturers 
When CMS is unablebecause of missing or 
ASP calculations for NDCs 
invalid datato use ASP data from manufacturers 
to calculate a Medicare payment amount for a 
Numerator  drug code, it uses the wholesale acquisition cost 
Manufacturer    (WAC) for the affected code.7   
drug sales in 
dollars  To facilitate manufacturers submissions of 
  complete and accurate ASP data for each NDC, 
Denominator   CMS implemented an online ASP data collection 
Manufacturer 
systemthe Medicare Part B Drug ASP Application 
sales volume 
(hereafter referred to as the ASP system)in April 
2019.  After a manufacturer submits its ASP data, 
Source: Section 1847A(c) of the  the manufacturer must certify the datas accuracy 
Social Security Act   and completeness.8  After manufacturers submit 
and certify data, CMS performs numerous quality 
checks every quarter, the results of which may determine whether an NDCs ASP and 
sales volume amounts will be included in CMSs calculation of the payment amount.  
To facilitate this process, CMS developed formal written procedures (hereafter 
referred to as internal controls), that outline the steps it takes to (1) collect and 
review manufacturer-reported ASP data and (2) calculate Medicare payment amounts.   
In conducting its oversight, CMS determines whether manufacturers submitted 
complete data.  After this review, CMS assigns a status indicator value for each NDC.  
This status indicator value denotes whether CMS considers the ASP data for that NDC 
to be usable for the calculation of the ASP-based payment amount.  As a result of this 
review, CMS may seek clarification or corrections from manufacturers that submit 
incomplete or inaccurate data.  CMS also identifies data that display certain 
characteristics which may indicate inaccurate data.  These characteristics include (1) an 
ASP that is higher than the reported WAC and (2) duplicate submissions for a single 
NDC.  
CMSs Calculation of Medicare Part B Payment Amounts.  CMS must calculate 
ASP-based payment amounts in a timely manner every quarter.  CMS determines 
quarterly payment amounts for Part B-covered drug codes rather than individual 
NDCs.  Because a drug code may correspond to multiple NDCs, CMS creates a file 
that links each NDC to its associated drug code (hereafter referred to as the 
background file).  The background file includes the manufacturer-reported ASP and 
sales volume for each NDC.  This file also includes product informationi.e., package 
size, package quantity, billing units, and billing units per packagethat CMS derives 
from manufacturer-reported data and publicly available information from drug 
resources such as Redbook.  In addition to the background file, CMS creates a 
separate filethe code pricing filethat contains the Medicare payment amount for 
each drug code.  This file also identifies the basis for the payment amount for each 
drug code (e.g., ASP, WAC, or average manufacturer price (AMP)).   
CMS Should Bolster Its Oversight of Manufacturer-Submitted ASP Data To Ensure Accurate Part B Drug Payments 
OEI-03-21-00390  Background | 2  CMS may not include every NDC associated with a drug code in its calculation  of  
payment amounts, as shown in Exhibit 2.  CMS  includes only NDCs assigned a status 
indicator value of  D in its calculation of payment amounts for drug codes.  A status 
indicator value of  D indicates valid data.  Valid data means that the manufacturer 
reported both the ASP value and sales volume values as  greater than zero.   According 
to CMS,  in some cases, a manufacturers  ASP data may  appropriately include ASP and  
sales volume values equal to or less than zero.  A manufacturer may include 
adjustments in the current quarters data  that are based on changes to sale prices and  
sales volumes  that occurred in previous quarters.  These adjustments can cause the  
current quarters ASP to  reflect a value equal to  or less than zero.  Regardless of  
whether CMS deems these  values to be  appropriate, it  does not include these values 
of  zero  or less-than-zero  in its  calculation of Part B payment amounts.  For the 
purposes of this report, we will refer to ASPs that are equal to or less than zero as 
invalid data.    
To calculate a single volume-weighted ASP for each drug code,  CMS  uses  the ASP  
data from  associated  NDCs that have been deemed to have valid data  (i.e., a status 
indicator value of  D).   CMS  calculates  the volume-weighted ASP by weighting the 
ASPs for all the NDCs associated with a drug code by the proportion of each NDCs 
sales volume.  CMS  then  calculates 106  percent  of  the volume-weighted ASP  for each 
drug code  to determine the Medicare payment amount.  Finally,  CMS  posts a file 
known as the payment filethat contains  these  payment amounts  on its website.9   
Medicare pays providers the same amount for the drug code regardless of  which 
product (and associated NDC) they give to the enrollee.   
Exhibit 2: The process for calculating  Medicare payment amounts  
CMS 
CMS  calculates the 
CMS notifies  determines  volume-weighted  CMS posts the 
submitASPs  manufacturers  which NDCs to  ASPs, identifies  provider 
and sales  of missing data  include in  large changes from  payment 
volume to  and performs  Medicare  the prior quarter,  amounts for 
CMS's online  quality checks  payment  and contacts  each drug for 
system.  on the data.  amount  manufacturers  the quarter. 
calculations.  about potential 
errors. 
Source: OIG review  of CMSs  ASP  Pricing Process Standard Operating Procedures  
Related Work  
OIG is also conducting a companion study that provides insight into ASPs for 
high-expenditure Part B drugs compared  to benchmark prices and factors that  
manufacturers consider when determining which sales, discounts, and fees to include 
in their ASP  calculations.10    
In a data snapshot released in 2020, OIG examined the accuracy of  
manufacturer-reported pricing data and identified specific errors in ASP and  average  
CMS Should Bolster Its Oversight of Manufacturer-Submitted ASP Data To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Background |  3   manufacturer price (AMP)  data.11   This work identified instances  in which  
manufacturers made changes to reported product information that did  not seem to  
be supported by changes in the drugs  publicly  available packaging information.  
These changes raised  questions about the accuracy of the data  being reported by 
manufacturers.   
In 2010 and  2014 reports, OIG identified  vulnerabilities in CMSs  oversight procedures.    
Specifically, OIG identified manual data entry systems  (e.g., systems whereby data 
entry was  done by either typing or using the copy and paste function), limited  
tracking processes, and incomplete manufacturer reporting as shortcomings with 
CMSs oversight.12, 13   We also found that manufacturers did not submit all required  
ASP data  within the specified timeframes.  CMS established its  online data collection  
system for ASPs,  in part,  to implement  OIGs recommendations from both reports that  
it establish an automated system to collect ASP  data.   To  implement the remaining  
recommendations from  OIGs 2014 report, CMS  ensured the accuracy of product  
information for NDCs listed in its  files  and  continued to assist  OIG in identifying and  
penalizing  manufacturers that do not meet ASP reporting requirements.   Although 
CMS did not concur with the recommendation to seek  legislative change to require all  
manufacturers of Part B-covered drugs to submit ASPs, recent legislation now  
requires that manufacturers report ASP data.14  
For over 15 years, OIG  has conducted a comparison of drug  codes  ASPs with  AMPs.  
These comparisons  identify drug codes associated with potentially excessive 
ASP-based  payment amounts and recommend  payment amount  reductions.  OIG  
provides the results of its analysis to  CMS;  CMS, in turn, determines whether to  
implement the recommended payment reductions.  It is CMS  that  decides whether to  
use the lower AMP-based payment amount  (103 percent of AMP)  rather than the 
higher ASP-based payment amount  (106 percent of ASP).  ASP dataincluding  
package size, package quantity, and the status indicatorplay a vital role in the effort  
to reduce Medicare expenditures.   CMSs implementation of OIGs recommended  
payment amount reductions has saved Medicare and its enrollees  $73.1  million since  
2013.15    
CMS Should Bolster Its Oversight of Manufacturer-Submitted ASP Data To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Background |  4    
RESULTS  
 
 
Gaps  continue  to exist  in CMSs  oversight  of  ASP  data accuracy  
CMSs internal controls do not  include specific procedures to review the  manual  
processes used by staff to  analyze ASP  data.   CMS  uses manual processes to select  
NDCs  that  populate certain data  fields in its drug files including  the ASP, sales 
volume, and status indicator values.  CMS has not  implemented  a quality assurance 
process  to review  manual processes  used by staff to  analyze data in the  background,  
code pricing, and payment files.  However, CMS  stated that  it is developing  an  
automated  process to reduce its reliance on manual processes.   
CMS makes limited use of its online  ASP  system for oversight   
CMS has not leveraged its online ASP data collection system  in ways that  would assist  
with oversight.  CMS produces a small number of  reports  from this system to  track 
manufacturer data submissions.  Specifically, each quarter CMS generates a report  
that identifies manufacturers that submitted their ASP data  after the deadline.  CMS  
generates two additional reports  that contain  (1) a  single manufacturers  entire 
submission for the quarter and  (2) all manufacturer submissions  for a quarter.  
However, these reports  enable CMS  to review  only data completeness in a single 
quarter rather than identify trends of problematic data and associated manufacturers  
over time.  CMS stated that it can request custom reports from the ASP  system, but it  
does not regularly generate reports that could help it conduct more targeted  
oversight.   
Although CMS does not make extensive use of the ASP  systems reporting function, it  
has incorporated several edits into the system  to evaluate ASP data as manufacturers  
submit them.  For example, CMS  has an edit that generates a warning message to a  
manufacturer that enters an ASP or sales volume value equal  to or less than zero.  The 
system does not prohibit manufacturers from entering these values, but  rather  
provides a warning, because values equal to  or less than zero may be correct in 
certain circumstances.  For example, we found that 634  NDCs associated  with  
61  manufacturers had negative ASP data.   Some of these may have  valid reasons for 
having negative ASP datae.g., sales adjustments from  previous quarters.  However, 
CMS does not require the manufacturers to explain why negative values may be 
appropriate.  Instead,  manufacturers may contact CMS by email to explain these zero  
and negative values  or provide this information as part of  the reasonable assumption  
details  they enter into the ASP system.  Because these explanations occur over email  
or in a  field  in the ASP system  not specific to negative values, CMS does not have a  
single location for  manufacturer explanations of  potentially problematic data.    
CMS Should Bolster Its Oversight of Manufacturer-Submitted ASP Data To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Results | 5   Gaps in CMSs  oversight of  ASP  data  have resulted in it  
implementing incorrect Part B payment amounts   
CMS did not accurately implement all price reductions, which are an important tool to  
lower prescription drug  costs.   Gaps in CMSs oversight processes prevented the 
program and its enrollees  from realizing millions in savings.    
CMS did not correctly implement reductions in Part B payment amounts for multiple  
drug codes; this resulted  in a loss of  $2.8 million in savings to Medicare and its 
enrollees.16,  17   CMS reported that the errors in the Part B payment amounts occurred  
because its staff  manually entered  data from the wrong spreadsheet column when it  
created the payment file.   
It was OIG analysis, in February 2022,  that alerted CMS  that  it  may have incorrectly 
implemented price reductions for seven drug  codes in the third quarter of 2020.   OIG  
recommended  that CMS reduce the price for these seven codes.   In response, CMS  
decided  to use the lower AMP-based payment amount rather than the higher 
ASP-based  payment amount.  However,  CMS then confirmed that it set  incorrect 
and higherMedicare payment amounts for these seven drug codes.    
   OIG determined  that CMS set the Medicare payment amounts for two  drugs at  
106  percent of the ASP  rather than at  103 percent of the  AMPthe  lower  
amount for  which  CMS substitutes ASP in response to OIGs quarterly 
recommendations.    
   Also, OIG determined that CMS  implemented incorrectand smaller 
payment amount reductions for five additional drugs.  For these five drug  
codes, CMS  erroneously set the payment amounts at 100  percent of ASP  
rather than the correct amount103 percent of AMP.    
In March 2022, CMS  eventually corrected the second-quarter 2021 payment amounts 
for the seven drugs.18   The payment amount reductions that CMS made based on  this  
inaccurate  2020 ASP data  caused  it  to achieve less than $10,000 in actual savings 
and not the millions that it should have saved.   This is the lowest savings amount  CMS  
achieved since it  implemented payment amount reductions in 2013.  This recent  
occurrence is not the only instance of OIG identifying errors in CMS-established drug  
payment amounts.  OIG identified 41 NDCs from calendar year 2018  with errors in the 
ASP data.19   These errors  included problems with the package quantity, a value CMS  
enters based  on  manufacturer-reported data.  For  7  of the  41  errors, CMS confirmed  
that these errors impacted  the accuracy of  its calculation of drug code payment  
amounts.  CMS  stated  that  it  subsequently corrected these  payment amounts.   In 
2017,  OIG  notified CMS of an error  CMS  made  in the payment amount for one drug  
code.  For this code,  CMS set the payment amount at  106  percent of ASP rather than 
the amount  at which  it should have been set103 percent of AMP.20    
In addition to finding errors in CMS-established drug payment amounts, OIG has 
identified potential errors in CMSs background and code pricing files, for over 
10  years, and notified CMS  of these potential errors.  For some of these  errors, CMS  
CMS Should Bolster Its Oversight of Manufacturer-Submitted ASP Data To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Results | 6   has corrected the data values stored in these files.  For others, CMS stated that  when 
it  has faced  time and resource constraints, certain data fields  receive less emphasis in 
its quality control checks because they do not  directly  impact the calculation of  the  
payment amount.  
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   
For  8 percent (59  of 780)  of  drug codes in our review,  CMS could not calculate an  
ASP-based  payment amount  in at  least  1 quarter of  our 5-year timeframe  because 
there were no valid ASP  data for any  of NDCs  associated with  these drug codes. 
Specifically, CMS was unable to calculate an ASP-based payment amount for these 
drugs due to several reasons.  These reasons included  that (1) the manufacturer 
reported negative sales or ASP value;  or (2) the manufacturer had no sales to report  
for that quarter.   
CMS uses the ASP payment methodology as a cost-containment measure.  However, 
if the ASP data are not  available, CMS must use an alternative payment methodology 
(WAC for these drugs) to determine the Part B payment amount.  Because WAC  
amounts represent manufacturers published catalog price for sales of  a drug to  
wholesalers and do not  include manufacturer discounts, they are often higher than 
the ASP.  CMS set  a WAC-based payment amount in at least  1 quarter for all 59 drug  
codes for which it did  not set an ASP-based payment amount.   
Nearly one quarter of  drug  codes  were missing  some  ASP  data 
in at  least  one quarter between 2016  and  2020    
Twenty-four  percent of drug codes (190  of  780)  were associated with at least  1 NDC 
that CMS classified as having  ASP data  missing.  In total, there were 614  NDCs with  
missing data associated  with these drug codes.  Over  half  of  these NDCs had data  
missing in three  or more quarters over the 5 years reviewed.  Overall, over  one-fifth  of  
the 614  NDCs had  4 or more quarters of missing data.   CMS  reports that there may be 
valid reasons  for some NDCs with  missing ASP datae.g., the manufacturer did not  
produce the drug that quarter, or there may be problems with the manufacturers 
supply or distribution.  However, CMSs  missing  status indicator does not distinguish 
the reasons for missing  ASP data.   
Missing data frequently did not prevent CMS from implementing an ASP-based 
payment amount.  For  178  of these 190  drug codes, CMS  implemented an ASP-based  
payment amount that excluded the NDCs with missing ASP data.21   In total, 582  NDCs  
with missing data  were associated with these 178  drug codes.   A total  of  
33  manufacturers produced NDCs that  were missing data  in 4 or more quarters.   
CMS Should Bolster Its Oversight of Manufacturer-Submitted ASP Data To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Results | 7   Missing data  can affect  expenditures for both the program and its enrollees.   For drug  
codes with  missing ASP data, CMS is not able to calculate a  comprehensive drug  
payment amount, which is a cause for concern.  As a result, CMS may  set  a payment  
amount that  is not reflective of  the market and  may  result in CMS and  enrollees  
paying more for a Part  B  drug.  Moreover, the frequency with which some 
manufacturers repeatedly do not provide required ASP data is cause for even greater 
concern.   
CMS  reported  challenges  that  hinder its  ability to  conduct  
oversight  of  ASP  data  
CMS reported challenges to ensuring  the accuracy of ASP data.   CMS reported  that  
manufacturers failure to  meet data reporting deadlines was a challengein fact, the 
most significant challenge it faces.  CMS  also reported  the lack  of  authority to  compel  
manufacturers to respond to  questions about inaccurate  data as a challenge, but  
noted  that  it  was not  as significant a  challenge as late data submissions.  Both late 
and inaccurate data may hinder CMSs ability to  ensure complete and accurate 
quarterly calculations of  Part B payment amounts.    
Late  ASP data  submissions from manufacturers substantially 
hindered  CMSs ability to  ensure the receipt of  timely and  
accurate  ASP data     
When manufacturers submit their ASP data  late, CMS  must devote its  staff resources 
and  limited  time to  request and obtain  the required data from manufacturers.  This 
reduces the already limited time that CMS has to  calculate and publish Part  B 
payment amounts for the quarter.  Further, CMS  reported that very few staff members 
are primarily responsible for completing this intensive process.   In 2022, CMS hired  
two  additional staff to review ASP data and calculate ASP-based payment amounts.   
CMS must  complete its  data collection, analysis, and quality control process  to  
calculate  Part B  payment amounts in  less than 2  months.  To illustrate,  ASP  data for  
the first  quarter of  calendar year 2022 were due to CMS by April  30, 2022, i.e., 30  days  
from the end of the previous quarter.  CMS  then  had  approximately  5  weeks  to  (1) 
calculate  the ASP-based Medicare payment  amounts; (2)  develop its  payment  files; and  
(3) complete  its  entire  review  and  analysis  process  in time to  publish the Part  B 
payment amounts in  early June.  Once CMS publishes its payment files on its website,  
CMS affords manufacturers and the public an opportunity to  identify and  correct  
potential errors.  CMS also  aimed  to provide 2  weeks for the Medicare Administrative  
Contractors to test the files in advance of the effective date of  July  1,  2022.    
CMS Should Bolster Its Oversight of Manufacturer-Submitted ASP Data To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Results | 8    
CONCLUSION AND  RECOMMENDATION  
 
 
To protect the Medicare program and its enrollees, it is vital  that CMS conduct robust  
oversight to  ensure the accuracy of ASP data.   CMS has opportunities to improve its 
oversight of  manufacturer-reported ASP data and  reduce the likelihood  of paying  
inappropriately  for prescription drugs.  Our findings indicate that while CMS has some 
oversight procedures in place (e.g., system edits in the ASP data collection system and  
CMSs internal reviews of manufacturer data), it  allowed  inaccurate data to impact  
Medicare Part B payment amounts.  
Gaps in CMSs  own  internal control  processes  resulted in the implementation of  
incorrect  Part B drug payment  amounts  by CMS.  The challenges that CMS faces 
including late submissions from manufacturers and the inability to compel 
manufacturers to submit accurate datahinder CMSs ability to include all  ASPs  for  
NDCs  that are associated with a drug code in its  payment amount calculations.   This 
lack of ASP  inclusivity can impact the payment amount implemented for drug codes  
because it may result in inaccurate  Medicare Part B payment amounts.    
Taken together, the vulnerabilities in CMSs  processes,  coupled with the errors OIG 
has identified,  highlight  the need for CMS to strengthen its oversight of  ASP  data.   For  
over 5 years, OIG has identified potential errors in CMSs pricing files  and notified  
CMS of these potential errors.  For some of these  errors, CMS  has corrected the data  
values stored in these files.  For other  errors, CMS  reported that  time and resource 
constraints  may limit its  quality control checks of  certain data  fields.  Although CMS  
has corrected some of  these errors, its oversight processes do not seem to enable 
CMS to  identify data errors independently.   
Given the cost and importance of these life-saving drugs, it  is vital that  CMS conduct  
robust oversight to ensure that Medicare makes appropriate payments for 
Part  B-covered drugs.   The recommendation that follows  aims  to  promote  accurate 
Medicare Part B drug payment amounts and  aid  CMS in its efforts at  improving  ASP  
data accuracy.  
We recommend  that CMS:  
Build  a  strategy to  strengthen its  internal controls  for ensuring  
the accuracy of  Part  B  drug  payments  
CMS could  implement additions to its oversight procedures to reduce the likelihood  
of errors in collecting ASP data and calculating  Medicare payment amounts.  These 
additions could include:  
   new or more enhanced  quality checks of  manual data processes;   
CMS Should  Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390     Conclusion and Recommendation  | 9      new reports generated from the ASP  system that CMS could  use to enhance 
its oversight of  manufacturer reporting of ASP data  manufacturers that may be 
submitting inaccurate ASPs (e.g., the ASP reported exceeds the WAC reported  
by the manufacturer in the ASP system); and  
   processes  for correcting potential errors in its data files.  
  
 
CMS Should  Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390     Conclusion and Recommendation  | 10   AAGGEENNCCYY   CCOOMMMMEENNTTSS  AANNDD  OOIIGG  RREESSPPOONNSSEE   
 
 
CMS concurred with our recommendation.  In its comments, CMS noted  that there  
can be  valid  reasons for using a WAC-based payment amount and valid  reasons for  
which  manufacturers may have missing ASP data.   OIG agrees and has included this 
context in our report.    
CMS stated  that it believes ASP reporting is consistent with statutory requirements 
and results in the determination of  accurate payment limits, but that it shares OIGs 
concerns about the potential  impact  that missing or inaccurate ASP data could have 
on Medicare Part B payment amounts.  
In response to our recommendation,  CMS reported that it  will identify ways to  
strengthen its internal controls and is working  on enhancements to (1) the current  
ASP system and (2) its internal processes.  CMS also  stated  that it  will consider OIGs 
suggestions as it continues to make enhancements in the area of  ASP data.    
For the full text of  CMSs comments, please see the Agency Comments appendix  at  
the end of the issue brief.     
 
 
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390     Agency Comments and OIG Response  | 11    
MMEETTHHOODDOOLLOOGGYY   
 
 
Data Sources  
To identify CMSs oversight activities for manufacturer-reported ASP data,  we  
received  documentation from CMS that outlined  its oversight procedures, including  
its internal controls,  for ASP data submissions.  We also  received  from CMS 
documentation that  described  its methods for determining which NDCs to  include in 
the calculation of  the Medicare payment amount.   
In addition, we interviewed  CMS to collect  information related to its policies and  
procedures to ensure the accuracy of ASP data.   We asked  CMS to describe  its:  
   oversight procedures to identify and  correct inaccurate ASP data;   
   challenges in conducting effective oversight and whether any additional  tools, 
resources, or authorities would bolster its oversight  procedures;  and  
   process for  assigning status indicator values to  NDCs.  
We obtained  CMSs background files and the code pricing files for  2016 through 
2020. CMS  creates these files each quarter.  The background file contains  
manufacturer-reported ASP data  for  each NDC, including ASP  and sales volume.  The 
background  file also includes  information entered by CMS, including  the status 
indicator, package size, and package quantity.   The code pricing file contains  the 
Medicare payment amount  for the drug code and the payment methodology used to  
calculate the payment amount for the drug code.   
We used  CMSs database of drug  manufacturers  that have entered  into  a Medicaid  
National  Drug Rebate Agreement  found online at Medicaid.govto identify the 
drug manufacturer associated with each NDC.  This file contains the labeler code, i.e., 
the first  five digits of an NDC, for each manufacturer that is required to report ASP  
data.   We used this file to ensure that the manufacturer was required to report ASP  
data in a specific quarter.    
We obtained  from the Food and  Drug Administrations (FDAs) website  the NDC  SPL  
Data Elements File (FDAs NDC  file).  FDAs data  include the date on which a 
manufacturer started marketing  a product and, where applicable, the expiration date 
of the last lot distributed.   We used this file to ensure that the drugs under review  
were on the market at the time at  which data submitted by manufacturers  were 
missing or negative.   
 
 
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390     Methodology  | 12   Data Analysis  
Review of CMSs  Oversight Procedures and  Challenges.   We  reviewed  the 
documentation CMS submitted and its responses to our interview questions to 
identify its  oversight methods, including its internal controls.  We identified potential  
vulnerabilities that may inhibit its ability to ensure the accuracy of ASP-based  
payment amounts.  We further identified some of the effects of potential  
vulnerabilities.   We  reviewed  the challenges CMS faces in conducting effective 
oversight.  We reviewed  the tools, resources, and  authorities that  CMS currently uses 
to collect and analyze data as well  as  any new tools,  resources,  or authorities that  
CMS stated  would  bolster its oversight processes.   
Review of  ASP  Data.   We used the code pricing file to  first identify all  drug codes 
that had an  ASP-based  payment amount for at least one of the quarters under review.  
We determined the number of  these drug codes for which CMS did not calculate an  
ASP-based  payment amount  in at  least one quarter because  none of the ASP  
submissions were deemed valid by CMS.  To do this, for each quarter, we identified  
drug codes for which all  associated  NDCs were assigned a status indicator value other 
than D.   For the drug codes for which CMS did  calculate an ASP-based payment  
amount  in at least one quarter during our timeframe, we determined the frequency of  
the alternative payment methodologies implemented by CMS when it did not  
calculate an  ASP-based  payment amount.   We did not include in this count drugs for 
which the only WAC-based payment amounts occurred in  the  first two quarters the  
drug was reported during the timeframe under review.  This was because a  
manufacturer may not have complete sales data  for new drugs and, therefore, may 
not be able to report ASPs.  We also  did not include in this count  the drug codes for 
which the manufacturers of the associated NDCs were not required to report ASP  
data.  To identify  these  drugs,  we determined whether the associated NDCs were 
produced by manufacturers with a  Medicaid drug rebate agreement.  To do this, we  
compared  the NDCs in the ASP files  to the NDCs in CMSs drug manufacturer 
database.  If none of the  NDCs were associated  with manufacturers that  had an active 
Medicaid drug rebate agreement in effect,  we concluded  that  the manufacturer was 
not required to report ASP  data to CMS  during the periods under  review.22    
We  used status indicator values to  identify the number of  drug codes and  NDCs  
associated  with missing  ASP  and  sales volume  values.   In each quarter under review,  
we counted  the number of drug codes for which at least  one NDC  associated with 
that code  was  missing ASP data (i.e., the status indicator value was M).   We also 
identified the  frequency of missing submissions as well as the  number of  
manufacturers associated with the  missing data submissions.   For these NDCs, we 
reviewed a combination of the background file, FDAs NDC  file, and CMSs drug  
manufacturer database to determine whether (1)  the manufacturer associated with 
the NDC  was required to report ASP data to  CMS  and (2) the drug was on the market.   
 
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390     Methodology  | 13   Limitations  
We  did  not  verify the accuracy of the manufacturer-reported data submitted to CMS  
by manufacturers.  
Standards  
We conducted this study in accordance with the  Quality Standards for Inspection  and  
Evaluation  issued by the Council  of the Inspectors General on Integrity and Efficiency.   
 
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390     Methodology  | 14    
APPENDIX  
 
Appendix A:  Agency Comments  
 
Following this page are the official comments from CMS.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390     Appendix A  | 15   DATE:  December 9, 2022 
TO:  Ann Maxwell 
Deputy Inspector General for Evaluation and Inspections 
Office of Inspector General 
FROM:  Chiquita Brooks-LaSure 
Administrator 
Centers for Medicare & Medicaid Services 
SUBJECT:  Office of Inspector General (OIG) Draft Issue Brief: CMS Should Bolster Its 
Oversight of Manufacturer-Submitted ASP Data to Ensure Accurate Part B Drug 
Payments (OEI-03-21-00390) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on the Office of Inspector Generals (OIG) draft report.  
CMS serves the public as a trusted partner and steward, dedicated to advancing health equity, 
expanding coverage, and improving health outcomes. As such, CMS strives to maximize the 
affordability and availability of drugs for individuals with Medicare while protecting taxpayer 
dollars. CMS uses manufacturer reported average sales price (ASP) product data to calculate Part 
B drug payment limits. Manufacturer reported data is vetted by CMS to verify that the reported 
values are consistent with the reported quantity of the drug. For example, files are reviewed to 
identify outliers and potential discrepancies are addressed on a case by case basis. Additionally, 
CMS works with manufacturers to mitigate and address concerns identified with the data. This 
includes providing technical assistance when manufacturers inquire about how to properly report 
their data.    
OIG has provided CMS with a list of the 59 drug codes for which CMS did not calculate an 
ASP-based payment amount in at least one quarter of the five-year audit timeframe. CMS has 
completed an initial review of the codes and found legitimate reasons for the decision to not 
calculate an ASP-based payment amount (for example, the code was not active during the entire 
period of the study, there were zero or negative sales data reported, etc.). Based on the initial 
review, CMS continues to believe that ASP reporting is consistent with statutory requirements 
and results in the determination of accurate payment limits under section 1847A of the Social 
Security Act.   
In addition, CMS would like to clarify that the OIGs report references invalid ASP data and 
defines invalid ASP data for purposes of the report as ASP data equal to or less than zero. Zero 
and negative sales data may be valid; however, we do not include them in volume weighted 
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data To Ensure Accurate Part B Drug Payments 
OEI-03-21-00390  Appendix A | 16  calculations because there is no impact of including zeros in volume weight calculations and 
including that data can also cause divide by zero errors. When manufacturers have negative or 
zero sales, they should report that data, as it is valid ASP data. Also, CMS does not include 
negative sales, because it may lead to skewed results.  
OIG also noted that they identified drugs associated with missing data values. CMS would like to 
clarify that there could be several legitimate reasons for missing data for certain drugs on the file 
such as skin substitutes, generics, repackagers, transferred and deactivated National Drug Codes 
(NDCs). CMS notes that missing data values may or may not be reflective of non-compliance 
with ASP reporting. For example, not all drug manufacturers will have sales in every quarter. 
Many skin substitute products have low sales volume with multiple patch sizes and not all the 
patch sizes are sold every quarter. Similarly, for repackagers there are multiple bottles with low 
volumes and all sizes may not sell every single quarter.  
We appreciate the OIG's work on this area and look forward to working collaboratively on this 
and other issues in the future. 
The OIGs recommendations and CMS responses are below. 
OIG Recommendation  
The OIG recommends that CMS build a strategy to strengthen its internal controls for ensuring 
the accuracy of Part B drug payments.  
CMS Response  
CMS concurs with this recommendation and is committed to ensuring the accuracy of Medicare 
Part B drug payments. While we believe that ASP reporting is consistent with statutory 
requirements and results in the determination of accurate payment limits under section 1847A of 
the Social Security Act, we understand and share OIGs concerns about the potential impact that 
missing or inaccurate ASP data could have on Medicare Part B payment amounts. As such, we 
are proactively looking for ways to strengthen our internal controls and are actively working on 
enhancements to the current ASP system and internal processes. We will take OIGs suggestions 
into considerations as we continue to make enhancements in this area.  
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data To Ensure Accurate Part B Drug Payments 
OEI-03-21-00390  Appendix A | 17   
AAAAPPCCPPKKEENNNNOODDWWIIXXLL  EEABDD   GGMMEENNTTSS   AANNDD  CCOONNTTAACCTT   
 
 
Acknowledgments  
Conswelia McCourt  served as the team leader for this study.  Others in the Office of  
Evaluation and Inspections who conducted the study include  Emily A.  Dieckman,  Amy 
Sernyak, and Karolina Hill.  Office of  Evaluation and Inspections headquarters staff  
who provided support include Michael Novello  and Melissa Baker.   
This report was prepared under the direction of  Linda Ragone, Regional Inspector 
General for Evaluation and Inspections in the Philadelphia regional  office, and  Edward  
K. Burley, Deputy Regional Inspector General.  
Contact  
To obtain additional information concerning this report, contact the Office of Public 
Affairs  at  Public.Affairs@oig.hhs.gov. OIG reports and other information can be found  
on  the OIG website at  oig.hhs.gov.  
Office of Inspector General  
U.S. Department of Health and Human Services  
330 Independence Avenue, SW  
Washington, DC 20201  
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Acknowledgments and Contact | 18   ABOUT THE OFFICE OF INSPECTOR GENERAL  
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:  
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 audits help reduce waste, abuse, and mismanagement and promote economy 
and efficiency throughout HHS.  
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.  
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.  
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 healthcare 
industry concerning the anti-kickback statute and other OIG enforcement authorities. 
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390    About OIG  | 19     
ENDNOTES  
 
 
 
1  Division CC, Title IV, Section 401(d),  of the  Consolidated Appropriations Act, 2021, P.L. No. 116-260 (Dec. 27, 2020).    
2  42 CFR  414.900(b) and CMS,  Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 15  50.  
3  Section 1847A(c) of the Social Security Act (the Act).    
4  Pursuant to section 1927(b)(3) of the Act, manufacturers that have a rebate agreement to participate  in the Medicaid Drug  
Rebate Program are required  to report ASP data.  Pursuant to section 1874A(f)(2) of the Act, beginning on January 1, 2022,  
manufacturers  without a drug  rebate  agreement are  also required to report ASP data.  Division CC, Title IV, Section 401,  of the  
Consolidated Appropriations Act, 2021, P.L.  No.  116-260  (Dec. 27, 2020).    
5  An NDC is a code used to identify a drug based on its manufacturer, product, and package size.  Multiple NDCs may be  
associated with a single drug code.   
6  In addition to the information it receives from manufacturers, CMS  stated that it verifies manufacturer-reported data against  
sources such as  Redbook  and  DailyMed  to determine  package size and quantity.  
7  Section 1847A(c)(6)(B) of the  Act defines WAC as the manufacturers list price for the drug to wholesalers or direct purchasers  
in the United States, not including certain price reductions or rebates, for the most recent month for which the information is  
available, as reported in  wholesale price guides or other publications of drug pricing data.  
8  The manufacturer must certify all revised and resubmitted data as accurate and complete.    
9  CMS,  Medicare Part B Drug Average Sales Price, https://www.cms.gov/medicare/medicare-fee-for-service-part-b-
drugs/mcrpartbdrugavgsalesprice, accessed October  11,  2022.  
10  OIG, Workplan Summary:  Accuracy of Manufacturer-Reported Average Sales Pricing,  https://oig.hhs.gov/reports-and-
publications/workplan/summary/wp-summary-0000616.asp, accessed October 11, 2022.  
11  OIG,  Some Manufacturers Reported Inaccurate Drug Product Data to CMS, OEI-03-19-00200, September 2020.  
12  OIG,  Average Sales Prices: Manufacturer Reporting and CMS Oversight, OEI-03-08-00480, February  2010.  
13  OIG,  Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs, OEI-12-13-00040, July 2014.  
14  Pursuant to section 1874A(f)(2) of the Act, beginning on January 1, 2022,  manufacturers  without a drug  rebate  agreement 
are required to report ASP data  like  manufacturers  with such an agreement.  Division CC, Title IV, Section 401,  of the  
Consolidated Appropriations Act, 2021, P.L.  No.  116-260 (Dec.  27,  2020).  
15  OIG,  Medicare  Part B Drug Payments: Impact of Price Reductions Based on 2020 Average Sales Prices, OEI-03-22-00170,  
September  2022.  
16  OIG,  Medicare  Part B Drug Payments: Impact of Price Reductions Based on 2020 Average Sales Prices, OEI-03-22-00170,  
September  2022.    
17  To calculate savings, we used Part B utilization data obtained in January 2022.  CMS implemented the  correction to the  
second-quarter 2021 payment amounts in March 2022.  Therefore, any claims for the drugs associated  with incorrect payment 
amounts billed after CMS implemented the corrected payment amounts would not be included  in our calculation of savings.   
CMS reported that it calculated lost savings that were 2 percent or approximately $53,500 less than OIGs calculation of lost  
savings.    
18  Although CMS corrected these payment amounts for these drugs in its payment files, it stated that it will not take action to 
retroactively reduce the payment amounts for these drugs on second-quarter 2021 claims paid prior to the payment correction 
implemented in March 2022.    
19  OIG,  Some Manufacturers Reported Inaccurate Drug Product Data to CMS, OEI-03-19-00200, September 2020.  
20  OIG,  Medicare  Part B Drug Payments: Impact of Price Substitutions Based on 2015 Average  Sales Prices, OEI-03-17-00360,  
September 2017.  
 
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Endnotes | 20    
21  For 10 of the remaining 12 drug codes, CMS based the Medicare payment amount on WAC for the quarters in which  
associated NDCs  were  missing data.   For the other  two  drug codes, CMS did not publish a Medicare payment amount for the  
quarters in  which associated NDCs  were  missing data.    
22  Pursuant to section 1874A(f)(2) of the Act, beginning on January 1,  2022,  manufacturers without a  drug rebate agreement 
are required to report ASP data  like  manufacturers  with such an agreement.  Division CC, Title IV, Section 401,  of the  
Consolidated Appropriations Act, 2021, P.L.  No.  116-260  (Dec. 27, 2020).  
CMS Should Bolster Its Oversight of Manufacturer-Reported ASP Data  To Ensure Accurate Part B Drug Payments  
OEI-03-21-00390   Endnotes | 21