Report in Brief 
September  2016  
OEI121600340  
 
Why This Review Matters  CMS Should Address Medicares Flawed Payment 
Unlike  most  other  Part  B  drugs,  
System for DME Infusion Drugs  
Medicare  payment  amounts  for  drugs  
infused  through  durable  medical  
What We Found 
equipment  (DME)  are  still  based  on  list  
prices    known  as  AWPs    from  2003.    OIG  published  its  first  report   Troubling 
Prior  Office  of  Inspector  General  (OIG)   recommending  changes  to  Medicare   reimbursement rates 
studies  found  that  AWP  was  a  flawed   payments  for  DME  infusion  drugs  3  years   for two vital DME 
benchmark  for  determining  payments,   ago,  yet  CMS  still  reimburses  for  these  
infusion drugs
because  it  does  not  adequately  reflect   drugs  at  prices  that  are  unrelated  to  the  
underscore the need to 
market  prices.   Paying  based  on   amounts  providers  pay  to  acquire  them.   
address Medicares
flawed,  outofdate  AWPs  may  create   Under  Medicares  current  reimbursement  
flawed payment
access  issues  for  vital  drugs  or  lead  to   methodology,  which  is  based  on  average  
excessive  billing.   For  example,   wholesale  prices  (AWPs)  from  October   methodology  
payments  that  are  below  costs  could  
2003,  Medicare  paid  suppliers  65  percent  
make  providers  less  willing  to  provide  
less  than  their  cost  for  pumpadministered  insulin   hindering  beneficiary  
a  drug,  while  payments  that  
access  to  the  drug.   Using  this  same  reimbursement  methodology,  
substantially  exceed  costs  create  
Medicare  paid  suppliers  of  milrinone  lactate,  an  infusion  drug  used  to  
incentives  to  overutilize  a  product.  
treat  congestive  heart  failure,  20  times  the  drugs  cost,  thereby  creating  
How We Did This Review   incentives  for  overutilization  and  improper  billing. 
In  February  2013,  OIG  issued  a  report  
     
to  the  Centers  for  Medicare  &  
    What We Recommend   
Medicaid  Services  (CMS)  regarding  
OIG  again  recommends  that  
Medicare  payments  for  DME  infusion  
CMS  take  action  to  address  
drugs.   In  that  report,  we  made  one  
payment  issues  associated  
recommendation  and  suggested  two  
with  DME  infusion  drugs.   
options  for  its  implementation  (see  
The  agency  could  seek  a  
graphic  on  the  right).   Because  CMS  
legislative  change  that  would  
had  not  taken  steps  to  address  our  
require  payments  for  DME  
recommendation,  and  payments  
infusion  drugs  to  be  based  on  
continued  to  be  misaligned  with  drug  
average  sales  prices  (ASPs),  
costs,  OIG  revisited  this  issue  in  a  2015  
as  is  the  case  with  most  other  
report.  
Part  B  drugs.   Alternatively,  
This  current  report,  following  up  on   CMS  could  address  our  
our  earlier  recommendation,  builds  on   recommendation  by  using  its  
previous  OIG  findings  by  illustrating   existing  authority  to  include  
the  impact  of  the  current  payment   DME  infusion  drugs  in  the  
methodology  on  provider  
competitive  bidding  program.  
reimbursement  rates  for  two  vital  
 
DME  infusion  drugs:   
pumpadministered  insulin  and  
milrinone  lactate.  
Full  report  can  be  found  at  http://oig.hhs.gov/OEI121600340    
 
HHS OIG Recommendation Followup  August 2016  OEI-12-16-00340 
 
CMS Should Address Medicares Flawed Payment 
System for DME Infusion Drugs  
 
BACKGROUND 
 
Medicare reimburses providers of most Part B-covered prescription drugs on the basis of average 
sales prices (ASPs)  a pricing benchmark defined by Federal law and calculated using actual 
sales data.1  However, as required by statute, Medicare sets payment amounts for drugs infused 
through durable medical equipment (DME infusion drugs) at 95 percent of the average wholesale 
prices (AWPs) in effect on October 1, 2003.2,  3  AWPs, which represent list prices rather than 
actual marketplace prices, have been long been recognized as a flawed pricing benchmark.4   
Prior Office of Inspector General (OIG) work consistently found that AWPs, even when timely, 
had little relation to provider acquisition costs.5      
 
In a February 2013 report, we found that, overall, the AWP-based Medicare payment amounts 
for DME infusion drugs substantially exceeded estimated provider acquisition costs, and that 
paying on the basis of ASPs, instead, would have reduced Medicare expenditures by hundreds of 
millions of dollars between 2005 and 2011.6  To ensure that payment amounts for DME infusion 
drugs more accurately reflect acquisition costs, we recommended that the Centers for Medicare 
& Medicaid Services (CMS) either (1) seek a legislative change requiring that DME infusion 
drugs are paid using the ASP-based methodology or (2) include DME infusion drugs in the next 
round of the competitive bidding program.7  As of August 2016, CMS had not taken steps toward 
seeking legislation. CMS has stated that it is considering phasing in competitive bidding for 
DME infusion drugs.  
 
OIG revisited this issue in an April 2015 report and again found that payment amounts for DME 
infusion drugs did not accurately reflect acquisition costs.8  We found that because Medicare 
reimbursement rates still were set at prices from more than a decade earlier, payment amounts 
for approximately one-quarter of DME infusion drugs were below provider acquisition costs   
potentially leading to beneficiary access issues.  However, because payment amounts for most of 
the drugs exceeded acquisition costs  sometimes substantially  we also found that Medicare 
expenditures for DME infusion drugs could have been $251 million lower during one 18-month 
period if the ASP-based payment methodology OIG recommended had been implemented the 
quarter after that report was issued.9    
 
In this recommendation followup report, we build on our earlier work by illustrating the impact 
of the AWP-based payment methodology on provider reimbursement for two vital DME infusion 
drugs:  pump-administered insulin (used to treat diabetes) and milrinone lactate (used to treat 
congestive heart failure).10  Further, we detail how current payment rates may affect beneficiary 
access to vital drugs and may encourage overutilization and excessive billing. 
1  
  RESULTS
 
 
Suppliers have been substantially under-reimbursed for 
pump-administered insulin since 2012, potentially creating 
barriers to patient access 
 
Since 2012, Medicare has consistently reimbursed suppliers of pump-administered insulin at 
amounts substantially below the prices suppliers paid to acquire the drug.  By the fourth quarter 
of 2015, the average cost of insulin had risen to $7.91 per 50 units, almost triple its cost 4 years 
earlier. Medicares payment amount  set by law at 95 percent of the AWP from October 2003  
was just $2.80 for the same number of units.  In other words, the average supplier would lose 
$5.11 (or 65 percent of the cost) on every 50 units billed to Medicare.  
 
Figure 1:  Medicare Payments for Insulin do not Reflect Cost Increases for the Drug  
 
Source: OIG analysis of CMS ASP and payment  amount data for pump-administered insulin, 2016. 
Note: Costs and payment amounts are from the fourth quarter of each year.  
 
As Figure 1 illustrates, suppliers have been under-reimbursed for pump-administered insulin in 
each of the last 4 years (20122015), as rising costs have not been accompanied by 
corresponding increases in payments.  As a result, suppliers are subject to escalating losses when 
providing the drug to Medicare beneficiaries.  If the average cost of insulin holds at $7.91 
through 2016, Medicare suppliers could expect to face an annual net loss of $30 million on the 
drug, or approximately $2,100 per beneficiary receiving pump-administered insulin.11    
 
The media also has taken note of the significant rise in insulin prices and the complex array of 
factors driving these increases (see Figure 2).12  However, despite the skyrocketing prices for 
2  
  pump-administered insulin, Part B payment amounts remain the same as they were a dozen years 
ago. In contrast, Medicare reimbursement rates for injectable insulin, which is covered under 
Part D, can be much more responsive to market price fluctuations, as plan sponsors regularly 
renegotiate the amount they pay suppliers.13  For some beneficiaries, continuously infused 
insulin offers significant clinical benefits over injectable insulin, meaning their medical needs are 
better met by continuing treatment with insulin pumps, covered under Part B, than by switching 
to injectable insulin, covered under Part D. 
 
Figure 2:  Recent Headlines Addressing the Rising Cost of Insulin  
 
 
 
 
 
 
Several sources report that beneficiaries are having difficulties finding suppliers who 
accept Medicare payment for pump-administered insulin  
 
In the 2013 CMS Medicare Ombudsmans report to Congress, the agency stated that it had heard 
from beneficiaries who could not find an insulin supplier willing to accept Medicare after their 
previous suppliers ceased accepting Medicare for the drug.14    
 
[CMS] received feedback that some suppliers, including mail-order companies and local 
retail pharmacies, were refusing to submit claims  to Medicare because the rate for 
Medicare reimbursement did not cover the cost of the drug, making it difficult for some  
beneficiaries to secure a supplier [...] As a result, some beneficiaries have had to change 
suppliers several times, while others have been unable to find another supplier and had to 
pay out of pocket for insulin. CMS caseworkers assisted beneficiaries in these instances 
as much as possible, but it has become increasingly difficult.  
 
Also in 2013, the Congressional Research Service (CRS) contacted OIG regarding potential 
access issues for insulin.  According to CRS, One [Congressional] staffer is receiving 
complaint(s) from Medicare beneficiaries because they are not able to buy insulin for their 
insulin pumps (paid for under the Part B DME benefit).   
 
Similarly, the Lincoln Journal Star reported on a Medicare beneficiary who was having difficulty 
finding a provider for pump-administered insulin:   
3  
   
For about nine months, Carr has had increasing difficulty finding a pharmacy willing to 
supply his insulin on a long-term basis because he is a money-losing proposition for any 
business. And he's not the only one facing the bureaucratic problem[...]  First Liberty 
Medical, a mail order firm Carr traditionally has used, stopped providing insulin for 
Medicare Part B.  Carr, who lives in Wymore, got his insulin one month from a local 
pharmacy, then from Walmart, then from another mail order company.  He's had nine 
providers in the past year.15  
 
The access issues cited above are not caused by insulin shortages, but by Medicare 
reimbursement practices that make it uneconomic for suppliers to provide the drug to 
beneficiaries.  As a result, beneficiaries face difficulties in finding suppliers who accept 
Medicare reimbursement for insulin, so they may have to pay out-of-pocket for a drug they need 
to survive. 
 
Large suppliers of pump-administered insulin have stopped providing the drug to 
Medicare beneficiaries  
 
In July 2010, OIG and CMS received a letter 
from one of Medicares largest suppliers of 
pump-administered insulin.  The supplier 
claimed that the company was unable to 
purchase insulin from manufacturers at prices 
below or equal to Medicare payment rates and  
stated that [w]ithout swift action to correct 
these inequitable policies, [we] will have no 
choice but to stop supplying rapid-acting 
insulin to people with Medicare who use 
insulin pumps.  In 2011, this supplier 
provided pump-administered insulin to          
56 percent (7,739) of the Medicare 
beneficiaries who received the drug; in 2012, 
just 4 beneficiaries received pump-
administered insulin from this supplier, and 
future years, 1 or 0. 
 
Other large suppliers appear to have made the same decision. Three companies (including the 
company referenced above) supplied 70 percent of the insulin paid for under Medicare Part B in 
2011. Just 4 years later, these companies didnt have a single paid claim for the drug, meaning 
that more than 10,000 Medicare beneficiaries had to find new suppliers  suppliers willing to 
incur a loss when providing insulin.   
 
As large suppliers have stopped providing pump-administered insulin to Medicare beneficiaries, 
smaller low-volume suppliers have become the primary billers.  In 2015, 80 percent of the 
insulin paid under Part B was provided by low-volume suppliers, i.e., suppliers associated with 
3 or fewer Medicare beneficiaries. In 2011, just 27 percent of pump-administered insulin was 
4  
  provided by low-volume suppliers.  Because these smaller suppliers are losing money on every 
Medicare prescription they fill for the drug, eventually they may follow the lead of large 
suppliers and stop accepting Medicare for pump-administered insulin.  
 
Medicares payment amount for milrinone lactate was 
20 times its acquisition cost in the fourth quarter of 2015, 
creating potential incentives for overbilling 
 
Milrinone lactate, a life-saving drug used to treat congestive heart failure, is consistently one of 
the highest-expenditure DME infusion products.   In the fourth quarter of 2015, Medicare 
reimbursed suppliers $51.58 per 5 mg of milrinone lactate; during this same period, suppliers of 
the drug paid an average of $2.53 per 5 mg.  Medicare beneficiaries were responsible for a 
copayment of $10.32 per 5 mg  more than 4 times the cost of the drug.  Medicare covered the 
remaining $41.26 (see Figure 3).  To put this in perspective, the average Medicare beneficiary 
who was prescribed milrinone lactate in 2015 received 6,500 mg of the drug, resulting in 
copayments of approximately $13,000 per patient that year.  
 
Figure 3:  Medicare and Beneficiaries Together Pay  More than 
$50 for a Drug that Costs Suppliers Approximately $2.50  
 
Source: OIG analysis of fourth-quarter 2015 Medicare payment data and ASP data for milrinone lactate, 2016.  
5  
   
In contrast to suppliers of pump-administered insulin, who have been subject to substantial losses 
on each prescription, suppliers of milrinone lactate have benefited from years of being 
reimbursed at amounts considerably higher than their costs for the drug.  From 2006 through 
2015, average provider acquisition costs for 5 mg of milrinone lactate have ranged from $1.89 to 
$5.51, while Medicare payment has remained at $51.58.  OIG previously found that Medicare 
expenditures for milrinone lactate would have been reduced by almost $166 million during an 
18-month period if reimbursement for the drug, instead, had been set at 106 percent of ASP.16    
 
The substantial difference between Medicare payment amounts and supplier acquisition 
costs for milrinone lactate provides incentives for overutilization and improper billing  
 
The 357 suppliers who Medicare paid for milrinone lactate in 2015 could each expect to net 
about $64,000 annually per beneficiary based on the difference between payment amounts and 
acquisition costs.17  Thirty-five of these suppliers each would capture over $1 million a year 
above cost, with the top supplier netting approximately $7 million.18    
 
The substantial difference between Medicare payment amounts and supplier acquisition costs for 
milrinone lactate creates incentives for overutilization and improper billing.  Two prepayment 
reviews for milrinone lactate, completed by a Medicare DME contractor in 2015, shed light on 
the extent of overutilization and improper billing that may be occurring.  The first involved 
prepayment medical reviews of 102 milrinone lactate claims.19  Eighty-two of the 102 claims  
were either completely denied or partially denied, resulting in an overall charge denial rate of 
73.4 percent (the overall charge denial rate equals the dollar amount of services determined to be 
billed in error divided by the dollar amount of services under review).  The second involved 
prepayment medical reviews of 75 claims, 60 of which were either completely denied or partially 
denied, resulting in an overall charge denial rate of 75.6 percent.20    
 
In both reviews, the reasons cited for denying payment included:  (1) claims not meeting 
coverage criteria; (2) missing, incomplete, or invalid written orders; and (3) proof-of-delivery 
issues. These reasons call into question whether milrinone lactate should have been provided in 
all of these cases and whether it was over-supplied because of the financial incentives.  
 
 
 
6  
  CONCLUSION 

 
OIG studies have repeatedly shown that Medicares reimbursement methodology for DME 
infusion drugs has resulted in payment amounts that bear little relationship to provider 
acquisition costs. Rather, payment amounts for DME infusion drugs are determined using        
13 year-old AWPs  a benchmark that, even when timely, has been shown to be a flawed basis 
for setting provider reimbursement rates.   
The troubling payment-related issues for two vital DME infusion drugs, as discussed in this 
report, illustrate why Medicares current reimbursement methodology must be revised.  Under-
reimbursement for pump-administered insulin has led some suppliers to cease providing the drug 
to Medicare beneficiaries, which may make it difficult for vulnerable patients to obtain their life-
saving medicine.  In contrast, when Medicare payments greatly exceed provider acquisition 
costs, as is the case with milrinone lactate, there may be incentives for providers to overutilize a 
particular drug, resulting in excessive Medicare payments. 
Moreover, the reimbursement practices affecting the two drugs presented in this analysis are not 
anomalies.  In our previous work, we found that approximately one-quarter of DME infusion 
drugs were reimbursed at amounts that, like insulin, were below their acquisition costs.  Further, 
Medicare reimbursed at least 42 percent of DME infusion drugs at amounts that, like milrinone 
lactate, were more than twice their estimated acquisition costs.   
Therefore, OIG continues to recommend that: 
CMS take action to ensure that Medicare payment amounts for DME infusion drugs 
more accurately reflect provider acquisition costs.   
The agency could choose to seek a legislative change that would require payments for DME 
infusion drugs to be based on ASPs.  We recognize that seeking such a change through the 
legislative proposal process would not, in itself, change payments unless Congress chooses to 
enact this change. Another available option would be for CMS to use its existing authority to 
include DME infusion drugs in the competitive bidding program as soon as possible.  
 
 
 
 
 
 
 
 
7  
  METHODOLOGY 

 
Data Collection and Analysis 
We obtained all paid Part B DME claims for pump-administered insulin and milrinone lactate 
from 2005 through 2015.  We obtained the AWP- and ASP-based payment amounts for both 
drugs in the fourth quarter of each year from CMSs payment limit files.21  Because ASPs are 
based on actual sales in the marketplace, they provide a reasonable estimate of the drug 
providers acquisition costs. We used the ASP-based payment amounts to calculate estimated 
acquisition costs in each quarter by dividing each drugs ASP-based payment amount by 1.06.22   
For each quarter, we calculated the difference between the AWP-based payment amount and the 
estimated acquisition cost for insulin and milrinone lactate.   
 
We summarized annual claims data for insulin and milrinone lactate by national provider 
identifier to determine the number of suppliers who were paid for the drugs each year and the 
amount each supplier received in reimbursement.  We performed a similar analysis by  
beneficiary to determine the number of beneficiaries who received insulin and milrinone lactate, 
as well as the amount each beneficiary received.  
 
Limitations 
We did not review Part B DME claims for accuracy, nor did we review any documentation in 
support of the claims included in our study.  We also did not examine any infusion-related 
services that may have been provided to beneficiaries who received DME infusion drugs.   
 
Under sequestration, the effective payment rate for Part B drugs (including DME infusion drugs) 
was reduced between 1 and 2 percent.23  Neither the published pricing data nor CMS expenditure 
data reflect these reductions. Our acquisition cost comparisons were calculated without regard to 
sequestration and therefore may be minimally overstated.  We did not estimate how a new 
payment methodology might change provider behavior and Medicare spending. 
 
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. 
   
8  
  ACKNOWLEDGMENTS 

 
This report was prepared under the direction of Dave Tawes, Regional Inspector General for 
Evaluation and Inspections in the Baltimore regional office, and Louise Schoggen, Assistant 
Regional Inspector General. 
 
Dave Tawes also served as the team leader for this study.  Other Office of Evaluation and 
Inspections staff from the Baltimore regional office who assisted with the study include Bahar 
Adili. Office of Evaluation and Inspections staff who provided support include Maria 
Maddaloni, Meghan Kearns, and Joanne Legomsky.  Other OIG staff who provided support 
include Jessica Swanstrom. 
   
9  
  ENDNOTES 

 
                                                            
1  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  calendar  quarter  divided  by  the  total  number  of  units  of  the  
drug  sold  by  the  manufacturer  in  that  same  quarter.   The  ASP  is  net  of  any  price  concessions,  such  as  volume  
discounts,  prompt  pay  discounts,  cash  discounts,  free  goods  contingent  on  purchase  requirements,  chargebacks,  
and  rebates  other  than  those  obtained  through  the  Medicaid  drug  rebate  program.    
2  Section  1842(o)(1)(D)(i)  of  the  Act.   According  to  section  20.1.3  of  chapter  17  of  the  Medicare  Claims  Processing  
Manual,  Pub.  No.  10004,  this  methodology  does  not  apply  if  the  drug  is  compounded  or  furnished  incident  to  a  
professional  service.   For  DME  infusion  drugs  not  listed  in  the  compendia  as  of  October  1,  2003,  payments  are  set  
at  95  percent  of  their  first  published  AWPs.   Also,  pursuant  to  section  1842(o)(1)(D)(ii)  of  the  Act,  payments  for  
DME  infusion  drugs  are  not  based  on  95  percent  of  AWP  if  subject  to  competitive  bidding.    
3  Only  a  small  number  of  Part  B  drugs  are  subject  to  the  DME  infusion  payment  methodology.   For  example,  in  an  
earlier  report,  OIG  found  that  31  Part  B  drugs  were  paid  for  under  the  DME  infusion  payment  methodology  from  
the  second  quarter  of  2013  through  the  third  quarter  of  2014.   See  Implementing  OIG  Recommendation  Could  
Have  Reduced  Payments  for  DME  Infusion  Drugs  by  Hundreds  of  Millions  of  Dollars,  OEI121500110,  April  2015.  
4  National  Health  Policy  Forum,  Average  Wholesale  Price  for  Prescription  Drugs:  Is  There  a  More  Appropriate  
Pricing  Mechanism?,  June  2002.  
5  For  example,  see  Medicaid  Drug  Price  Comparison:   Average  Sales  Price  to  Average  Wholesale  Price,  
OEI030500200,  June  2005.    
6  OIG,  Part  B  Payments  for  Drugs  Infused  Through  Durable  Medical  Equipment,  OEI121200310,  February  2013.  
7  The  DME,  Prosthetics,  Orthotics,  and  Supplies  Competitive  Bidding  Program  was  mandated  by  section  302  of  the  
Medicare  Prescription  Drug,  Improvement,  and  Modernization  Act  of  2003,  P.  L.  No.  108173,  to  reduce  expenses  
for  Medicare  and  its  beneficiaries.   DME  suppliers  submit  bids  to  become  Medicare  contract  suppliers  and  to  
furnish  items  in  competitive  bidding  areas.   42  C.F.R.    414.412(a).   Payment  amounts  resulting  from  the  bids  
replace  the  feeschedule  payment  amounts.   Competitive  bidding  has  been  implemented  in  phases  beginning  with  
bids  for  items  with  the  highest  cost  and  highest  volume  or  with  the  largest  savings  potential.   CMS,  Medicare  
Claims  Processing  Manual,  Pub.  10004,  ch.  36,    20.1.  
8  OIG,  Implementing  OIG  Recommendation  Could  Have  Reduced  Payments  for  DME  Infusion  Drugs  by  Hundreds  of  
Millions  of  Dollars,  OEI121500110,  April  2015.  
9  Ibid.  
10  Medicare  Part  B  only  covers  insulin  when  it  is  administered  through  an  external  infusion  pump.   According  to  
CMS,  a  continuous  subcutaneous  insulin  infusion  pump  worn  outside  the  body  (external),  including  the  insulin  
used  with  the  pump,  may  be  covered  for  some  people  with  Medicare  Part  B  who  have  diabetes  and  who  meet  
certain  conditions.   CMS,  Medicare  National  Coverage  Determinations  Manual,  Pub.  No.  10003,  ch.  1,  part  4,    
280.14(B)(1)(e).   Beneficiaries  who  do  not  meet  these  conditions  may  still  receive  injectable  insulin  under  Part  D.   
CMS,  Medicare  Prescription  Drug  Benefit  Manual,  Pub.  No.  10018,  ch.  6,    10.1  and  Appendix  B.   See  also,  CMS,  
Medicares  Coverage  of  Diabetes  Supplies  &  Services  at  https://www.medicare.gov/Pubs/pdf/11022.pdf.  
11  Based  on  our  analysis  of  Part  B  claims  data,  the  average  Medicare  beneficiary  who  used  an  insulin  pump  
received  411  billing  units  the  drug  in  2015  (1  billing  unit  is  equivalent  to  50  units  of  pumpadministered  insulin).  
12  Identifying  factors  that  increased  manufacturer  sales  prices  for  pumpadministered  insulin  was  beyond  the  
scope  of  this  study.  
13  CMS  contracts  with  private  companies,  known  as  plan  sponsors,  which  offer  prescription  drug  plans  to  their  
beneficiaries.   Pharmacy  reimbursement  for  Part  D  drugs  is  based  on  negotiations  between  plan  sponsors  and  
pharmacies  (see  definition  of  negotiated  prices  at  42  CFR    423.100).   The  Government  is  prohibited  from  
interfering  in  these  price  negotiations  (see    1860D11(i)  of  the  Act).  
14  Office  of  the  Medicare  Ombudsman,  Fiscal  Year  2013  Report  to  Congress.   Accessed  online  at  
https://www.cms.gov/Center/SpecialTopic/Ombudsman/2013OmbudsmanReporttoCongress.pdf.  
15  Nancy  Hicks,  Pharmacies  unwilling  to  take  loss  on  insulin  for  Medicare  patients,  Lincoln  Star  Journal,  June  28,  
2013.   Accessed  online  at  http://journalstar.com/news/local/govtandpolitics/pharmaciesunwillingtotakeloss
oninsulinformedicarepatients/article_185a4e3a4873505aa40d245550b4c3b4.html.  
10  
                                                                                                                                                                                                  
16  OIG,  Implementing  OIG  Recommendation  Could  Have  Reduced  Payments  for  DME  Infusion  Drugs  by  Hundreds  of  

Millions  of  Dollars,  OEI121500110,  April  2015.  

17  This  calculation  was  based  on  payment  levels  and  acquisition  costs  from  the  fourth  quarter  of  2015. 
 
18  Calculated  based  on  2015  billing  levels.  

19  NHIC,  Corp.,  DME  MAC  Jurisdiction  A  Resource,  September  2015.   Accessed  online  at 
 
https://med.noridianmedicare.com/documents/6547796/6558261/DME_MAC_A_Resource_37_September+2015. 

pdf/29d07a6ce42749898c563aff1d0ed1dc. 
 
20  NHIC,  Corp.,  DME  MAC  Jurisdiction  A  Resource,  December  2015.   Accessed  online  at 
 
https://med.noridianmedicare.com/documents/6547796/6558261/DME_MAC_A_Resource_38_December+2015. 
pdf/2d32c47605a74a61a337bfab84826c31.  
21  CMSs  payment  limit  file  did  not  include  milrinone  lactate  in  the  fourth  quarter  of  2015.   Therefore,  we  obtained  
the  payment  amount  from  CMSs  nonpublished  ASP  background  file.  
22  There  is  a  twoquarter  lag  between  the  time  when  ASP  sales  occur  and  when  Medicare  payment  amounts  reflect  
those  sales.   As  a  result,  ASPs  in  a  given  quarter  were  calculated  using  ASPbased  payment  amounts  from  two  
quarters  later.  
23  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).   For  further  
explanation,  see  http://www.cms.gov/outreachandeducation/outreach/ffsprovpartprog/downloads/20130308
standalone.pdf.   Because  this  mandatory  payment  reduction  is  applied  after  the  beneficiarys  coinsurance  has  
been  determined,  the  resulting  reduction  in  the  effective  payment  rate  is  between  1  and  2  percent.    
 
11