Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
C A S
OMPARING  VERAGE  ALES 
 
 
P A
RICES AND  VERAGE 
 
 
M P
ANUFACTURER  RICES FOR 
 
M   P B D : 
EDICARE  ART    RUGS   
 
  A O 2013 
N  VERVIEW OF 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
Suzanne Murrin 
Deputy Inspector General for 
Evaluation and Inspections 
 
February 2015 
OEI-03-14-00520   
   
EXECUTIVE SUMMARY:  COMPARING AVERAGE SALES PRICES AND 
AVERAGE MANUFACTURER PRICES FOR MEDICARE PART B DRUGS:        
AN OVERVIEW OF 2013  
OEI-03-14-00520 
 
WHY WE DID THIS STUDY 
When Congress established average sales prices (ASPs) as the primary basis for 
Medicare Part B drug reimbursement, it also mandated that the Office of Inspector 
General (OIG) compare ASPs with average manufacturer prices (AMPs) and directed the 
Centers for Medicare & Medicaid Services (CMS) to substitute payment amounts for 
drugs with ASPs that exceed AMPs by a threshold of 5 percent.  To comply with its 
statutory mandate, OIG has completed over 30 quarterly pricing comparisons.  In 
April 2013, CMS began substituting payment amounts in accordance with its published 
price substitution policy, which currently applies to only certain drug codes with 
complete AMP data that exceed the 5-percent threshold in two consecutive quarters or 
three of the previous four quarters. 
 
HOW WE DID THIS STUDY  
We identified drug codes that had price substitutions on the basis of data from 2013, as  
well as codes that exceeded the 5-percent threshold but were not eligible for price 
substitution under CMSs current criteria. We also estimated the financial impact of 
reducing reimbursement for each of the drug codes that exceeded the 5-percent threshold.  
 
WHAT WE FOUND 
Under CMSs price substitution policy, 15 drug codes were subject to reimbursement 
reductions on the basis of data from 2013, saving Medicare and its beneficiaries an 
estimated $13 million from the fourth quarter of 2013 through the third quarter of 2014.   
We estimate that if CMS had expanded its price substitution criteria to include drug codes 
with complete AMP data in a single quarter or certain codes with partial AMP data, the  
agency could have generated almost $6 million in additional savings.   
 
WHAT WE RECOMMEND  
CMS has maintained a cautious approach to price substitutions and has expressed 
concern that expanding the criteria for price substitution may impede physician and 
beneficiary access to drugs. OIG agrees that CMS should always be mindful of access to 
prescription drugs; however, we continue to believe that CMS can achieve a better 
balance between safeguarding access to drugs and ensuring that Medicare and its 
beneficiaries do not overpay for drugs with ASPs that exceed the AMPs by the threshold 
percentage.  Therefore, we recommend that CMS consider pursuing rulemaking to 
expand the price substitution policy to include at least some additional drug codes.  CMS 
responded that more experience with the policy is needed before it is expanded. 
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

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

Methodology................................................................................................3 

Findings........................................................................................................6 

CMSs price substitution policy saved Medicare and its 

beneficiaries an estimated $13 million over 1 year .........................6 

Expanding the price substitution criteria could have generated                

almost $6 million in additional savings for Medicare and                 

its beneficiaries ................................................................................7 

Conclusion and Recommendation ...............................................................9 

Agency Comments and Office of Inspector General Response .................10 

Appendix: Agency Comments ..................................................................11 
 
Acknowledgments......................................................................................12 

 
   
   
OBJECTIVES 
1. 	  To estimate the financial impact of substituting Medicare Part B 
reimbursement amounts for drugs in 2013 that met criteria established 
by the Centers for Medicare & Medicaid Services (CMS).   
2. 	  To estimate the financial impact of expanding CMSs criteria for price 
substitution. 
BACKGROUND 
When Congress established average sales price (ASP) as the basis for 
Medicare Part B drug reimbursement, it also provided a mechanism for 
monitoring market prices and limiting potentially excessive payment 
amounts based on ASPs.  Specifically, the Social Security Act (the Act) 
mandates that the Office of Inspector General (OIG) compare ASPs with 
average manufacturer prices (AMPs).1  If OIG finds that the ASP for a 
drug exceeds the AMP by a certain percentagecurrently, 5 percent 
OIG must notify the Secretary of Health and Human Services.  The Act 
directs the Secretary to then substitute the payment amount with the lesser 
of the widely available market price (if any) or 103 percent of the AMP.2,  3  
Payments for Prescription Drugs Under Medicare Part B  
Medicare Part B covers a limited number of outpatient prescription drugs. 
To obtain reimbursement for Part B drugs, health care providers submit 
claims to Medicare contractors using Healthcare Common Procedure 
Coding System (HCPCS) codes.4 In 2013, Medicare and its beneficiaries 
spent over $13 billion for Part B drugs. 
Medicare Part B pays for most covered drugs using a reimbursement 
methodology based on ASPs.  As defined by law, an ASP is the 
manufacturers sales of a drug to all purchasers in the United States in a 
calendar quarter divided by the total number of units of the drug sold by 
the manufacturer in that same quarter.5  Certain manufacturers must 
                                                                        
1 Section  1847A(d)(2)(B) of the Act.  

2 Section  1847A(d)(3) of the Act.  
 
3 Pursuant to   1847A(d)(3)(B)(ii)  of the Act, the threshold percentage has been
  
maintained  at 5 percent.   
4 A HCPCS code for a drug defines the drug  name and a specific amount of the drug  but  
does not specify the manufacturer  or package size.  
5 Section 1847A(c)  of the Act.  Certain types of sales are exempted from ASP, and  ASP 
is net of any price concessions (with limited exceptions). 
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  1 
   
   
provide CMS with the ASP and volume of sales for each of their national 
drug codes (NDCs) on a quarterly basis.6, 7    
HCPCS codes represent one or more NDCs.  Under the ASP pricing 
methodology, the Medicare reimbursement for most Part B drugs is equal 
to 106 percent of the volume-weighted ASP for the HCPCS code.8, 9 There 
is a two-quarter lag between the sales period for which ASPs are reported 
and the effective date of the reimbursement amounts.  For example, ASPs  
from the first quarter of 2013 were used to establish reimbursement 
amounts for the third quarter of 2013. 
Manufacturer Reporting of AMPs  
In addition to providing quarterly ASPs, certain manufacturers must 
provide CMS with the AMP for each of their NDCs on a quarterly basis.10   
The AMP is generally calculated as a weighted average of prices for all of 
a manufacturers package sizes of a drug and is reported for the lowest 
identifiable quantity of the drug (e.g., 1 milliliter, one tablet, one capsule).  
By law,  AMP is defined as the average price paid to the manufacturer for 
the drug in the United States by (1) wholesalers for drugs distributed to 
retail community pharmacies and (2) retail community pharmacies that 
purchase drugs directly from the manufacturer.11  
OIGs Monitoring of ASPs and AMPs  
To comply with its statutory mandate, OIG has completed over   
30 quarterly pricing comparisons since the ASP reimbursement 
methodology for Part B drugs was implemented in January 2005.  In 
addition, OIG has completed six annual overviews of ASPs and AMPs for 
the years 2007 through 2012. 
AMP-Based Price Substitutions 
Since April 2013, CMS has substituted 103 percent of the AMP for the                
ASP-based reimbursement amount when OIG identifies a HCPCS code 
                                                                        
6 Section 1927(b)(3)  of the Act.  
7 An  NDC is an 11-digit identifier that represents a specific manufacturer, product,  and 
package size. 
8 Section 1847A(b)(1)  of the  Act.  Medicare beneficiaries are responsible for 20 percent  
of this amount  in the form of coinsurance.  
9 Part B claims dated  on  or after  April 1, 2013, incur a reduction in payment in  
accordance with the Budget Control Act of 2011 and the American Taxpayer Relief Act 
of 2012 (see CMS Medicare  FFS Provider e-News,  Mandatory Payment Reductions in 
the Medicare Fee-for-Service (FFS) ProgramSequestration,  March 8, 2013).  Under 
this mandatory payment reduction, the effective payment rate for most Part B drugs is 
104.3 percent of  the volume-weighted ASP. 
   
10 Section 1927(b)(3)  of the Act. 

11 Section 1927(k)(1)  of the Act, as amended by  2503 of the Patient Protection and 

Affordable Care Act, P.L. 111-148.    
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  2 
   
   
that exceeds the 5-percent threshold in two consecutive quarters or three 
of the previous four quarters.12 Because CMS believes that comparisons 
based on partial AMP data may not adequately reflect market trends, the 
agency lowers reimbursement amounts only when ASP and AMP  
comparisons are based on the same set of NDCs (i.e., are based on 
complete AMP  data).13  To prevent the price substitution policy from  
inadvertently raising Medicare reimbursement amounts, CMS does not 
substitute prices when the substituted amount is greater than the 
ASP-based payment amount calculated for the quarter in which the price 
substitution takes effect.14  CMS also does not substitute prices when the 
drug and dosage form described by the HCPCS code are identified by the 
Food and Drug Administration (FDA) as being in short supply.15 Price 
substitutions take effect in the quarter after OIG shares the results of its 
most recent pricing comparison and remain in effect for one quarter.16  
Because of the two-quarter lag between the ASP reporting period and the 
effective date of reimbursement amounts, and the additional quarter that is 
necessary for OIG to complete its pricing comparison, there is a                   
three-quarter lag between the ASP reporting period and the effective date 
of the price substitutions.  For example, price substitutions that took effect 
in the fourth quarter of 2013 were based on comparisons of ASPs and 
AMPs from the first quarter of 2013. 
METHODOLOGY 
Data Collection and Analysis  
We obtained NDC-level ASP data, AMP data, and wholesale acquisition 
cost (WAC) data from CMS for the first through fourth quarters of 2013. 
We also obtained ASP-based reimbursement amounts for the quarters in 
which price substitutions occurred (i.e., the fourth quarter of 2013 through 
the third quarter of 2014). 
For HCPCS codes in each quarter of 2013, we calculated                            
volume-weighted AMPs consistent with CMSs methodology for 
calculating volume-weighted ASPs.  For HCPCS codes with partial AMP 
data (i.e., HCPCS codes that had AMP data for only some of the NDCs 
that CMS used to calculate volume-weighted ASPs), we accounted for 
                                                                        
12 42  C.F.R.  414.904(d)(3).
    
13 Ibid.  See also 76 Fed. Reg. 73026, 73289  (Nov. 28, 2011). 

14 Ibid.  See also 75 Fed. Reg. 40040, 40158  (July 13, 2010).  

15 Ibid.    

16 Ibid.   

Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  3 
   
   
missing data by substituting each missing AMP value with the 
manufacturer-reported WAC.17,  18    
For each quarter of 2013, we compared the volume-weighted ASPs and 
AMPs and identified all HCPCS codes with ASPs that exceeded the AMPs 
by at least 5 percent. We identified HCPCS codes that had price 
substitutions on the basis of data from 2013, as well as HCPCS codes that 
exceeded the 5-percent threshold but were not eligible for price 
substitution under CMSs current criteria.  To identify trends over time for 
HCPCS codes in the latter group, we reviewed pricing comparison results 
for the 2-year period from the first quarter of 2012 through the last quarter 
of 2013. 
To estimate the savings associated with reducing reimbursement for each 
HCPCS code that exceeded the 5-percent threshold, we subtracted               
103 percent of the volume-weighted AMP from the ASP-based 
reimbursement amount for the quarter in which the price substitution 
would have occurred/did occur.19  We then multiplied the difference by 
one-fourth of the number of services that were allowed by Medicare for 
each HCPCS code in 2013.   
Limitations 
We did not verify the accuracy of manufacturer-reported ASP,  AMP, and 
WAC data, nor did we verify the underlying methodology used by 
manufacturers to calculate ASPs and AMPs.  We also did not verify the 
accuracy of CMSs calculations of Part B drug reimbursement amounts. 
Manufacturers are required to submit their quarterly ASP and AMP data to 
CMS within 30 days after the close of the quarter.  Our analyses were 
performed on ASP and AMP data compiled by CMS soon after that 
deadline. We did not determine whether manufacturers provided any 
updated data to CMS at a later date. 
Under sequestration, the effective payment rate for most Part B drugs is 
104.3 percent of the volume-weighted ASP.  However, savings estimates 
in this report were calculated without regard to sequestration and therefore 
may be slightly overstated. 
Savings estimates for the fourth quarter of 2013 through the third quarter 
of 2014 were based on drug utilization from 2013.  These estimates 
assume that the number of services that were allowed by Medicare 
                                                                        
17  WAC is defined in  1847A(c)(6)(B)  of the Act.  
18  WACs are typically higher than AMPs and therefore function as conservative proxies 
for missing AMP values.   
19 AMP-based  price substitutions based  on  data from the first through  fourth  quarters of 
2013  were applied in the fourth quarter of 2013 through the third quarter of 2014,  
respectively. 
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  4 
   
   
remained consistent from one quarter to the next and that there were no 
significant changes in utilization between 2013 and 2014. 
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. 
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  5 
   
   
FINDINGS 
CMSs price substitution policy saved Medicare and its 
beneficiaries an estimated $13 million over 1 year  
Under CMSs price substitution policy, 15 HCPCS codes were subject to 
price reductions on the basis of data from 2013.  These codes exceeded the 
5-percent threshold in two consecutive quarters or three of four quarters 
using complete AMP data, were not identified by FDA as being in short 
supply, and had AMP-based substitution amounts that were less than the 
ASP-based reimbursement amounts for the quarter(s) in which a 
substitution occurred.20  We estimate that price substitutions for these 
HCPCS codes saved Medicare and its beneficiaries approximately                  
$13 million over the 1 year period from  the fourth quarter of 2013 through 
the third quarter of 2014. Table 1 lists the 15 HCPCS codes, including the 
quarter(s) during which the price substitution occurred.   
 
Table 1: HCPCS Codes That Had Price Substitutions on the Basis of Data from 2013  
Quarter(s) in Which Price Substitutions 
 
    Occurred  
HCPCS 
HCPCS  Description   Code  Fourth  First  Second   Third 
Code     Dosage   Quarter   Quarter   Quarter   Quarter  
      2013   2014   2014   2014  
J0500  Dicyclomine injection  20 mg   X 
J1110  Dihydroergotamine mesylate injection  1 mg  X  X  X  X 
J1270  Doxercalciferol injection   1 mcg  X   
J1953  Levetiracetam injection  10 mg   X   
J1955  Levocarnitine injection  1 g    X 
J2360  Orphenadrine injection  60 mg   X    X 
J2675  Progesterone injection  50 mg     X  X 
J3070  Pentazocine injection  30 mg     X 
J3410  Hydroxyzine HCl injection   25 mg   X  X 
J3415  Pyridoxine HCl injection   100 mg     X 
J7626  Budesonide noncompounded, unit dose form   0.5 mg     X  X 
J9040  Bleomycin sulfate injection   15 units  X 
J9190  Fluorouracil injection  500 mg     X  X 
J9211  Idarubicin HCl injection  5 mg    X 
J9360  Vinblastine sulfate injection   1 mg  X  X  X 
Source:  OIG analysis of ASP and AMP data from 2013. 
                                                                        
20 Three additional HCPCS codes met CMSs duration criteria but were in short supply 
and/or had AMP-based substitution amounts that were greater than the ASP-based 
reimbursement amounts for the quarters in which the substitutions would have occurred.  
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  6 
   
   
Expanding the price substitution criteria could have 
generated almost $6 million in additional savings for 
Medicare and its beneficiaries 
CMS has maintained a cautious approach to price substitutions; however, 
this cautious approach may restrict the Governments ability to curb 
potentially excessive payment amounts based on ASPs.  We estimate that 
if CMS had expanded its price substitution criteria to include certain other 
Part B drugs, Medicare and its beneficiaries could have saved an 
additional $5.9 million over 1 year.  
An additional $3.6 million could have been saved over 1 year 
by expanding the criteria to include HCPCS codes with 
complete AMP data in a single quarter  
Twenty HCPCS codes with complete  AMP data exceeded the 5-percent 
threshold in at least one quarter of 2013 but were not eligible for price 
substitution in that quarter because they did not meet CMSs duration 
criteria (i.e., they did not exceed the threshold in two consecutive quarters 
or three of four quarters).21  We estimate that if these 20 drug codes had 
been eligible for price reductions on the basis of data from a single quarter 
only, Medicare and its beneficiaries could have saved an additional 
$3.6 million from the fourth quarter of 2013 through the third quarter of 
2014. 
CMS has expressed concern that price substitutions based on results from 
a single quarter would not account for temporary fluctuations in market 
prices.22  However, price discrepancies for the majority of the 20 HCPCS 
codes do not appear to have resulted from only isolated fluctuations. 
Almost all of the codes also exceeded the 5-percent threshold at some  
point before and/or after the quarter in question,23 with more than half of 
the codes (11 of 20) exceeding the 5-percent threshold at least once in the 
previous 5 quarters. For example, one HCPCS code was not eligible for 
price substitution in the first quarter of 2013 because it did not meet 
CMSs duration criteria, even though this code met all of CMSs price 
substitution criteria in the first and third quarters of the previous year.24   
Another HCPCS code exceeded the threshold in the third quarter of 2012 
                                                                        
21 These 20  drugs were  not identified by  FDA  as being in short supply and  did not have  
AMP-based substitution amounts that were greater than the ASP-based reimbursement 
amounts in the quarters during which the substitutions would have  occurred. 
22 76 Fed. Reg. 73026, 73288  (Nov. 28, 2011).   
23 This analysis is based  on  pricing comparison  results for the 2-year period from the first 
quarter  of  2012 through the last quarter of  2013. 
24 The ASP for this HCPCS code exceeded the AMP by at least 5 percent in the second 
quarter of 2013 as well, which triggered a price substitution because the code then  
exceeded the threshold for two consecutive  quarters.  
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  7 
   
   
and again in the second and fourth quarters of 2013 but never had a price 
substitution because it never met CMSs specific duration criteria.  If CMS 
had expanded its price substitution criteria to include codes that exceed the 
threshold in 2 of 6 quarters, all 11  codes that also exceeded the threshold 
in a prior quarter could have been eligible for price substitutions, saving 
Medicare and its beneficiaries approximately $600,000. 
An additional $2.3 million could have been saved over 1 year 
by expanding the criteria to include HCPCS codes with partial 
AMP data in a single quarter 
When we used WACs as proxies for missing AMPs, two HCPCS codes 
exceeded the threshold in at least one quarter of 2013.25,  26 Given that 
WACs were higher than AMPs for the vast majority of drug products 
covered under Part B in 2013, these results suggest that the ASPs for these 
two HCPCS codes may be excessive and that price substitutions may be 
warranted in these cases. We estimate that if reimbursement amounts for  
the two HCPCS codes had been based on 103 percent of the AMPs during 
the applicable quarters, Medicare expenditures could have been reduced 
by $2.3 million from the fourth quarter of 2013 through the third quarter 
of 2014. 
                                                                        
25 These two HCPCS codes did not meet CMSs duration criteria.  However, one of the  
codes exceeded the threshold during one quarter of 2012 using complete AMP data (and 
met all of CMSs price substitution criteria during that quarter).  The two codes met 
CMSs other price substitution criteria (i.e., they were not identified  by FDA as being in  
short supply, and they did not have AMP-based substitution amounts that were greater 
than the ASP-based reimbursement  amounts in  the quarters during which the 
substitutions would  have occurred).   
26 An additional three HCPCS codes with  partial AMP data exceeded the 5-percent 
threshold in at least one quarter of  2013  but were identified as being in short supply 
and/or having AMP-based substitution amounts  that were greater than the ASP-based 
reimbursement amounts for the quarters in which the price substitutions would have 
occurred. 
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  8 
   
   
CONCLUSION AND RECOMMENDATION 
Currently, CMSs price substitution policy is relatively narrow in scope; it 
is limited to only certain HCPCS codes with complete AMP data.  Under 
this policy, 15 drug codes were subject to reimbursement reductions on the 
basis of data from 2013, saving Medicare and its beneficiaries an 
estimated $13 million from the fourth quarter of 2013 through the third 
quarter of 2014. The agency could achieve even greater savings for 
Medicare and its beneficiaries by expanding its criteria for AMP-based 
price substitutions. 
In response to previous OIG recommendations, CMS expressed concern 
that expanding price substitution criteria may impede physician and 
beneficiary access to drugs. OIG agrees that CMS should always be 
mindful of access to prescription drugs, and we support current safeguards 
to prevent price substitutions for drugs that are in short supply.  However,  
we continue to believe that CMS can achieve a better balance between 
safeguarding access to drugs and ensuring that Medicare and its 
beneficiaries do not overpay for drugs with ASPs that exceed the AMPs by 
the threshold percentage. Therefore, we recommend that CMS:  
Consider pursuing rulemaking to expand the price substitution 
policy  
To more effectively limit potentially excessive payment amounts based on 
ASPs and generate greater savings for Medicare and its beneficiaries, 
CMS should consider broadening its price substitution criteria to include 
at least some additional HCPCS codes.  A more expansive policy might 
include HCPCS codes with complete AMP data that exceed the threshold 
in a single quarter, or those with partial AMP data that exceed the 
threshold when WACs are used as proxies for missing AMPs.  
Alternatively, CMS could consider a more modest expansion of the policy 
that better captures HCPCS codes that repeatedly exceed the 5-percent 
threshold. For example, CMS could expand the criteria to include codes 
with complete AMP data that exceed the 5-percent threshold in two of six 
quarters. To provide CMS with greater flexibility, any future regulations 
could provide the agency discretion to forgo a price substitution when 
there are indications that the substitution amount is below the provider 
acquisition cost. 
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  9 
   
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
In response to our recommendation, CMS stated that more experience with 
the price substitution policy is needed before it can be expanded.  CMS 
appreciates OIGs findings and welcomes information from future pricing 
comparisons so that specific proposals may be considered on the basis of 
additional experience. 
To help ensure that CMS has sufficient information for its deliberations 
regarding the price substitution policy, OIG will continue to provide CMS 
with the results from our quarterly pricing comparisons, along with annual 
assessments of the impact of the price substitution policy.  Because CMS 
did not specifically state whether it concurs with our recommendation, we 
ask that CMS more clearly indicate in its final management decision 
whether it concurs with our recommendation and what steps, if any, it will 
take to implement it.   
For the full text of CMSs comments, see the Appendix. 
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  10 
  APPENDIX 
Agency Comments 
/tp.VlC~., 
~ lLJ<.~ 
(  DEPARTMENT OF HEALTH & HUMAN SJ<.KV  Centers for Medicare & Medicaid Services 
'~'r 
Administrator 
Washington, DC 20201 
JAN  1'6 2015 
To: 	 Daniel R. Levioson 
Inspector General 
From: 	 Mari~TilM'Oner 
Administrator 
Centers for Medicare & Medicaid Services 
Subject: 	 OIG Draft Report: Comparing Average Sales Prices and Average Manufacturer 
Prices for Medicare Part B Drugs: An Overview o/2013, OEI-03-14-00520 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportw1ity to review and 
comment on the Office of the Inspector General's (DIG) draft report. This report is part of a 
series of average sales price (ASP) and average manufacturer price (AMP) comparisons required 
uoder section 184 7A  ( d) ofthe Social Security Act. CMS is committed to being a good steward 
of taxpayer dollars by continuously striving to maximize the affordability and availability of 
drugs for Medicare patients. CMS is saviog taxpayer money through this goal. According to the 
OIG's study, CMS's price substitution policy saved Medicare and its beneficiaries an estimated 
$13 million over a one-year period between the fourth quarter of2013 and the third quruter of 
2014 by reducing payment limits on 15 Healthcare Common Procedure Coding System 
(HCPCS) billing codes. 
OIG Recommendation 
The DIG recommends that CMS consider pursuing rulemaking to expand the price substitution 
policy to ioclude at least some additional HCPCS codes. 
CMS Response 
CMS believes that more experience is needed with this policy before it is expanded, particularly 
in light of the recent statutory change to the definition of AMP, which may affect the AMP of 
certaio drugs, including those used mainly in the physician's office. CMS appreciates the DIG's 
findings and welcomes information from continuing the studies that are required by the statute so 
that specific proposals based on more thorough experience may be considered. By continuing to 
take a cautious approach, as discussed in rulemaking and acknowledged in the DIG's report, 
CMS minimizes the risk of impacting physician and beneficiary access to drugs. 
CMS thanks the OIG for their efforts on this issue and looks forward to working with the OIG on 
this and other issues in the future. 
Comparing ASPs and AMPs for Medicare Part B Drugs: An Overview of 2013 (OEI-03-14-00520)  11   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Robert A. Vito, Regional 
Inspector General for Evaluation and Inspections in the Philadelphia 
regional office.   
Lauren McNulty served as the team leader for this study.  Central office 
staff who provided support include Meghan Kearns and Christine Moritz.  
 
 
 
Comparing ASPs and AMPs for Medicare Part B Drugs:  An Overview of 2013 (OEI-03-14-00520)  12 
   
   
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.