Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

CALCULATION OF VOLUMEWEIGHTED AVERAGE SALES 


PRICE FOR MEDICARE PART B 


PRESCRIPTION DRUGS


Daniel R. Levinson


Inspector General 


February 2006


OEI-03-05-00310

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 all 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 in order to reduce waste, abuse, and mismanagement and to promote economy 

and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts management and program evaluations 

(called inspections) that focus on issues of concern to HHS, Congress, and the public. The 

findings and recommendations contained in the inspections generate rapid, accurate, and up-todate information on the efficiency, vulnerability, and effectiveness of departmental programs. 

OEI also oversees State Medicaid Fraud Control Units which investigate and prosecute fraud and 

patient abuse in the Medicaid program. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 

allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment 

by providers. The investigative efforts of OI lead to criminal convictions, administrative 

sanctions, 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 

in OIG’s internal operations. OCIG imposes program exclusions and civil monetary penalties on 

health care providers and litigates those actions within HHS. OCIG also represents OIG in the 

global settlement of cases arising under the Civil False Claims Act, develops and monitors 

corporate integrity agreements, develops compliance program guidances, renders advisory 

opinions on OIG sanctions to the health care community, and issues fraud alerts and other 

industry guidance. 
ΔINTROD UCT ION

 EXECUTIVE SUMMAR Y 

OBJECTIVE 

To review the Centers for Medicare & Medicaid Services’ (CMS) 

methodology for calculating volume-weighted average sales price (ASP) 

for Medicare Part B prescription drugs. 

BACKGROUND 

In January 2005, Medicare began paying for most Part B drugs using an 

entirely new pricing methodology based on ASPs. Manufacturers report 

ASPs by national drug codes (NDC), which are 11-digit identifiers that 

indicate the manufacturer, the product dosage form, and the package 

size of a drug. Manufacturers must provide CMS with the ASP and 

sales volume for each of their NDCs on a quarterly basis. 

Although manufacturers submit ASP data by NDCs, CMS does not 

reimburse Medicare providers for drugs using NDCs. Instead, CMS 

uses procedure codes. CMS established the Healthcare Common 

Procedure Coding System (HCPCS) to provide a standardized coding 

system for describing the specific items and services provided in the 

delivery of health care. Given that Medicare reimbursement for Part B 

drugs is based on HCPCS codes rather than NDCs, and that more than 

one NDC may meet the definition of a particular HCPCS code, CMS has 

developed a file that “crosswalks” manufacturers’ NDCs to HCPCS 

codes. The NDC-level information in this crosswalk can then be used to 

calculate an ASP for each covered HCPCS code. 

When CMS calculates payment amounts for HCPCS codes, it must 

weight ASPs at the NDC level by the amount of the drug sold during the 

quarter. Pursuant to section 1847A(b)(1) of the Social Security Act (the 

Act), the Medicare allowance for most Part B drug codes is then equal to 

106 percent of the volume-weighted ASPs for those HCPCS codes. 

Section 1847A(b)(3) of the Act specifies the way to calculate a volumeweighted ASP based on information reported by manufacturers, and 

this calculation assumes that the unit of ASP submission is the lowest 

identifiable quantity of the drug (e.g., 1 milliliter, 1 tablet). However, 

the Act also granted the Secretary of the Department of Health and 

Human Services (Secretary) discretion to establish a different unit for 

reporting ASPs.1 Acting on behalf of the Secretary, CMS opted to 

exercise this discretion and changed the unit of ASP submission to the 

1Social Security Act § 1847A(b)(2)(B). 

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EXE CUTIVE S U MMAR Y 

amount of the drug represented by the NDC.

2 The amount of the drug 

represented by one NDC may differ from the amount of the drug 

represented by another NDC. It may also differ from the amount of the 

drug specified by the HCPCS code. Therefore, collecting ASPs and sales 

volume by NDC means that there is no longer a standard unit across 

NDCs to use in calculating a volume-weighted ASP for the HCPCS code. 

To standardize the amount of the drug contained in each of the NDCs 

associated with a given HCPCS code, CMS introduced billing units into 

the calculation of volume-weighted ASPs. The number of billing units 

in an NDC describes the number of HCPCS code units in that NDC. 

For this study, we obtained volume-weighted ASPs for the first quarter 

of 2005, which CMS calculated based on data submitted by 

manufacturers for the third quarter of 2004. We reviewed CMS’s 

calculations of volume-weighted ASPs for 459 HCPCS codes. We also 

developed an alternate method for calculating volume-weighted ASP 

and used this alternate method to calculate volume-weighted ASPs and 

reimbursement amounts for each of the 459 HCPCS codes. We then 

compared reimbursement amounts calculated using the alternate 

method to those calculated by CMS and identified codes for which the 

reimbursements differed. We also estimated the monetary impact of 

using the Office of Inspector General (OIG) reimbursement methodology 

rather than the CMS reimbursement methodology. 

FINDINGS 

The method CMS uses to calculate volume-weighted average 

sales price is incorrect. We believe that the method CMS uses to 

calculate a volume-weighted ASP for a HCPCS code is mathematically 

incorrect because CMS does not use billing units consistently 

throughout its equation. Although CMS uses billing units to 

standardize ASPs across NDCs for each HCPCS code, it does not 

similarly standardize sales volume across NDCs. As a result, CMS’s 

equation may not always yield a volume-weighted ASP that is 

consistent with the volume-weighted ASP derived from the calculation 

set forth in the law. Recognizing this inconsistency, OIG developed an 

alternate method for calculating the volume-weighted ASP, which 

produces a volume-weighted ASP that is both mathematically correct 

and consistent with the results of the calculation set forth in the ASP 

legislation. To illustrate this point, we calculated the volume-weighted 

242 C.F.R. § 414.802 (2004). 

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EXE CUTIVE S CUTIVE S U MMAR Y

ASP for a HCPCS code using the calculation derived from section 

1847A(b)(3) of the Act, CMS’s calculation, and OIG’s alternate 

calculation. The calculation derived from the statute and OIG’s 

alternate calculation both yielded the same volume-weighted ASP for 

the HCPCS code, whereas CMS’s calculation yielded a different volumeweighted ASP. 

Because CMS calculates volume-weighted ASPs incorrectly, current 

and future reimbursement amounts may not be accurate. According 

to our analysis of prices published in the first quarter of 2005, 

46 percent of HCPCS codes had a reimbursement amount that was 

higher than it should have been, resulting in an estimated $115 million 

loss to Medicare in 2005. For 13 percent of HCPCS codes, CMS’s 

reimbursement amount was lower than it should have been, 

representing an estimated $5 million loss to providers in 2005. For the 

remaining 41 percent of HCPCS codes, there was no difference between 

the reimbursement amount calculated by CMS and the reimbursement 

amount calculated by OIG. In addition, CMS’s incorrect calculation 

affects adjustments to drug reimbursement amounts based on OIG 

pricing comparisons mandated by the Medicare Prescription Drug, 

Improvement, and Modernization Act of 2003 (MMA). 

RECOMMENDATION 

Volume-weighted ASPs form the basis on which providers are 

reimbursed for most Part B drugs. Therefore, any inaccuracies in these 

amounts have significant implications for the Medicare program, its 

health care providers, and its beneficiaries. We believe that CMS’s 

method for calculating volume-weighted ASPs is incorrect, and that the 

incorrect calculation can produce improper reimbursement amounts. 

Although we identified many HCPCS codes for which reimbursement 

was too high in the first quarter of 2005, we also found a number of 

HCPCS codes for which reimbursement was too low. Moreover, the 

ratio between codes with reimbursements that are too high and those 

with reimbursements that are too low may periodically fluctuate given 

that ASP data change from quarter to quarter. 

Furthermore, CMS’s incorrect calculation has implications for future 

adjustments to reimbursement amounts based on OIG pricing 

comparisons mandated by the MMA. It is therefore critical that the 

calculation of volume-weighted ASPs be performed correctly for all 

HCPCS codes. 

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EXE CUTIVE S CUTIVE S U MMAR Y

CMS should change its method for calculating volume-weighted ASPs. 

We propose that CMS adopt an alternate equation, which uses billing 

units consistently and produces a volume-weighted ASP that is both 

mathematically correct and consistent with the results of the calculation 

set forth in section 1847A(b)(3) of the Act. 

AGENCY COMMENTS 

CMS indicated that it will consider the report’s findings in its ongoing 

efforts to enhance implementation of the new ASP payment 

methodology. CMS also stated that it presented the current ASP 

calculation in proposed rule 70 Fed. Reg. 45764, 45844 (August 8, 2005) 

and received public comments on its approach. As CMS gains more 

experience with the ASP data, and as more information becomes 

available, CMS stated that it may consider altering the ASP 

methodology. 

OFFICE OF INSPECTOR GENERAL RESPONSE 

We continue to believe that CMS is calculating volume-weighted ASP 

incorrectly, and that this incorrect calculation results in reimbursement 

amounts that are inaccurate and inconsistent with the ASP payment 

methodology set forth in section 1847A(b)(3) of the Act. According to 

our analysis of prices from the first quarter of 2005, the net effect of 

inaccurate payments was a loss for the Medicare Trust Fund. 

OIG’s concerns about the ASP calculation were echoed in the comments 

CMS received on proposed rule 70 Fed. Reg. 45764, 45844 (August 8, 

2005). In response to the proposed rule, several manufacturers or their 

representatives noted that products are available in different package 

sizes and that a billing code may encompass multiple NDCs; therefore, 

weighting the ASP payment amount by NDCs sold does not reflect the 

true weighted average price per billing unit. These commenters 

suggested that CMS revise its calculation so that the payment limit is 

based on the weighted ASP of the number of billing units sold rather 

than the number of NDCs sold. Commenters on the proposed rule 

recognized that such a change could result in an increase or decrease to 

the reimbursement amount, but recommended that the calculation be 

altered nonetheless. 

We look forward to receiving CMS’s comments on this final report. 

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Δ T ABLE OF CONTENTS 

EXECUTI VE SUMMARY ....................................... i

INTRODUCTI ON ................................................ 1 

FINDI NGS ....................................................... 6 

CMS’s calculation of volume-weighted ASPs is incorrect ........ 6

Reimbursement amounts may not be accurate ................ 8

RECOM M E NDATI O N ........................................... 11 

Agency Comments...................................... 11

Office of Inspector General Response....................... 11

APPENDI XES .................................................. 13 

A: Equations Used to Calculate Volume-Weighted ASP ....... 13

B: Codes for Which CMS’s Reimbursement Amount Exceeded 

OIG’s Reimbursement Amount ........................ 14

C: Codes for Which CMS’s Reimbursement Amount Was Less 

Than OIG’s Reimbursement Amount.................... 19

D: Codes for Which CMS’s Reimbursement Amount and OIG’s 

Reimbursement Amount Were the Same................. 21

E: Centers for Medicare & Medicaid Services’ Comments ...... 26

ACKN O W LEDGMENTS ......................................... 27
Δ INTRODU C TION 

OBJECTIVE 

To review the Centers for Medicare & Medicaid Services’ (CMS) 

methodology for calculating volume-weighted average sales price (ASP) 

for Medicare Part B prescription drugs. 

BACKGROUND 

Medicare Coverage of Prescription Drugs 

Medicare Part B currently covers a limited number of outpatient 

prescription drugs. Those that are covered include injectable drugs 

administered by a physician; certain self-administered drugs, such as 

oral anticancer drugs and immunosuppressive drugs; drugs used in 

conjunction with durable medical equipment; and some vaccines. With 

the advent of the Part D benefit in 2006, Medicare will offer 

beneficiaries additional insurance coverage for certain outpatient 

prescription drugs that are not covered under Part B. 

Use of Average Sales Price in the Medicare Program 

In January 2005, Medicare began paying for most Part B drugs using an 

entirely new pricing methodology based on ASPs.

1 Section 1847A(c) of 

the Social Security Act (the Act), as added by the Medicare Prescription 

Drug, Improvement, and Modernization Act of 2003 (MMA), P.L. 108-

173, defines an ASP as a manufacturer’s 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. The ASP is net of any price concessions such as volume 

discounts, prompt pay discounts, and cash discounts; free goods 

contingent on purchase requirements; chargebacks; and rebates other 

than those obtained through the Medicaid drug rebate program. Sales 

that are nominal in amount are exempted from the ASP calculation, as 

are sales excluded from the determination of “best price” in the 

Medicaid drug rebate program.

2 

1Prior to 2005, the pricing methodology for most Part B drugs was based on the average 

wholesale price (AWP). For 2004, the reimbursement amount for most covered drugs was 

based on 85 percent of the AWP as published in national pricing compendia such as the 

“Red Book.” Prior to 2004, Medicare Part B reimbursed for covered drugs based on the 

lower of either the billed amount or 95 percent of AWP. 

2Pursuant to section 1927 (c)(1)(C)(i) of the Act, “best price” is the lowest price available 

from the manufacturer during the rebate period to any wholesaler, retailer, provider, 

health maintenance organization, nonprofit entity, or governmental entity within the 

United States, with certain exceptions. 

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INTROD UCT ION 

Manufacturers’ Reporting of Average Sales Price Data 

Pursuant to section 1927(b)(3)(A)(iii) of the Act, manufacturers report 

ASPs by national drug codes (NDC), which are 11-digit identifiers that 

indicate the manufacturer, the product dosage form, and the package 

size of a drug. Manufacturers must provide CMS with the ASP and 

volume of sales for each NDC on a quarterly basis, with submissions 

due 30 days after the close of the quarter. 

Section 1847A(b)(2)(B) of the Act defines the unit of ASP submission as 

the lowest identifiable quantity (such as a capsule or tablet, milligram 

of molecules, or grams) of the drug or biological. Accordingly, 

manufacturers would submit, with respect to each NDC, the ASP and 

volume of sales for the smallest amount of the drug contained in the 

NDC—e.g., manufacturers would submit an ASP for 1 milliliter and the 

number of 1-milliliter units sold. However, section 1847A(b)(2)(B) of the 

Act also grants the Secretary of the Department of Health and Human 

Services (Secretary) discretion to establish a different unit for reporting 

ASPs for years after 2004. Acting on behalf of the Secretary, CMS opted 

to exercise this discretion and changed the unit of ASP submission from 

the lowest identifiable quantity of the drug (e.g., 1 milliliter, 1 tablet) to 

the amount of the drug represented by the NDC (e.g., 50 milliliters, 

100 tablets).3 Therefore, manufacturers currently report an ASP for the 

amount of the drug in the NDC rather than for the smallest identifiable 

quantity of the drug. 

Use of Healthcare Common Procedure Coding System Codes 

Although manufacturers submit ASP data by NDCs, CMS does not 

reimburse Medicare providers for drugs using NDCs. Instead, CMS 

uses procedure codes. CMS established the Healthcare Common 

Procedure Coding System (HCPCS) to provide a standardized coding 

system for describing the specific items and services provided in the 

delivery of health care. Each HCPCS code for drugs defines the drug 

name and dosage size but does not specify manufacturer information or 

package size data. 

Given that Medicare reimbursement for Part B drugs is based on 

HCPCS codes rather than NDCs, and that more than one NDC may 

meet the definition of a particular HCPCS code, CMS has developed a 

file that “crosswalks” manufacturers’ NDCs to HCPCS codes. The NDClevel information in this crosswalk can then be used to calculate an ASP 

for each covered HCPCS code. Under the ASP pricing methodology, the 

342 C.F.R. § 414.802 (2004). 

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INTROD UCT ION

Medicare allowance for most Part B drugs is equal to 106 percent of the 

ASP for the HCPCS code. Medicare beneficiaries are responsible for 

20 percent of this amount in the form of coinsurance. 

Calculation of Volume-Weighted ASP 

Calculation of a Volume-Weighted ASP Based on the Methodology Set Forth in 

the Law. As mentioned above, manufacturers submit ASPs by NDCs, 

and more than one NDC may meet the definition of a HCPCS code. 

These multiple NDCs are then used to calculate an ASP for the HCPCS 

code. However, each NDC does not contribute equally toward the 

payment amount for a HCPCS code. Consistent with section 

1847A(b)(3) of the Act, when payment amounts for HCPCS codes are 

calculated, ASPs at the NDC level must be weighted by the amount of 

the drug sold during the quarter. This means that the ASP for a drug 

with a high volume of sales will have greater influence on the 

reimbursement amount for a HCPCS code than an ASP for a drug with 

a low volume of sales. Section 1847A(b)(3) of the Act describes the 

following equation for calculating volume-weighted ASP: 

Volume-Weighted ASP Sum of (ASP for One Unit * Number of Units Sold ) 

for One Unit = 

Sum of Number of Units Sold 

This equation assumes that the unit of ASP submission, as defined in 

section 1847A(b)(2)(B) of the Act, is the lowest identifiable amount of 

the drug. Therefore, the equation yields a volume-weighted ASP for the 

lowest identifiable amount of the drug—e.g., a volume-weighted ASP for 

1 milliliter or 1 tablet. This amount can then be multiplied by the 

amount of the drug specified by the HCPCS code, which results in the 

volume-weighted ASP for the HCPCS code.4 For example, if a HCPCS 

code represents 5 milliliters of a drug, and the volume-weighted ASP for 

1 milliliter of the drug as determined by the calculation in the law is $2, 

then the volume-weighted ASP for the HCPCS code would be 5 times 

$2, or $10. 

Calculation of a Volume-Weighted ASP According to CMS. The calculation 

specified in the statute uses the lowest identifiable amount of the drug 

as the standard unit of the drug across NDCs. However, because CMS 

exercised its discretion and changed the unit of ASP submission from 

4The statute does not specifically address converting the volume-weighted ASP for the 

lowest identifiable amount of the drug to a reimbursement amount for the HCPCS code. 

However, the conversion can be achieved by multiplying the volume-weighted ASP for one 

unit by the amount of the drug specified by the HCPCS code. 

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INTROD UCT ION

the lowest identifiable amount of the drug to the entire amount of the 

drug represented by the NDC, the calculation described in the law could 

not be applied exactly as written. 5 The entire amount of the drug 

contained in an NDC may differ from one NDC to the next. It may also 

differ from the amount of the drug specified by the HCPCS code. 

Therefore, collecting ASPs and sales volume by NDCs means that there 

is no longer a standard unit across NDCs to use in calculating a volumeweighted ASP for the HCPCS code. It was therefore necessary for CMS 

to modify the method for calculating a volume-weighted ASP described 

in the law. 

To standardize the amount of the drug contained in each of the NDCs 

associated with a given HCPCS code, CMS introduced billing units into 

the calculation of a volume-weighted ASP. The number of billing units 

in an NDC, which CMS calculates as part of its crosswalk files, 

describes the number of HCPCS code units that are in that NDC. For 

instance, an NDC may contain a total of 10 milliliters of Drug A, but the 

corresponding HCPCS code may be defined as only 5 milliliters of Drug 

A. In this case, there are two billing units in the NDC. The equation 

that CMS uses to calculate a volume-weighted ASP is as follows: 

ASP for NDC * Number of NDCs Sold 

Volume-Weighted ASP Sum of 

Billing Units in NDC for the Billing Unit of = HCPCS Code 

Sum of Number of NDCs Sold 

METHODOLOGY 

We obtained CMS’s volume-weighted ASPs for the first quarter of 2005, 

which were calculated based on NDC-level data submitted by 

manufacturers for the third quarter of 2004. In addition, we obtained 

the file that CMS used to crosswalk NDCs to their corresponding 

HCPCS codes. Both the volume-weighted ASPs and the crosswalk file 

were updated as of January 13, 2005. 

As of January 13, 2005, CMS had established prices for 459 HCPCS 

codes based on the ASP reimbursement methodology. This total 

excludes HCPCS code J3490, which is defined as “unclassified drugs.” 

Reimbursement amounts for the 459 HCPCS codes were based on ASP 

data for 2,399 NDCs. We reviewed the method CMS used to calculate a 

volume-weighted ASP for each of the 459 HCPCS codes, examining each 

5Discretion to change the unit of ASP submission is permitted by section 1847A(b)(2)(B) of 

the Act. 

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INTROD UCT ION

step to ensure that CMS’s calculation was mathematically correct. 

However, we did not verify the accuracy of the billing unit information 

contained in CMS’s crosswalk file. 

We concluded that CMS’s calculation was problematic, and therefore 

developed an alternate method for calculating a volume-weighted ASP 

and used this method to calculate alternate volume-weighted ASPs for 

each of the 459 HCPCS codes. Under this method, billing units are used 

as the standard unit across all NDCs for a particular HCPCS code, just 

as they are in CMS’s calculation. However, the Office of Inspector 

General’s (OIG) calculation uses billing units differently than CMS’s 

calculation. OIG’s alternate equation is as follows: 

Volume-Weighted ASP Sum of (ASP for NDC * Number of NDCs Sold ) 

for the Billing Unit of = HCPCS Code Sum of (Number of NDCs Sold * Billing Units in NDC) 

As mentioned earlier, the Medicare allowance for a HCPCS code is 

equal to 106 percent of the volume-weighted ASP. Therefore, to 

determine what the Medicare reimbursement amount would be 

according to the alternate calculation, we multiplied OIG’s volumeweighted ASPs for each of the 459 codes by 1.06. We then compared our 

reimbursement amounts to CMS’s reimbursement amounts and 

identified codes for which the reimbursements differed. To estimate the 

monetary impact of using the OIG reimbursement rather than the CMS 

reimbursement, we first subtracted OIG’s first quarter 2005 

reimbursement amount from CMS’s first quarter 2005 reimbursement 

amount for each HCPCS code. We then multiplied the difference by the 

number of services that were allowed by Medicare for each HCPCS code 

in 2004, as reported in CMS’s Part B Extract and Summary System 

(BESS).

6 This estimate assumes that the volume-weighted ASP for 

each HCPCS code will remain consistent throughout 2005. However, 

the ASP amounts submitted by manufacturers may actually vary from 

quarter to quarter. 

Standards 

This study was conducted in accordance with the “Quality Standards for 

Inspections” issued by the President’s Council on Integrity and Efficiency 

and the Executive Council on Integrity and Efficiency. 

6At the time of extraction, BESS data were 96 percent complete for HCPCS codes processed 

by local carriers and 91 percent complete for HCPCS codes processed by the durable 

medical equipment regional carriers. 

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Δ FINDINGS

The method CMS uses to 

calculate a volume-weighted 

The method CMS uses to calculate volumeweighted average sales price is incorrect 

ASP for a HCPCS code is 

mathematically incorrect because CMS does not use billing units 

consistently throughout its equation. Although CMS uses billing units 

to standardize ASPs across NDCs for each HCPCS code, it does not 

similarly standardize sales volume across NDCs. As a result, CMS’s 

equation may not always yield the same volume-weighted ASP as that 

derived from the equation set forth in section 1847A(b)(3) of the Act.7 

To address this inconsistency, OIG developed an alternate method for 

calculating a volume-weighted ASP. The alternate calculation corrects 

the deficiencies in CMS’s calculation by multiplying the number of 

NDCs sold by the number of billing units in the NDC in both the 

numerator and denominator of the equation. As a result, OIG’s 

alternate calculation produces a volume-weighted ASP that is both 

mathematically correct and consistent with the results of the ASP 

calculation set forth in the Act. A more detailed explanation of OIG’s 

equation is presented in Appendix A. 

To illustrate this point, we calculated volume-weighted ASP for HCPCS 

code X using the calculation derived from the statute, CMS’s 

calculation, and OIG’s alternate calculation. In this example, there are 

four different NDCs that meet the description of HCPCS code X, which 

is defined as 5 milliliters of Drug A. The table on the next page provides 

ASP information for each of the four NDCs. Columns C and D 

demonstrate the way that manufacturers would have submitted the 

ASP data if CMS had used the original unit of ASP submission (i.e., the 

lowest identifiable quantity of the drug). Columns E and F illustrate 

the way that manufacturers would currently submit the ASP and sales 

volume for each of the NDCs (i.e., in terms of NDC units). Column G 

shows the number of 5-milliliter units that are contained in each of the 

four NDCs associated with HCPCS code X. 

As shown on the next page, CMS’s calculation yields a volume-weighted 

ASP for HCPCS code X that is $0.73 higher than the volume-weighted 

ASP derived from either the calculation specified in section 1847A(b)(3) 

of the Act or OIG’s alternate calculation. 

7The calculation described in section 1847A(b)(3) of the Act does consistently use a 

standardized unit (i.e., the lowest identifiable quantity of the drug). 

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F I NDING S 

 Calculating A Volume-Weighted ASP for HCPCS Code X (5 mL of Drug A) 

ASP Information for Four NDCs Associated With HCPCS Code X 

A B C D E F G 

NDC 

Total Amount 

of Drug 

in NDC 

ASP 

for One Unit 

(1 mL) 

Number 

of 1-mL Units 

Sold 

ASP 

for 

Entire NDC 

Number 

of 

NDCs Sold 

Billing Units 

in NDC 

1 2 mL $4.35 57,600 $8.70 28,800 0.4 

2 2 mL $4.25 84,660 $8.50 42,330 0.4 

3 3 mL $3.98 116,640 $11.94 38,880 0.6 

4 4 mL $3.14 210,760 $12.56 52,690 0.8 

Billing Units in NDC 

* Number of NDCs Sold ASP for NDC Sum of 

1. Volume-Weighted ASP for HCPCS Code X Based on the Calculation in the Law 

Sum of (ASP for One Unit * Number of Units Sold) Amount of Drug Specified Volume-Weighted ASP * = Sum of Number of Units Sold by HCPCS Code for HCPCS Code 

($4.35 * 57,600) + ($4.25 * 84,660) + ($3.98 * 116,640) + ($3.14 * 210,760) 

* 5 mL = $18.49 

57,600 + 84,660 + 116,640 + 210,760 

2. Volume-Weighted ASP for HCPCS Code X Based on CMS’s Calculation 

Volume-Weighted ASP 

Sum of Number of NDCs Sold = for HCPCS Code 

$8.70 * 28,800 + $8.50 * 42,330 + $11.94 * 38,880 + $12.56 * 52,690 

0.4 0.4 0.6 0.8 

= $19.22 

28,800 + 42,330 + 38,880 + 52,690 

3. Volume-Weighted ASP for HCPCS Code X Based on OIG’s Calculation 

Sum of (ASP for NDC * Number of NDCs Sold ) Volume-Weighted ASP 

Sum of (Number of NDCs Sold * Billing Units in NDC) = for HCPCS Code 

($8.70 * 28,800) + ($8.50 * 42,330) + ($11.94 * 38,880) + ($12.56 * 52,690) 

= $18.49 

(28,800* 0.4) + (42,330 * 0.4) + (38,880 * 0.6) + (52,690 * 0.8) 

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F F I NDING S I NDING S

We believe that the discrepancy between CMS’s results and the results 

of the other two calculations stems from the fact that CMS uses billing 

units to standardize ASPs but not the number of NDCs sold. In the 

numerator of its equation, CMS standardizes ASPs across NDCs by 

calculating an ASP per billing unit for each NDC. 8 However, CMS does 

not convert the number of NDCs sold into the number of billing units 

sold in the numerator, nor does CMS convert NDCs sold into billing 

units sold in the denominator. Instead, CMS continues to use the 

number of NDCs sold. CMS treats these sales figures as if they 

represent a standard amount of the drug when, in fact, the amount of 

the drug in each NDC may vary from one NDC to the next. Summing 

the number of NDCs sold across NDCs is similar to concluding that 

5 nickels, 2 dimes, and 1 quarter equals 8 cents because 5+2+1=8. 

Because CMS calculates volume-weighted 

ASPs incorrectly, current and future 

reimbursement amounts may not be accurate 

Volume-weighted ASPs form the 

basis for the reimbursement of most 

Part B drugs. Therefore, the 

incorrect calculation of volumeweighted ASPs has a significant impact on the Medicare program, its 

health care providers, and its beneficiaries. 

The method CMS uses to calculate volume-weighted ASPs often results in 

reimbursement amounts that are either too high or too low 

According to our analysis of data from the first quarter of 2005, almost 

60 percent of published HCPCS codes had a reimbursement amount 

that was either too high or too low when compared to the results of 

OIG’s alternate calculation. Reimbursement amounts for the remaining 

HCPCS codes would have been the same regardless of whether CMS’s 

or OIG’s calculation was used. 

For 46 percent of HCPCS codes, CMS’s reimbursement amount was too high. 

For 212 of the 459 HCPCS codes, the Medicare reimbursement amount as 

calculated by CMS was higher than the Medicare reimbursement amount 

as calculated by OIG. Of these HCPCS codes, 18 had a reimbursement 

amount that was at least twice as much as it would have been using OIG’s 

method, and 3 had a reimbursement amount that was at least 5 times 

what it would have been using the OIG method. 

8The ASP per billing unit is the ASP for the entire NDC divided by the number of billing 

units in the NDC. In terms of the table on page 7, this would be Column E divided by 

Column G. 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 8 
F I NDING S 

Based on the number of services allowed in 2004, the Medicare program 

and its beneficiaries would pay an estimated $115 million less in 2005 if 

reimbursement amounts were calculated using OIG’s method rather 

than CMS’s method. Adjusting the calculation for just two codes, J9217 

and J2275, would result in an estimated savings of almost $50 million 

for the Medicare program in the year 2005. 9 A list of all 212 HCPCS 

codes is presented in Appendix B. 

For 13 percent of HCPCS codes, CMS’s reimbursement amount was too low. For 

61 of the 459 HCPCS codes, the Medicare reimbursement amount as 

calculated by CMS was lower than the Medicare reimbursement amount 

as calculated by OIG. Of these HCPCS codes, seven had a reimbursement 

amount that was at least 10 percent lower than it would have been using 

OIG’s calculation. 

We estimate that providers who bill Medicare for the 61 HCPCS codes 

would gain about $5 million in the year 2005 if OIG’s method for 

calculating a volume-weighted ASP were used instead of CMS’s method. 

In fact, providers who bill Medicare for one HCPCS code alone, J2430, 

would receive an estimated $1.6 million more in the year 2005. 10 A list 

of all 61 HCPCS codes is presented in Appendix C. 

For the remaining 41 percent of HCPCS codes, there was no difference between 

the reimbursement amount calculated by CMS and the reimbursement amount 

calculated by OIG. CMS and OIG calculations yielded the same result for 

the remaining 186 HCPCS codes. In these cases, CMS’s inconsistent use 

of billing units did not affect the results, usually because there was only 

one NDC used to price the HCPCS code and therefore no need to weight 

the data by volume. A list of these 186 HCPCS codes is presented in 

Appendix D. 

CMS’s incorrect calculation of volume-weighted ASPs affects statutory 

mandates to monitor and adjust drug reimbursement amounts 

To monitor new reimbursement amounts based on ASPs, section 

1847A(d)(2)(B) of the Act mandates that OIG perform comparisons 

between ASPs and both average manufacturer prices (AMP) and widely 

available market prices (WAMP). If OIG determines that the ASP for a 

drug exceeds either the AMP or the WAMP by 5 percent, the Secretary 

9HCPCS code J9217 represents leuprolide acetate (for depot suspension), 7.5 mg; and 

HCPCS code J2275 represents an injection of morphine sulfate (preservative-free sterile 

solution), per 10 mg. 

10HCPCS code J2430 represents an injection of pamidronate disodium, per 30 mg. 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 9 
F I NDING S 

may substitute the payment amount for that drug product with the lower 

of either the WAMP or 103 percent of the AMP. 

CMS’s incorrect calculation affects the outcome of future pricing 

comparisons performed by OIG, which in turn affect whether 

reimbursement amounts are lowered. If volume-weighted ASPs and 

volume-weighted AMPs are not calculated correctly, reimbursement 

amounts for some HCPCS codes may be lowered to 103 percent of the AMP 

or the WAMP when they should not be, and reimbursement amounts for 

other codes would remain the same when, according to the statute, they 

may be lowered. 

The following example illustrates a case in which the method used to 

calculate volume-weighted ASPs and AMPs affects the outcome of the 

comparison between the ASP and the AMP. In this example, CMS’s 

calculation results in a volume-weighted ASP of $1.20 and a volumeweighted AMP of $1.10 for a given HCPCS code, while OIG’s calculation 

results in a volume-weighted ASP of $1.17 and a volume-weighted AMP of 

$1.15 for that same HCPCS code. According to CMS’s calculation, the ASP 

exceeds the AMP by 9 percent, which meets the 5-percent threshold 

specified in the Act. The reimbursement amount for this drug would then 

be eligible to be lowered to 103 percent of the AMP, or $1.13. However, 

according to OIG’s calculation, the ASP exceeds the AMP by only 

2 percent, which does not meet the 5-percent threshold. Using OIG’s 

calculation, the reimbursement for this HCPCS code would not be lowered. 

OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 10 
ΔEXE R E C OCUTIVE S MMENDA TU I MMAR O N Y

 RECOMME NDA TION 

Volume-weighted ASPs form the basis on which providers are 

reimbursed for most Part B drugs. Therefore, any inaccuracies in these 

amounts have significant implications for the Medicare program, its 

health care providers, and its beneficiaries. We believe that CMS’s 

method for calculating volume-weighted ASPs is incorrect, and that the 

incorrect calculation can produce improper reimbursement amounts. 

Although we identified many HCPCS codes for which reimbursement 

was too high in the first quarter of 2005, we also found a number of 

HCPCS codes for which reimbursement was too low. Moreover, the 

ratio between codes with reimbursements that are too high and those 

with reimbursements that are too low may periodically fluctuate given 

that the ASP data change from quarter to quarter. 

Furthermore, CMS’s incorrect calculation has implications for future 

adjustments to reimbursement amounts based on OIG pricing 

comparisons mandated by the MMA. It is therefore critical that the 

calculation of volume-weighted ASPs be performed correctly for all 

HCPCS codes. 

CMS Should Change its Method for Calculating Volume-Weighted ASPs 

We propose that CMS adopt an alternate equation, which uses billing 

units consistently and produces a volume-weighted ASP that is both 

mathematically correct and consistent with the results of the calculation 

set forth in section 1847A(b)(3) of the Act. 

AGENCY COMMENTS 

CMS indicated that it will consider the report’s findings in its ongoing 

efforts to enhance implementation of the new ASP payment 

methodology. CMS also stated that it presented the current ASP 

calculation in proposed rule 70 Fed. Reg. 45764, 45844 (August 8, 2005) 

and received public comments on its approach. As CMS gains more 

experience with the ASP data, and as more information becomes 

available, CMS stated that it may consider altering the ASP 

methodology. 

The full text of CMS’s comments can be found in Appendix E. 

OFFICE OF INSPECTOR GENERAL RESPONSE 

We continue to believe that CMS is calculating volume-weighted ASP 

incorrectly, and that this incorrect calculation results in reimbursement 

amounts that are inaccurate and inconsistent with the ASP payment 

methodology set forth in section 1847A(b)(3) of the Act. According to 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 11 
R E C O MMENDA T I ON 

our analysis of prices from the first quarter of 2005, the net effect of 

inaccurate payments is a loss for the Medicare Trust Fund. 

OIG’s concerns about the ASP calculation were echoed in the comments 

CMS received on proposed rule 70 Fed. Reg. 45764, 45844 (August 8, 

2005). In response to the proposed rule, several manufacturers or their 

representatives noted that products are available in different package 

sizes and that a billing code may encompass multiple NDCs; therefore, 

weighting the ASP payment amount by NDCs sold does not reflect the 

true weighted average price per billing unit. These commenters 

suggested that CMS revise its calculation so that the payment limit is 

based on the weighted ASP of the number of billing units sold rather 

than the number of NDCs sold. Commenters on the proposed rule 

recognized that such a change could result in an increase or decrease to 

the reimbursement amount, but recommended that the calculation be 

altered nonetheless. 

We look forward to receiving CMS’s comments on this final report. 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 12 
ΔAPP E N D I X ~A APPENDIX ~ A 

1. The Equation Used by CMS to Calculate a Volume-Weighted ASP 

In the following equation, a “unit” is defined as the entire amount of the drug 

contained in the NDC: 

ASP for NDC * Number of NDCs Sold 

Volume-Weighted ASP Sum of 

Billing Units in NDC for the Billing Unit of = HCPCS Code 

Sum of Number of NDCs Sold 

2. The Equation Used by OIG to Calculate a Volume-Weighted ASP 

We suggest that CMS’s calculation should be modified by multiplying the number of 

NDCs sold by the number of billing units in the NDC in both the numerator and 

denominator of the equation: 

ASP for NDC * Number of NDCs Sold * Billing Units in NDC 

Volume-Weighted ASP Sum of 

Billing Units in NDC for the Billing Unit of = HCPCS Code 

Sum of (Number of NDCs Sold * Billing Units in NDC) 

However, the terms “Billing Units in NDC” in the numerator of the equation cancel 

each other out: 

ASP for NDC * Number of NDCs Sold * Billing Units in NDC 

Volume-Weighted ASP Sum of 

Billing Units in NDC for the Billing Unit of = HCPCS Code 

Sum of (Number of NDCs Sold * Billing Units in NDC) 

Therefore, OIG’s equation is written in the following way: 

Volume-Weighted ASP Sum of (ASP for NDC * Number of NDCs Sold) 

for the Billing Unit of = HCPCS Code Sum of (Number of NDCs Sold * Billing Units in NDC) 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 13 
Δ APPENDIX ~ B 

Table 1: Codes for Which CMS’s Reimbursement Amount Exceeded 

OIG’s Reimbursement Amount 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

OIG's 

Reimbursement 

Amount 

Difference 

Between 

CMS and OIG 

% Difference 

Between 

CMS and OIG 

Estimated Monetary 

Impact of Correcting 

CMS’s Calculation 

(Gain to Medicare) 

J9217 $253.13 $230.09 $23.04 10.01% $32,374,264.32 

J2275 $11.75 $4.88 $6.87 140.78% $16,556,926.71 

Q0136 $10.18 $10.07 $0.11 1.09% $9,324,462.07 

J7317 $110.27 $101.03 $9.24 9.15% $5,975,905.32 

J9202 $189.79 $184.64 $5.15 2.79% $5,013,185.10 

J1260 $6.61 $5.78 $0.83 14.36% $4,859,645.85 

J1563 $56.72 $55.57 $1.15 2.07% $4,688,351.05 

J2790 $102.36 $97.93 $4.43 4.52% $4,108,156.07 

J1626 $7.09 $6.57 $0.52 7.91% $2,601,538.16 

J7644 $0.29 $0.28 $0.01 3.57% $2,137,831.40 

J1100 $0.14 $0.03 $0.11 366.67% $2,038,162.17 

J7506 $0.22 $0.03 $0.19 633.33% $1,694,987.15 

J2353 $85.39 $82.91 $2.48 2.99% $1,630,845.52 

J3420 $0.47 $0.11 $0.36 327.27% $1,465,893.00 

J9045 $125.47 $124.72 $0.75 0.60% $1,441,580.25 

J9390 $69.09 $65.55 $3.54 5.40% $1,324,887.48 

J1030 $5.36 $4.70 $0.66 14.04% $1,324,384.38 

J1642 $0.07 $0.02 $0.05 250.00% $1,082,555.20 

J1040 $9.75 $9.20 $0.55 5.98% $982,224.10 

J3301 $1.32 $1.19 $0.13 10.92% $952,077.49 

J1080 $12.62 $9.01 $3.61 40.07% $933,574.88 

J1170 $1.71 $1.39 $0.32 23.02% $825,428.80 

J0150 $31.07 $27.74 $3.33 12.00% $804,461.40 

J7507 $3.31 $3.29 $0.02 0.61% $739,314.16 

J2270 $1.86 $0.56 $1.30 232.14% $691,308.80 

J1564 $0.57 $0.55 $0.02 3.64% $671,911.78 

J1245 $1.93 $1.49 $0.44 29.53% $569,168.60 

J1325 $12.16 $11.91 $0.25 2.10% $523,334.75 

J9190 $1.68 $1.43 $0.25 17.48% $437,058.50 

J2271 $5.07 $2.60 $2.47 95.00% $424,229.91 

J0880 $17.72 $17.71 $0.01 0.06% $408,226.02 

J1550 $100.02 $94.54 $5.48 5.80% $395,721.76 

J0256 $3.28 $3.08 $0.20 6.49% $386,787.60 

J0475 $180.49 $176.03 $4.46 2.53% $382,346.88 

J1250 $5.11 $3.69 $1.42 38.48% $348,010.76 

J0152 $70.00 $69.75 $0.25 0.36% $344,831.75 

J7608 $2.30 $1.73 $0.57 32.95% $299,276.22 

J0640 $1.30 $1.22 $0.08 6.56% $287,072.72 

J2912 $0.15 $0.03 $0.12 400.00% $276,065.04 

J9000 $4.25 $3.92 $0.33 8.42% $265,254.99 

J9265 $15.85 $15.72 $0.13 0.83% $243,959.95 

J0895 $15.67 $15.40 $0.27 1.75% $182,897.19 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 14 
APP E N D I X ~B 

Table 1: Codes for Which CMS’s Reimbursement Amount Exceeded 

OIG’s Reimbursement Amount 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

OIG's 

Reimbursement 

Amount 

Difference 

Between 

CMS and OIG 

% Difference 

Between 

CMS and OIG 

Estimated Monetary 

Impact of Correcting 

CMS’s Calculation 

(Gain to Medicare) 

J2260 $4.77 $4.49 $0.28 6.24% $173,673.64 

Q0179 $30.86 $28.92 $1.94 6.71% $159,836.60 

J1885 $0.64 $0.50 $0.14 28.00% $158,952.64 

J9214 $13.12 $13.06 $0.06 0.46% $136,586.58 

J7669 $0.26 $0.25 $0.01 4.00% $135,115.32 

J2997 $30.15 $27.10 $3.05 11.25% $125,806.40 

J1580 $1.44 $0.52 $0.92 176.92% $124,395.04 

J3303 $1.76 $1.37 $0.39 28.47% $124,372.17 

J9260 $2.16 $1.53 $0.63 41.18% $109,302.48 

Q0187 $1,043.05 $1,037.96 $5.09 0.49% $103,820.73 

J1745 $53.08 $53.07 $0.01 0.02% $93,175.94 

J2175 $1.37 $0.85 $0.52 61.18% $91,967.72 

J1950 $445.11 $429.96 $15.15 3.52% $78,295.20 

J1644 $0.10 $0.04 $0.06 150.00% $75,384.24 

J2300 $1.33 $0.54 $0.79 146.30% $73,007.85 

J2250 $0.48 $0.29 $0.19 65.52% $67,366.02 

J2820 $21.67 $21.59 $0.08 0.37% $58,779.84 

J3010 $0.27 $0.24 $0.03 12.50% $56,022.66 

J9090 $13.91 $11.91 $2.00 16.79% $54,766.00 

J2355 $243.35 $241.67 $1.68 0.70% $46,045.44 

J1200 $0.94 $0.88 $0.06 6.82% $43,953.60 

J3370 $2.42 $2.27 $0.15 6.61% $42,812.10 

J0280 $0.50 $0.35 $0.15 42.86% $41,536.95 

J1817 $2.18 $2.15 $0.03 1.40% $39,502.35 

J3410 $0.35 $0.08 $0.27 337.50% $37,937.43 

J0698 $5.02 $4.32 $0.70 16.20% $37,765.00 

J9062 $18.37 $17.94 $0.43 2.40% $36,858.31 

J7060 $0.79 $0.69 $0.10 14.49% $35,240.00 

J7051 $0.01 $0.00 $0.01 N/A $34,727.40 

J1940 $0.49 $0.35 $0.14 40.00% $33,559.82 

J2010 $3.48 $3.33 $0.15 4.50% $31,658.10 

J3480 $0.08 $0.04 $0.04 100.00% $29,124.64 

J9182 $4.51 $4.35 $0.16 3.68% $28,641.60 

J7070 $2.73 $2.22 $0.51 22.97% $28,536.54 

J2060 $1.27 $0.98 $0.29 29.59% $27,982.97 

J9100 $1.68 $1.12 $0.56 50.00% $27,009.36 

Q0180 $47.72 $43.33 $4.39 10.13% $26,620.96 

J2150 $1.02 $0.75 $0.27 36.00% $26,580.42 

J1631 $5.80 $5.49 $0.31 5.65% $26,469.35 

J2550 $2.15 $2.05 $0.10 4.88% $24,214.60 

J9001 $356.35 $356.13 $0.22 0.06% $24,175.80 

J0970 $29.67 $28.81 $0.86 2.99% $22,988.66 

J9110 $8.38 $5.64 $2.74 48.58% $19,253.98 

J9250 $0.20 $0.17 $0.03 17.65% $18,879.24 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 15 
APP E N D I X ~B 

Table 1: Codes for Which CMS’s Reimbursement Amount Exceeded 

OIG’s Reimbursement Amount 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

OIG's 

Reimbursement 

Amount 

Difference 

Between 

CMS and OIG 

% Difference 

Between 

CMS and OIG 

Estimated Monetary 

Impact of Correcting 

CMS’s Calculation 

(Gain to Medicare) 

J7192 $0.92 $0.91 $0.01 1.10% $18,782.04 

Q0166 $32.54 $30.80 $1.74 5.65% $17,810.64 

J0690 $0.28 $0.16 $0.12 75.00% $17,532.00 

J9181 $0.45 $0.43 $0.02 4.65% $15,624.82 

J9070 $2.34 $2.27 $0.07 3.08% $14,788.69 

J0460 $0.26 $0.17 $0.09 52.94% $14,714.28 

J9213 $30.84 $30.31 $0.53 1.75% $14,446.74 

J0670 $1.60 $1.49 $0.11 7.38% $14,305.17 

J7130 $1.25 $0.02 $1.23 6150.00% $13,975.26 

J7042 $0.14 $0.06 $0.08 133.33% $13,844.48 

J9140 $11.25 $10.67 $0.58 5.44% $13,735.56 

J0595 $1.82 $1.22 $0.60 49.18% $13,224.00 

90703 $14.53 $14.33 $0.20 1.40% $12,742.60 

J9091 $23.43 $22.69 $0.74 3.26% $12,601.46 

J1645 $9.92 $9.60 $0.32 3.33% $12,446.08 

J0800 $93.71 $93.70 $0.01 0.01% $12,271.37 

J3315 $180.93 $176.24 $4.69 2.66% $11,274.76 

J9360 $0.96 $0.87 $0.09 10.34% $10,862.55 

J2930 $2.62 $2.58 $0.04 1.55% $10,626.68 

J7030 $0.10 $0.08 $0.02 25.00% $10,563.68 

J2360 $15.95 $15.12 $0.83 5.49% $10,541.00 

J9130 $5.29 $4.98 $0.31 6.22% $9,850.87 

J7040 $0.05 $0.04 $0.01 25.00% $8,872.26 

J0215 $26.65 $26.62 $0.03 0.11% $8,430.90 

J9060 $4.96 $4.94 $0.02 0.40% $6,431.84 

J1390 $14.83 $14.41 $0.42 2.91% $6,092.52 

J3360 $0.56 $0.42 $0.14 33.33% $5,434.10 

Q4076 $0.72 $0.35 $0.37 105.71% $5,375.36 

J9150 $27.42 $24.38 $3.04 12.47% $5,192.32 

J1610 $55.17 $54.65 $0.52 0.95% $2,730.00 

J9375 $7.00 $6.93 $0.07 1.01% $2,728.25 

Q3025 $85.18 $85.17 $0.01 0.01% $2,646.79 

J9092 $46.86 $45.38 $1.48 3.26% $2,641.80 

J0637 $31.88 $31.79 $0.09 0.28% $2,641.23 

J3265 $2.28 $2.00 $0.28 14.00% $2,586.36 

J1190 $211.38 $211.07 $0.31 0.15% $2,553.47 

J9080 $4.69 $4.54 $0.15 3.30% $2,511.45 

J2510 $8.28 $8.02 $0.26 3.24% $2,452.58 

Q0168 $8.31 $8.17 $0.14 1.71% $2,396.66 

J1470 $20.00 $18.91 $1.09 5.76% $2,389.28 

J9017 $33.30 $33.29 $0.01 0.03% $2,339.49 

J2400 $16.52 $16.26 $0.26 1.60% $2,245.36 

J1560 $100.02 $94.54 $5.48 5.80% $2,076.92 

J2540 $1.00 $0.54 $0.46 85.19% $2,018.94 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 16 
APP E N D I X ~B 

Table 1: Codes for Which CMS’s Reimbursement Amount Exceeded 

OIG’s Reimbursement Amount 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

OIG's 

Reimbursement 

Amount 

Difference 

Between 

CMS and OIG 

% Difference 

Between 

CMS and OIG 

Estimated Monetary 

Impact of Correcting 

CMS’s Calculation 

(Gain to Medicare) 

J9370 $3.50 $3.47 $0.03 0.86% $2,014.14 

90632 $44.43 $42.98 $1.45 3.37% $1,771.90 

J2354 $4.67 $4.61 $0.06 1.30% $1,770.66 

J0692 $6.89 $6.87 $0.02 0.29% $1,682.20 

J1490 $40.01 $37.82 $2.19 5.79% $1,600.89 

J1500 $50.01 $47.28 $2.73 5.77% $1,490.58 

J0270 $1.82 $1.22 $0.60 49.18% $1,281.60 

J0697 $4.35 $4.22 $0.13 3.08% $1,248.13 

J0610 $0.05 $0.04 $0.01 25.00% $1,243.90 

J0500 $13.03 $12.70 $0.33 2.60% $1,220.01 

J0694 $11.90 $11.64 $0.26 2.23% $1,193.14 

J0170 $0.29 $0.27 $0.02 7.41% $1,158.54 

90718 $9.25 $9.24 $0.01 0.11% $1,107.64 

J1160 $3.04 $1.51 $1.53 101.32% $962.37 

J1956 $7.64 $7.61 $0.03 0.39% $879.75 

J3105 $12.66 $12.40 $0.26 2.10% $812.76 

J7120 $0.76 $0.75 $0.01 1.33% $776.54 

J0743 $11.72 $11.64 $0.08 0.69% $776.48 

J2765 $0.45 $0.43 $0.02 4.65% $757.36 

J2680 $1.14 $1.13 $0.01 0.88% $716.92 

J2700 $1.61 $1.57 $0.04 2.55% $662.08 

J2020 $23.76 $23.68 $0.08 0.34% $499.04 

J2810 $0.38 $0.30 $0.08 26.67% $495.60 

J1720 $1.81 $1.80 $0.01 0.56% $450.14 

J0295 $6.67 $6.61 $0.06 0.91% $438.24 

J0290 $0.21 $0.20 $0.01 5.00% $427.37 

J1600 $11.30 $11.28 $0.02 0.18% $378.92 

J1460 $10.00 $9.46 $0.54 5.71% $331.56 

J1480 $30.00 $28.37 $1.63 5.75% $324.37 

J0540 $23.02 $23.01 $0.01 0.04% $245.49 

J1530 $80.02 $75.63 $4.39 5.80% $237.06 

J0744 $8.57 $8.47 $0.10 1.18% $224.80 

J0282 $0.38 $0.28 $0.10 35.71% $219.40 

J1455 $10.63 $10.62 $0.01 0.09% $213.90 

J1327 $12.40 $11.90 $0.50 4.20% $184.00 

J1510 $60.05 $56.73 $3.32 5.85% $169.32 

J3230 $2.39 $2.22 $0.17 7.66% $151.64 

J2795 $0.08 $0.07 $0.01 14.29% $148.49 

J9218 $13.49 $13.15 $0.34 2.59% $146.54 

J2560 $3.17 $2.52 $0.65 25.79% $101.40 

J8530 $1.02 $1.00 $0.02 2.00% $99.72 

90375 $62.06 $61.86 $0.20 0.32% $91.00 

J2993 $877.12 $873.92 $3.20 0.37% $70.40 

J1540 $90.08 $85.12 $4.96 5.83% $59.52 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 17 
APP E N D I X ~B 

Table 1: Codes for Which CMS’s Reimbursement Amount Exceeded 

OIG’s Reimbursement Amount 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

OIG's 

Reimbursement 

Amount 

Difference 

Between 

CMS and OIG 

% Difference 

Between 

CMS and OIG 

Estimated Monetary 

Impact of Correcting 

CMS’s Calculation 

(Gain to Medicare) 

J1815 $0.22 $0.21 $0.01 4.76% $41.47 

J1165 $0.61 $0.54 $0.07 12.96% $39.13 

J9380 $17.50 $17.34 $0.16 0.92% $38.72 

J1955 $14.65 $14.10 $0.55 3.90% $30.80 

J1520 $69.96 $66.14 $3.82 5.78% $30.56 

J0456 $23.56 $23.55 $0.01 0.04% $26.78 

Q0163 $0.03 $0.02 $0.01 50.00% $17.80 

Q2009 $5.10 $4.67 $0.43 9.21% $17.63 

J0745 $0.49 $0.45 $0.04 8.89% $16.36 

J8700 $7.17 $7.16 $0.01 0.14% $14.25 

J2280 $3.77 $3.76 $0.01 0.27% $13.60 

J2515 $1.85 $1.73 $0.12 6.94% $11.64 

J0330 $0.10 $0.08 $0.02 25.00% $9.08 

Q0178 $0.08 $0.07 $0.01 14.29% $7.85 

Q0164 $0.06 $0.05 $0.01 20.00% $7.14 

J2710 $0.06 $0.03 $0.03 100.00% $6.87 

J8610 $0.21 $0.19 $0.02 10.53% $5.08 

90633 $21.95 $21.42 $0.53 2.47% $4.77 

J0706 $3.27 $3.26 $0.01 0.31% $3.97 

J0360 $7.13 $7.12 $0.01 0.14% $3.24 

90385 $25.77 $25.47 $0.30 1.18% $2.10 

J0300 $2.47 $2.44 $0.03 1.23% $0.90 

J0470 $18.62 $18.61 $0.01 0.05% $0.88 

J3030 $49.03 $49.00 $0.03 0.06% $0.12 

Q0172 $0.09 $0.08 $0.01 12.50% $0.12 

J2940 $40.16 $40.15 $0.01 0.02% $0.01 

90705 $13.68 $13.67 $0.01 0.07% $0.00 

90707 $35.96 $35.94 $0.02 0.06% $0.00 

90716 $63.23 $62.41 $0.82 1.31% $0.00 

J2941 $42.38 $42.32 $0.06 0.14% $0.00 

J7344 $59.63 $17.68 $41.95 237.27% $0.00 

J7613 $0.07 $0.05 $0.02 40.00% $0.00 

J7614 $1.28 $1.09 $0.19 17.43% $0.00 

J7616 $2.60 $2.50 $0.10 4.00% $0.00 

J9035 $57.08 $57.07 $0.01 0.02% $0.00 

J9305 $40.54 $40.53 $0.01 0.02% $0.00 

Q2019 $1,476.21 $1,468.31 $7.90 0.54% $0.00 

J3246 $7.85 $7.77 $0.08 1.03% Not Available

 Total $115,221,345.93 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 18 
Δ APPENDIX ~ C 

Table 2: Codes for Which CMS’s Reimbursement Amount Was Less Than 

OIG’s Reimbursement Amount 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

OIG's 

Reimbursement 

Amount 

Difference 

Between CMS 

and OIG 

% Difference 

Between 

CMS and OIG 

Estimated Monetary 

Impact of Correcting 

CMS’s Calculation 

(Loss to Medicare) 

J2430 $59.06 $62.15 -$3.09 -4.97% -$1,633,151.52 

J9170 $297.58 $298.75 -$1.17 -0.39% -$1,014,778.44 

J0696 $6.57 $6.76 -$0.19 -2.81% -$435,180.94 

J7517 $2.51 $2.52 -$0.01 -0.40% -$422,437.93 

J9350 $739.69 $744.25 -$4.56 -0.61% -$280,996.32 

J7502 $3.90 $3.94 -$0.04 -1.02% -$257,177.92 

J7631 $0.10 $0.12 -$0.02 -16.67% -$173,850.20 

J0585 $4.71 $4.72 -$0.01 -0.21% -$126,373.93 

J9206 $125.58 $125.64 -$0.06 -0.05% -$64,532.58 

J2405 $3.73 $3.74 -$0.01 -0.27% -$46,285.91 

J9310 $442.01 $442.03 -$0.02 0.00% -$27,610.78 

J9209 $16.69 $16.90 -$0.21 -1.24% -$26,215.14 

J9208 $62.04 $62.91 -$0.87 -1.38% -$23,229.87 

J2788 $24.47 $24.97 -$0.50 -2.00% -$23,170.50 

J1450 $44.85 $49.11 -$4.26 -8.67% -$23,110.50 

J2780 $0.93 $1.00 -$0.07 -7.00% -$20,904.03 

J1650 $5.15 $5.19 -$0.04 -0.77% -$18,403.48 

J0702 $4.51 $4.52 -$0.01 -0.22% -$9,725.23 

J1750 $11.06 $11.07 -$0.01 -0.09% -$8,312.74 

J9040 $55.01 $55.67 -$0.66 -1.19% -$8,300.16 

J1440 $178.94 $178.95 -$0.01 -0.01% -$6,536.72 

J9211 $317.27 $322.72 -$5.45 -1.69% -$5,847.85 

J1630 $2.56 $3.07 -$0.51 -16.61% -$5,755.35 

J1110 $28.75 $29.88 -$1.13 -3.78% -$4,680.46 

J2001 $0.01 $0.02 -$0.01 -50.00% -$2,641.37 

J0780 $3.01 $3.20 -$0.19 -5.94% -$2,369.87 

J9340 $43.57 $43.79 -$0.22 -0.50% -$1,818.08 

J9293 $321.80 $321.82 -$0.02 -0.01% -$1,694.00 

J3260 $1.98 $2.00 -$0.02 -1.00% -$1,234.42 

J1070 $4.91 $4.92 -$0.01 -0.20% -$1,123.93 

J7682 $46.98 $46.99 -$0.01 -0.02% -$906.43 

J2543 $4.59 $4.65 -$0.06 -1.29% -$881.22 

J7509 $0.07 $0.08 -$0.01 -12.50% -$874.54 

J1230 $3.28 $3.29 -$0.01 -0.30% -$344.39 

J1590 $0.44 $0.45 -$0.01 -2.22% -$254.53 

J1051 $4.89 $4.90 -$0.01 -0.20% -$221.16 

J2440 $0.76 $0.84 -$0.08 -9.52% -$178.56 

J1790 $1.02 $1.13 -$0.11 -9.73% -$171.71 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 19 
APP E N D I X ~C 

Table 2: Codes for Which CMS’s Reimbursement Amount Was Less Than 

OIG’s Reimbursement Amount 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

OIG's 

Reimbursement 

Amount 

Difference 

Between CMS 

and OIG 

% Difference 

Between 

CMS and OIG 

Estimated Monetary 

Impact of Correcting 

CMS’s Calculation 

(Loss to Medicare) 

90371 $113.57 $113.94 -$0.37 -0.32% -$167.24 

J2370 $0.63 $0.75 -$0.12 -16.00% -$111.48 

J2185 $3.40 $3.41 -$0.01 -0.29% -$101.18 

J0715 $2.70 $2.73 -$0.03 -1.10% -$95.70 

J0725 $2.58 $2.59 -$0.01 -0.39% -$71.63 

J2320 $3.41 $3.43 -$0.02 -0.58% -$47.96 

J9098 $350.45 $350.46 -$0.01 0.00% -$27.69 

J1800 $5.10 $5.11 -$0.01 -0.20% -$16.58 

J3305 $136.93 $136.94 -$0.01 -0.01% -$10.44 

J1180 $4.00 $4.01 -$0.01 -0.25% -$10.21 

90376 $66.31 $66.36 -$0.05 -0.08% -$6.95 

J0720 $6.10 $6.11 -$0.01 -0.16% -$5.57 

90700 $12.81 $12.96 -$0.15 -1.16% -$2.40 

J2783 $107.01 $107.02 -$0.01 -0.01% -$2.26 

Q2017 $263.67 $265.15 -$1.48 -0.56% -$1.48 

J7110 $10.71 $10.72 -$0.01 -0.09% -$0.72 

90585 $122.54 $122.55 -$0.01 -0.01% -$0.10 

Q2007 $63.36 $63.37 -$0.01 -0.02% -$0.02 

90396 $109.82 $109.83 -$0.01 -0.01% -$0.01 

J0180 $121.12 $121.14 -$0.02 -0.02% $0.00 

J7518 $2.42 $2.43 -$0.01 -0.41% $0.00 

Q0171 $0.10 $0.11 -$0.01 -9.09% $0.00 

Q0176 $0.26 $0.27 -$0.01 -3.70% $0.00

 Total -$4,681,962.33 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 20 
Δ APPENDIX ~ D 

Table 3: Codes for Which CMS’s Reimbursement Amount and OIG’s Reimbursement 

Amount Were the Same 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

$8.77 

OIG's 

Reimbursement 

Amount 

Q2014 $8.77

J2505 $2,273.93 $2,273.93 

J3487 $198.39 $198.39 

J9263 $8.24 $8.24 

J9201 $115.34 $115.34 

J7626 $4.03 $4.03 

J9219 $2,206.27 $2,206.27 

J7320 $200.15 $200.15 

J9355 $52.99 $52.99 

J1441 $282.41 $282.41 

Q0137 $3.54 $3.54 

J2792 $13.40 $13.40 

J7190 $0.52 $0.52 

J9395 $80.51 $80.51 

J9185 $272.09 $272.09 

J7520 $6.73 $6.73 

J1785 $3.91 $3.91 

Q4077 $54.02 $54.02 

J9031 $118.41 $118.41 

J0207 $417.56 $417.56 

J7515 $0.99 $0.99 

J7198 $1.09 $1.09 

J2324 $73.33 $73.33 

J7195 $0.84 $0.84 

J9010 $511.48 $511.48 

J7193 $0.75 $0.75 

J9015 $672.06 $672.06 

J9178 $25.41 $25.41 

J7050 $0.02 $0.02 

Q4054 $3.54 $3.54 

J9160 $1,205.53 $1,205.53 

J9291 $141.14 $141.14 

J0587 $7.76 $7.76 

Q2022 $0.72 $0.72 

J9268 $1,870.88 $1,870.88 

J9290 $65.91 $65.91 

J1756 $0.36 $0.36 

J7342 $15.32 $15.32 

J9096 $6.04 $6.04 

J7500 $0.19 $0.19 

J9300 $2,203.67 $2,203.67 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 21 
APP E N D I X ~D 

Table 3: Codes for Which CMS’s Reimbursement Amount and OIG’s Reimbursement 

Amount Were the Same 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

$0.60 

OIG's 

Reimbursement 

Amount 

J9093 $0.60

J2916 $4.83 $4.83 

J9065 $43.29 $43.29 

J7639 $16.93 $16.93 

J9095 $3.02 $3.02 

J3240 $699.60 $699.60 

J8521 $10.76 $10.76 

J0287 $11.94 $11.94 

J1020 $2.67 $2.67 

J7340 $26.51 $26.51 

J1335 $21.30 $21.30 

J0289 $20.38 $20.38 

J1212 $36.79 $36.79 

J9280 $23.38 $23.38 

J3130 $14.99 $14.99 

J9200 $71.39 $71.39 

J7308 $87.65 $87.65 

J1655 $2.60 $2.60 

J0205 $39.22 $39.22 

J0600 $39.74 $39.74 

J1670 $68.47 $68.47 

J0285 $29.84 $29.84 

J1570 $33.93 $33.93 

J9050 $139.10 $139.10 

J9097 $12.08 $12.08 

J9094 $1.21 $1.21 

J1410 $56.71 $56.71 

J9320 $153.82 $153.82 

J0550 $29.91 $29.91 

J0570 $30.41 $30.41 

J0740 $762.50 $762.50 

J0713 $3.74 $3.74 

J9600 $2,285.15 $2,285.15 

J7194 $0.49 $0.49 

J9245 $388.73 $388.73 

J0476 $67.55 $67.55 

90586 $118.41 $118.41 

J2920 $1.92 $1.92 

J1000 $5.02 $5.02 

90675 $115.02 $115.02 

Q4075 $0.03 $0.03 

J0850 $672.61 $672.61 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 22 
APP E N D I X ~D 

Table 3: Codes for Which CMS’s Reimbursement Amount and OIG’s Reimbursement 

Amount Were the Same 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

$7.49 

OIG's 

Reimbursement 

Amount 

J3120 $7.49

J0580 $60.28 $60.28 

J7513 $380.28 $380.28 

J3475 $0.01 $0.01 

J0530 $11.37 $11.37 

J3465 $4.55 $4.55 

J2760 $22.47 $22.47 

J2322 $13.86 $13.86 

Q0167 $4.00 $4.00 

J2545 $39.05 $39.05 

J2770 $103.25 $103.25 

J7511 $297.78 $297.78 

J9020 $54.52 $54.52 

J1438 $147.16 $147.16 

J0560 $17.29 $17.29 

J3415 $2.36 $2.36 

J2597 $2.47 $2.47 

J0770 $45.09 $45.09 

J0760 $4.07 $4.07 

J7525 $124.27 $124.27 

J3320 $28.65 $28.65 

Q0165 $0.04 $0.04 

J3250 $4.12 $4.12 

J9266 $1,459.51 $1,459.51 

J2321 $6.56 $6.56 

J9230 $10.45 $10.45 

J2501 $4.02 $4.02 

J0130 $431.24 $431.24 

J3100 $2,040.05 $2,040.05 

J1980 $4.71 $4.71 

J1652 $6.74 $6.74 

J1270 $2.80 $2.80 

J2730 $85.79 $85.79 

J1120 $12.70 $12.70 

J8520 $3.24 $3.24 

J9151 $55.99 $55.99 

J9120 $12.07 $12.07 

J7100 $14.05 $14.05 

J0630 $35.03 $35.03 

J0592 $0.82 $0.82 

J7501 $46.88 $46.88 

J1380 $11.36 $11.36 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 23 
APP E N D I X ~D 

Table 3: Codes for Which CMS’s Reimbursement Amount and OIG’s Reimbursement 

Amount Were the Same 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

$1.93 

OIG's 

Reimbursement 

Amount 

J2675 $1.93

J0636 $0.71 $0.71 

J7504 $283.59 $283.59 

J0210 $9.03 $9.03 

J7330 $16,284.90 $16,284.90 

J2690 $0.90 $0.90 

J0515 $3.40 $3.40 

J1835 $36.23 $36.23 

J7516 $20.59 $20.59 

J3364 $8.15 $8.15 

J3365 $407.54 $407.54 

J3486 $18.74 $18.74 

J3411 $0.58 $0.58 

J7310 $4,240.00 $4,240.00 

J0583 $0.15 $0.15 

J1742 $223.65 $223.65 

J1840 $0.23 $0.23 

J7505 $830.01 $830.01 

J2995 $76.32 $76.32 

J1240 $4.73 $4.73 

J1830 $80.53 $80.53 

J1364 $2.94 $2.94 

J2410 $2.29 $2.29 

J3485 $0.96 $0.96 

J1320 $1.79 $1.79 

J1730 $112.01 $112.01 

Q2012 $154.05 $154.05 

J8560 $31.03 $31.03 

J2210 $4.30 $4.30 

J2590 $1.04 $1.04 

J1595 $34.85 $34.85 

J0275 $20.75 $20.75 

Q2002 $2.98 $2.98 

Q0177 $0.07 $0.07 

J1205 $9.13 $9.13 

Q0170 $0.16 $0.16 

Q0169 $0.28 $0.28 

Q2021 $133.75 $133.75 

Q2006 $555.03 $555.03 

J2720 $0.36 $0.36 

Q0175 $0.21 $0.21 

90704 $17.81 $17.81 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 24 
APP E N D I X ~D 

Table 3: Codes for Which CMS’s Reimbursement Amount and OIG’s Reimbursement 

Amount Were the Same 

HCPCS 

Code 

CMS's 

Reimbursement 

Amount 

$14.98 

OIG's 

Reimbursement 

Amount 

90706 $14.98

J0128 $68.62 $68.62 

J0135 $577.56 $577.56 

J0878 $0.28 $0.28 

J2357 $15.32 $15.32 

J2469 $18.22 $18.22 

J2794 $4.60 $4.60 

J3396 $8.99 $8.99 

J7611 $0.07 $0.07 

J7612 $0.87 $0.87 

J8501 $4.62 $4.62 

J8510 $1.91 $1.91 

J9041 $28.38 $28.38 

J9055 $49.64 $49.64 

J1457 $1.25 $1.25 

J1931 $22.74 $22.74 

J7674 $0.41 $0.41 

Q2003 $2.15 $2.15 

Q2008 $11.55 $11.55 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 25 
Δ APPENDIX ~ E 

Comments from the Centers for Medicare & Medicaid Services 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 26 
Δ ACKNOWLEDGMENTS 

This report was prepared under the direction of Robert A. Vito, Regional 

Inspector General for Evaluation and Inspections in the Philadelphia 

regional office, and Linda M. Ragone, Deputy Regional Inspector 

General. Other principal Office of Evaluation and Inspections staff who 

contributed include: 

Lauren McNulty, Team Leader 

Linda Boone Abbott, Program Specialist 

 OE I-03-05-00 310 CALCULAT I O N O F V O L UM E - WE I G H T E D AVERA G E S A L E S P R I CE 27