Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

LIMITATIONS IN MANUFACTURER 

REPORTING OF AVERAGE SALES 

PRICE DATA FOR PART B DRUGS 

Suzanne Murrin 

Deputy Inspector General for 

Evaluation and Inspections 

July 2014 

OEI-12-13-00040 
 

 

EXECUTIVE SUMMARY: LIMITATIONS IN MANUFACTURER REPORTING OF 

AVERAGE SALES PRICE DATA FOR PART B DRUGS 

OEI-12-13-00040 

WHY WE DID THIS STUDY 

Manufacturer-reported average sales prices (ASPs) serve as the basis for most Part B drug 

payment amounts. Complete ASP data ensure that payment amounts are accurate and are 

reflective of all manufacturer sales prices. Previous Office of Inspector General (OIG) work has 

shown that the Centers for Medicare & Medicaid Services (CMS) lacks complete ASP data for 

certain drugs because (1) not all manufacturers that are required to report ASPs are doing so and 

(2) not all manufacturers of Part B drugs are required to report ASPs. OIG has previously 

recommended that CMS consider seeking a legislative change to require all manufacturers of 

Part B drugs to submit ASPs. In response, CMS stated that it would be helpful if OIG provided a 

full analysis of the policy’s implications. 

HOW WE DID THIS STUDY 

We compared data in CMS’s background and crosswalk files—the agency’s two ASP-related 

files—with two national drug compendia to determine the number of manufacturers that did not 

report required ASPs in the third quarter of 2012. We then determined the number of additional 

manufacturers that would be required to submit ASPs if reporting requirements were extended to 

all manufacturers of Part B drugs. We also identified national drug codes (NDCs) with incorrect 

product and pricing information in CMS’s ASP files. Finally, we surveyed CMS officials and 

reviewed CMS policies to determine whether the agency has improved ASP collection and 

verification processes since the publication of OIG’s prior work. 

WHAT WE FOUND 

At least one-third of the more than 200 manufacturers of Part B drugs did not submit ASPs for 

some of their products in the third quarter of 2012, despite being required to do so. 

An additional 45 manufacturers of Part B drugs were not required to report ASPs that quarter. 

Furthermore, for a small number of drugs, inaccuracies in CMS’s ASP files may have affected 

Medicare payments. Finally, CMS has improved its ASP-related processes and procedures; 

however, challenges remain. 

WHAT WE RECOMMEND 

We recommend that CMS (1) continue to assist OIG in identifying and penalizing manufacturers 

that do not meet ASP reporting requirements; (2) seek a legislative change to directly require all 

manufacturers of Part B drugs to submit ASPs; (3) ensure the accuracy of product information 

for NDCs listed in the background and crosswalk files; and (4) finalize the implementation of 

automated ASP-related procedures by using processes related to average manufacturer price as a 

model, and subsequently require all manufacturers to submit ASPs through the automated 

system. CMS concurred with our first, third, and fourth recommendations, but did not concur 

with our recommendation to seek a legislative change. 
 

TABLE OF CONTENTS 

Objectives ....................................................................................................1 

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

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

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

At least one-third of manufacturers did not submit ASPs for some
 

of their Part B drugs in the third quarter of 2012, despite being 

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

At least 45 manufacturers of Part B drugs were not required to 

report ASPs for 443 NDCs in the third quarter of 2012 ..................8 

For a small number of drugs, inaccuracies in CMS’s ASP files 

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

CMS has improved its ASP-related processes and procedures; 

however, challenges remain ...........................................................11
 

Conclusion and Recommendations ............................................................13 

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

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

A: Descriptions and 2012 Medicare Part B Spending for Sample 

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

B: Detailed Methodology for Identifying Part B Drug NDCs Not
 

Listed in the Background File..................................................19 

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

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

 

OBJECTIVES 

1.	 To determine whether manufacturers reported average sales prices 

(ASPs) for all Part B drugs in the third quarter of 2012. 

2.	 To determine the effect on ASP reporting if all manufacturers of Part B 

drugs were required to submit ASPs. 

3.	 To assess the validity and accuracy of data contained in the Centers for 

Medicare & Medicaid Services’ (CMS’s) ASP files. 

4.	 To determine whether CMS has improved its processes for collecting 

and analyzing ASPs. 

BACKGROUND 

ASPs serve as the basis for most Part B drug payment amounts. However, 

previous OIG work has shown that not all manufacturers are reporting the 

required ASP data to CMS.1 Furthermore, because ASP reporting 

requirements are linked to Medicaid drug rebate agreements, some 

manufacturers of Part B drugs—i.e., manufacturers that do not have such 

agreements—are not required to submit ASP data. The nonreporting of 

ASPs may result in Medicare payment amounts that are inaccurate and not 

reflective of all manufacturer sales prices. 

Recent OIG reports recommended that CMS consider seeking a legislative 

change to require all manufacturers of Part B drugs to submit ASPs. In 

response to one such report, CMS stated that for a legislative change to be 

considered, it would be helpful if OIG provided a full analysis of the 

policy’s implications (e.g., the number of additional drugs for which 

manufacturers would be reporting ASPs).2 

Previous OIG work also found issues with the product data compiled by 

CMS (e.g., potentially inaccurate strengths or package sizes) for certain 

Part B drugs.3

 Inaccurate product data could result in incorrect Medicare 

payment amounts and incorrect beneficiary coinsurance. Further, OIG 

found that CMS’s processes for collecting and analyzing ASPs could be 

improved. For example, unlike the automated system in place to collect 

average manufacturer price (AMP) data under Medicaid, CMS manually 

1

 OIG, Comparison of Average Sales Prices to Widely Available Market Prices for 

Selected Drugs, OEI-03-10-00280, January 2012. 2

 OIG, Comparison of Average Sales Prices and Average Manufacturer Prices: An
 

Overview of 2010, OEI-03-11-00410, November 2011. 3

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

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

OEI-03-13-00100, December 2012. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 1 
 

 

 

 

 

 

 

imported ASP data, which could lead to data errors. OIG recommended 

that CMS develop an automated system for collecting ASP data.4 

Medicare Part B Coverage and Payment for Prescription Drugs 

Medicare covers a limited number of outpatient prescription drugs and 

biologicals (hereinafter referred to as drugs) under its Part B benefit, 

including injectable drugs used in the treatment of cancer, certain 

vaccines, oral anticancer drugs, and inhalation drugs used in conjunction 

with durable medical equipment.5 To obtain payment for Part B drugs, 

providers submit claims to Medicare contractors using Healthcare 

Common Procedure Coding System (HCPCS) codes. Each HCPCS code 

defines the drug’s name and the amount of drug represented by one unit of 

the code but does not specify manufacturer or package size information. 

Payments for most Part B drugs are equal to 106 percent of the 

volume-weighted ASP among all drugs represented by the HCPCS code 

(or, if lower, the actual charge billed on the claim).6 Medicare 

beneficiaries are responsible for 20 percent of this amount in coinsurance.7 

Medicare and its beneficiaries spent $13.6 billion for Part B drugs in 2012. 

Although Part B paid for more than 700 drug HCPCS codes that year, 

95 percent of spending was concentrated on just 100 HCPCS codes. 

Manufacturer Reporting Requirements for ASPs 

Pursuant to section 1927(b)(3) of the Act, manufacturers with Medicaid 

rebate agreements must provide CMS with the ASP and sales volume for 

each of their Part B drugs on a quarterly basis.8 Manufacturers typically 

report ASPs by national drug code (NDC), an 11-digit code that is divided 

into three segments identifying (1) the firm that manufactures, distributes, 

4

 OIG, Average Sales Prices: Manufacturer Reporting and CMS Oversight, 

OEI-03-08-00480, February 2010. 

5

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

50428 (August 20, 2003). 

6

 Section 1847A(c) of the Social Security Act (the Act) defines ASP as a manufacturer’s
 

sales of a drug (with certain exceptions) to all purchasers in the United States in a quarter 

divided by the number of units of the drug sold by the manufacturer in that same quarter.
 

The ASP is net of any price concessions other than those obtained through the Medicaid 

drug rebate program (MDRP).
 7

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

a 2-percent reduction in payment in accordance with the Budget Control Act of 2011 and
 

the American Taxpayer Relief Act of 2012 (i.e., sequestration). This mandatory payment 

reduction is applied after the beneficiary’s coinsurance has been determined, resulting in
 

a payment rate for most Part B drugs of 104.3 percent of the volume-weighted ASPs. See 

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

Fee-for-Service (FFS) Program—“Sequestration,” March 8, 2013.
 8

 For Federal financial participation to be available for covered outpatient drugs provided
 

under Medicaid, manufacturers must enter into rebate agreements with the Secretary of 

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

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

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 2 
 

 

 

 

 

or repackages the drug product (i.e., the labeler code); (2) the specific 

strength, dosage form, and formulation of the product; and (3) the 

product’s package size.9 

Manufacturers may face civil money penalties (CMPs) or suspension of 

their rebate agreements if they knowingly provide false information about 

their ASPs or fail to report ASP data within the required timeframe (i.e., 

within 30 days of the close of a quarter).10 OIG has coordinated with CMS 

to identify manufacturers that do not submit ASP (or AMP) data in a 

timely fashion and has initiated actions against certain manufacturers that 

failed to satisfy their submission requirements. 

CMS Calculation and Publication of Payment Amounts 

Because payments for Part B drugs are based on HCPCS codes rather than 

on NDCs and because more than one NDC may meet the definition of a 

particular HCPCS code, CMS must first “crosswalk” manufacturers’ 

NDCs to their matching HCPCS codes. In addition, because the amount 

of a drug represented by an NDC may differ from the amount of a drug 

specified by a HCPCS code, CMS staff often must convert “NDC units” to 

“HCPCS code units” to determine the amount of the drug contained within 

a given HCPCS code. Each quarter, CMS publishes a crosswalk file that 

lists the NDCs matching each Part B drug HCPCS code as well as the 

number of “NDC units” within the HCPCS code. CMS also develops a 

nonpublic quarterly ASP “background” file for internal use, which lists the 

ASPs and number of units sold for all NDCs that meet the definition of 

each Part B drug HCPCS code paid under the ASP methodology.11 

CMS performs numerous checks on the data in the background file, and 

may seek clarification or correction regarding submitted data if the data do 

not pass CMS’s checks. CMS then determines whether to include the 

submitted ASP for each NDC in its calculation of the volume-weighted 

ASP for the HCPCS code.12 Finally, CMS calculates a payment amount by 

multiplying the volume-weighted ASP by 106 percent. 

There is a two-quarter lag between the sales period for which ASPs are 

reported and the effective date of the reimbursement amounts. For 

9

 One manufacturer may have multiple labeler codes. Labelers will hereinafter be 

referred to as “manufacturers.” In addition, a small number of Part B drugs are identified 

using alternative IDs, which do not necessarily include a labeler code, rather than NDCs. 

10 Sections 1927(b)(3)(C)(i) and (ii) of the Act and 42 CFR § 414.804(a)(5). 

11 A quarterly background file will include an NDC if its ASP has been previously 

reported by the manufacturer, regardless of whether its ASP was reported in that 

particular quarter. The background file also contains a few NDCs for which ASPs have 

not been reported but that CMS contractors have identified to be in the market. 

12 CMS assigns a status indicator in the ASP background file for each NDC that specifies 

whether the NDC’s ASP was included in the calculation of volume-weighed ASP. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 3 
 

 

 

example, ASPs reported by manufacturers for the third quarter of 2012 

served as the basis for first-quarter 2013 payment amounts. CMS posts an 

ASP payment amount file and an ASP crosswalk file on its Web site in the 

weeks before the start of the applicable quarter. 

METHODOLOGY 

Data Collection 

Total Part B Expenditures and Utilization. We obtained expenditure and 

utilization data for all Part B drug HCPCS codes in all quarters of 2012 

and the first quarter of 2013 from CMS’s Part B Analytics Report (PBAR). 

ASP Data Files. We obtained from CMS (1) the first-quarter 2013 

payment amount file; (2) the third-quarter 2012 ASP background file (i.e., 

the ASPs on which first-quarter 2013 payment amounts were based) for 

drugs paid in noninstitutional Part B settings13; and (3) the third-quarter 

2012 ASP crosswalk file. 

MDRP-Participating Drug Manufacturer File. We obtained from CMS 

the list of manufacturers participating in the MDRP in the third quarter of 

2012 and their associated labeler codes. 

Drug Compendia. We obtained product information (e.g., strength, 

package size, and package quantity) for the third quarter of 2012 for all 

drugs under review from two national drug compendia: Truven Health 

Analytics’ Red Book and First Databank’s National Drug Data File. 

External Web Sites and 2012 HCPCS Code Level II Reference Book. We 

referred to external Web sites, including those of the U.S. Food and Drug 

Administration (FDA) and individual pharmaceutical manufacturers, as 

well as the HCPCS code reference book, to confirm product and coding 

information when there were discrepancies between CMS’s 

background/crosswalk files and the two national drug compendia. 

CMS Documents and Interviews with Officials. We surveyed CMS staff in 

August 2013 and March 2014 and reviewed CMS policies regarding ASP 

submission procedures. The survey and document review identified 

whether CMS had automated the data collection process and made other 

improvements in collecting, entering, and verifying ASP data. We also 

asked CMS officials regarding challenges they face in improving these 

processes. 

13 Our analysis does not include drugs paid for under the hospital outpatient prospective 

payment system, many of which are also paid on the basis of ASPs. CMS publishes a 

separate ASP file for hospitals. There is substantial overlap in the HCPCS codes listed in 

both files, and the same ASP data are used to derive payment amounts. We do not 

believe that including hospital files in our analysis would have affected our findings. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 4 
 

 

 

 

 

Data Analysis 

Selection of Drugs. We used CMS’s first-quarter 2013 payment amount 

file to identify all 539 HCPCS codes that were paid on the basis of ASPs 

that quarter.14 Because there is a two-quarter lag between the sales period 

for which ASPs are reported and the effective date of the reimbursement 

amounts, the ASPs reflected sales from the third quarter of 2012. We also 

obtained from CMS’ third-quarter 2012 ASP background file a list of all 

4,330 active NDCs that CMS associated with the 539 HCPCS codes. 

We selected a purposive sample of drugs for a portion of our analysis. We 

used PBAR to select 87 high-expenditure Part B drug HCPCS codes that 

constituted 86 percent of total Part B spending in 2012 (see Appendix A).15 

Identifying NDCs Listed in the Background File with Unreported ASPs. 

We examined the status indicator variable for all 4,330 NDCs listed in the 

third-quarter 2012 background file to identify NDCs for which 

manufacturers did not submit ASP data. We matched the labeler codes for 

these NDCs to the participating-manufacturer file to determine whether or 

not the associated manufacturers had Medicaid rebate agreements and 

were thus required to report ASPs. 

Identifying Part B Drug NDCs Not Listed in the Background File. For the 

87 sampled HCPCS codes, we also identified NDCs with unreported ASPs 

that met the definition of a HCPCS code but were not included in the 

background file. Using Red Book and the National Drug Data File, we 

developed a list of all NDCs associated with the 87 HCPCS codes and 

matched this list against the background file. For NDCs that appeared in 

the compendia but not the background file, we used other external 

resources (such as the HCPCS Code Level II Reference Book) to determine 

whether the NDC should have been listed in the background file. Please 

see Appendix B for a detailed description of this comparison. 

Identifying NDCs with ASPs Reported by Manufacturers Without Rebate 

Agreements. For all 539 HCPCS codes, we used the background file and 

the manufacturer file to determine the number of manufacturers that did 

not have rebate agreements yet still submitted ASPs in the third quarter of 

2012. Although manufacturers without rebate agreements are not required 

to report ASPs, such reporting helps ensure that CMS has the information 

needed to calculate payment amounts that are reflective of all sales in the 

14 We excluded HCPCS codes that represent Not Otherwise Classified (NOC) drugs. 15 We initially selected 100 HCPCS codes with the highest total expenditures in 2012 

(constituting 95 percent of spending). We removed 3 of the 100 codes because they were 

paid for on the basis of average wholesale prices, 5 codes because they were priced by 

individual Medicare contractors, and 5 codes because they represented NOC drugs. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 5 
 

 

 

 

 

 

marketplace. We estimated the effect on payment amounts if these 

manufacturers had chosen not to report ASPs that quarter.16 

Assessing the Accuracy and Validity of ASP Data in CMS’s ASP Files. We 

identified any NDCs for which the product information (e.g., strength, 

package size, and package quantity) listed in the third-quarter 2012 ASP 

background and crosswalk files did not match the information published in 

the national drug compendia. We used external sources, such as 

manufacturer Web sites, to resolve any conflicts between CMS’s files and 

the compendia. Using this product information, we also verified CMS’s 

conversions of NDC units to HCPCS units for each code. Incorrectly 

converted units could result in inaccurate Medicare payment amounts and 

beneficiary coinsurance. In addition, many Medicaid State agencies use 

CMS’s conversions on the crosswalk file to adjust the HCPCS units listed 

on Medicare “crossover” claims.17 

Assessing Improvements in CMS’s ASP-Related Processes. We reviewed 

CMS policies and surveyed CMS officials to determine whether the 

agency had automated manufacturer ASP submissions, as recommended 

by OIG, or had made other improvements to its collection, entry, and 

verification processes since the publication of OIG’s earlier report.18 

Limitations 

We did not determine whether manufacturers’ calculations of ASPs were 

correct. In addition, we did not verify the accuracy or completeness of 

drug product information listed in the national drug compendia, the FDA 

Web site, or in any of the other sources we used to evaluate CMS’s ASP 

files. We also did not verify that NDCs listed in the compendia 

represented drugs that were actually manufactured and sold in the third 

quarter of 2012. Findings related to the purposive sample of 

87 high-expenditure HCPCS codes cannot be generalized to all Part B 

drug HCPCS codes paid on the basis of ASPs in 2012. 

Standards 

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors General 

on Integrity and Efficiency. 

16 To do this, we removed any “nonrequired” NDCs (i.e., NDCs for which manufacturers 

were not required to report ASPs) and recalculated the volume-weighted ASP for each 

HCPCS code. We then calculated the percentage difference between the actual payment 

amount and new payment amount. 

17 “Crossover” claims are claims in which both Medicare and Medicaid pay a portion. 

Incorrect conversions are a frequent source of Medicaid drug rebate disputes. 

18 OIG, Average Sales Prices: Manufacturer Reporting and CMS Oversight, 

OEI-03-08-00480, February 2010. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 6 
 

 

 

 

 

 

FINDINGS 

At least one-third of manufacturers did not submit 

ASPs for some of their Part B drugs in the third 

quarter of 2012, despite being required to do so 

In the third quarter of 2012, at least 207 manufacturers of Part B drugs 

were operating under Medicaid drug rebate agreements and were thus 

required to report ASPs.19 At least 74 of these manufacturers did not 

report ASPs for one or more of their Part B NDCs that quarter (see 

Table 1). 

Table 1: Impact of Nonreporting by Manufacturers With Rebate Agreements 

Presence in Background File Number of 

Manufacturers Number of NDCs Number of Affected HCPCS Codes 

NDC listed in background file, 

but ASP not reported 63 176 80 

NDC not listed in background 

file but met HCPCS code 

definition (from sample) 

21 81 17 

Overlap in above categories (10) (0) (4) 

Totals 74 257 93 

Source: OIG analysis of CMS’s third-quarter 2012 background file, national drug compendia, CMS’s MDRP-participating manufacturer file, 

the HCPCS Code Level II Reference Book, and external Web sites. 

Sixty-three manufacturers that had rebate agreements did not 

report ASPs for one or more NDCs listed in the third-quarter 

2012 background file 

In the third quarter of 2012, 63 manufacturers did not report ASPs for 

176 NDCs listed in the background file (6 percent of the total number of 

required NDCs in the background file) despite being required to do so. 

The majority of manufacturers associated with the missing ASPs failed to 

report for only a small percentage and/or small number of their NDCs.20, 21 

However, 24 manufacturers that had rebate agreements did not report 

ASPs for any of their NDCs listed in the third-quarter 2012 background 

file. 

19 We use the term “at least” throughout the first two findings because a portion of the 

total number of manufacturers in question was identified through our purposive sample of 

high-expenditure HCPCS codes. Because we cannot extrapolate this sample to all 

HCPCS codes, there may be additional manufacturers of Part B drugs that we did not 

identify. 

20 For example, one manufacturer failed to report ASPs for only 20 of its 304 NDCs (i.e., 

7 percent). Another manufacturer failed to report ASPs for one of its NDCs but had only 

two NDCs in the marketplace that quarter (i.e., 50 percent). 

21 As a result, the Medicare payment amount for 80 of the associated HCPCS codes did 

not reflect all market prices. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 7 
 

 

 

 

At least 21 manufacturers that had rebate agreements should 

have reported ASPs for additional NDCs not listed in CMS’s 

background file 

Based on our purposive sample of high-expenditure drugs, 

21 manufacturers that had rebate agreements should have reported ASPs 

for 81 additional NDCs not listed in the third-quarter 2012 background 

file.22, 23 Because this portion of our analysis reflects only a subset of 

high-expenditure drugs, there are likely other NDCs for which 

manufacturers have never reported the required ASPs. This would result 

in additional HCPCS codes having payment amounts that are not 

reflective of all marketplace sales prices. 

At least 45 manufacturers were not required to report 

ASPs for 443 Part B NDCs in the third quarter of 2012 

Current law requires manufacturers to report ASPs to CMS only if they 

have signed a Medicaid drug rebate agreement. However, for many 

reasons, not all manufacturers of Part B drugs participate in the rebate 

program.24 In the third quarter of 2012, at least 45 manufacturers of Part B 

drugs did not have rebate agreements and thus were not required to report 

ASPs for any of their NDCs. 

That quarter, 22 of the 45 manufacturers that did not have 

rebate agreements voluntarily reported ASPs 

In the third quarter of 2012, 22 manufacturers reported ASPs for 272 of 

their 274 Part B NDCs despite not being required to do so under current 

law. Manufacturers reported ASPs for an additional 73 products 

represented by alternative IDs rather than NDCs. 25 ASPs associated with 

these NDCs and alternative IDs were included in payment amount 

calculations for 86 HCPCS codes. 

Payment amounts for 36 of 86 HCPCS codes were calculated solely on the 

basis of ASPs submitted by manufacturers that did not have rebate 

agreements. If these manufacturers had elected not to report ASPs for 

22 Ten manufacturers are included among the 63 with NDCs in the background file for 

which ASPs were not reported in the third quarter of 2012. 23 These NDCs matched the definition of 17 HCPCS codes included in our purposive 

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

24 For example, manufacturers of products paid as drugs under Part B but considered
 

devices and not drugs by Medicaid and FDA typically do not have rebate agreements and 

therefore are not required to report ASPs. 25 Because these products did not have NDCs (and thus no labeler codes), we could not 

determine the exact number of manufacturers represented. The products were skin
 

substitutes (used to aid in wound closure and wound healing) and certain injections for 

knee pain, which are not classified as drugs by FDA.
 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 8 
 

 

 

 

 

 

their products, Part B payment amounts for the 36 HCPCS codes could not 

have been calculated on the basis of ASPs. CMS would typically have 

calculated payment amounts using list prices published in compendia, 

which OIG has found do not accurately reflect actual market prices.26, 27 

For example, NDCs associated with a high-expenditure “device” HCPCS 

code representing hyaluronan (HCPCS code J7321) were associated solely 

with manufacturers that did not have rebate agreements. If these 

manufacturers had chosen not to report ASPs for their NDCs in the third 

quarter of 2012, payment amounts for the HCPCS code could not have 

been based on ASPs. Part B spent a total of $67 million for this HCPCS 

code in 2012. If the payment amount were calculated on the basis of 

WACs, Part B expenditures would have substantially increased because 

the associated WACs were much greater than the ASPs.28 

Payment amounts for 50 of 86 HCPCS codes were calculated on the basis 

of third-quarter 2012 ASPs submitted both by manufacturers that had 

rebate agreements and by manufacturers that did not. If the 

manufacturers without rebate agreements had chosen not to report ASPs 

for their products, payment amounts for the corresponding HCPCS codes 

could have still been based on ASPs (because other manufacturers were 

still required to report). However, the payment amounts for 5 of the codes 

would have increased (between 3 and 40 percent) and those for 7 of the 

codes would have decreased (between 1 and 49 percent). For the 

remaining 38 codes, payment amounts would have remained the same. 

The remaining 23 manufacturers did not report ASPs for any of 

their NDCs in the third quarter of 2012 

At least 23 manufacturers that did not have rebate agreements did not 

report ASPs for any Part B NDCs in third quarter of 2012.29 If these 

manufacturers had been required to report ASPs that quarter, CMS could 

have received data for 169 additional NDCs associated with 36 HCPCS 

codes. In total, 124 of the 169 “nonrequired” NDCs were already listed in 

the ASP background file. The remaining 45 NDCs were not listed in the 

26 CMS used published prices to set payment amounts for four HCPCS codes in the first 

quarter of 2013 because none of the manufacturers were required to report ASPs and 

(1) the manufacturers did not submit ASPs; (2) the manufacturers submitted unusable 

ASPs; or (3) the NDCs were obsolete, near obsolete, or represented terminated drugs. In 

three of the cases CMS used wholesale acquisition costs (WACs) as the basis for 

payment amounts, and in the other case it used average wholesale prices. 

27 OIG, Medicaid Drug Price Comparisons: Average Manufacturer Price to Published 

Prices, OEI-05-05-00240, June 2005. 28 The WACs of associated NDCs exceeded ASPs by between 52 and 96 percent. 

29 Twenty of the twenty-three were repackagers. Repackagers purchase drugs from 

manufacturers to resell in smaller packages. Many do not participate in the MDRP, and 

their drugs are not eligible for Federal financial participation under Medicaid. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 9 
 

 

 

 

 

ASP background file but matched the definition of at least one 

high-expenditure HCPCS code. 

For a small number of drugs, inaccuracies in CMS’s 

ASP files may have affected Medicare payments 

The product information (e.g., package sizes and billing units per package 

size) listed in the background and crosswalk files for an NDC sometimes 

differed from the product information listed in the national compendia.30 

After performing numerous checks, we believe that inaccurate product 

information for 27 NDCs may have affected payment amount calculations 

for 23 HCPCS codes in the third quarter of 2012. For 19 of these 

23 codes, the discrepancies had little impact on Part B payments, with the 

overall effect on first-quarter 2013 expenditures being less than $7,500 per 

code.31 For the remaining four codes, the impact was likely more 

substantial, ranging from $15,000 to $203,000 per code in that quarter. 

For example, because of incorrectly listed package sizes and package 

quantities for NDCs crosswalked to HCPCS code Q3025, Medicare may 

have inadvertently underpaid providers by 9 percent in the first quarter of 

2013; the Part B payment amount for the HCPCS code should have been 

$319.09 instead of $291.64. Part B expenditures for this code were 

$2.2 million in the first quarter of 2013. In contrast, Medicare apparently 

overpaid providers by 12 percent for HCPCS code J1170 in the first 

quarter of 2013 as a result of an incorrect unit conversion for one NDC. 

Medicare should have paid providers $1.42 per unit instead of $1.61 per 

unit. Part B expenditures for this code were $898,330 that quarter. 

For an additional 161 NDCs, potential discrepancies in the ASP files had 

zero effect on payment amounts—in many cases, because of CMS’s 

quality control efforts. For example, half of the 161 NDCs represented 

contrast agents, for which manufacturers have consistently reported their 

ASPs by vial rather than by NDC. CMS took this reporting anomaly into 

account when calculating the payment amount.32 In other cases, the NDCs 

in question were excluded altogether from the payment amount 

calculations or the data was incorrect in the crosswalk file but correct in 

the background file. 

30 When there were differences in the product information listed in CMS’s files and the 

national compendia, we reviewed information from other sources (such as drug package 

labels from FDA’s Web site) to determine the reasons for the discrepancies. 

31 In these cases, either the “corrected” payment amount changed only slightly (less than 

1 percent for 9 codes) and/or the HCPCS code was associated with minimal expenditures. 

32 For example, an NDC may represent 10 vials of a drug, but the manufacturer reports 

the ASP for a single vial. If CMS recognizes this, the background file would then 

“incorrectly” list a package size of 1 rather than 10 so that the issue is accounted for 

when CMS calculates the volume-weighted ASP for the HCPCS code. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 10 
 

Because the crosswalk file is often used by State Medicaid agencies when 

invoicing manufacturers for rebates, inaccuracies in the published 

crosswalk file may impact the amount of rebates paid to States even when 

payment amounts were not affected. However, CMS staff informed us 

that users of the crosswalk file, such as State Medicaid agencies, should be 

aware that crosswalk data are intended solely for Part B drug payment 

purposes and that some of the data as presented in the crosswalk may not 

be suitable for other uses. 

CMS has improved its ASP-related processes and 

procedures; however, challenges remain 

A previous OIG study found that CMS’s procedures for collecting, 

entering, and verifying manufacturer-reported ASP data for Part B drugs 

reduce efficiency and lead to potential errors. As a result, OIG 

recommended improvements to ASP-related processes, including the 

development of an automated system for submitting ASP data.33 CMS has 

made progress in addressing OIG’s recommendation; however, certain 

areas of concern still remain. 

CMS has yet to implement an automated system for 

manufacturer submission of ASP data 

Unlike with its system for reporting AMP data under Medicaid, CMS does 

not have a fully automated system for collecting ASP data from 

manufacturers. Previously, we found that manufacturers instead typically 

mailed disks containing ASP data to CMS.34 CMS staff then manually 

transferred every data element from the submissions into the ASP files. 

CMS now gives manufacturers the option of emailing the data to agency 

staff. CMS also provides manufacturers with a template to complete prior 

to submitting ASP data. CMS staff no longer manually transfer 

manufacturer-reported data, but instead use software such as Microsoft 

Excel and SAS to partially automate importation. 

When we surveyed CMS in August 2013, the agency expected an 

automated system for ASP submission to be ready for manufacturer testing 

in the first quarter of 2014, with full implementation in the second quarter 

of the year. However, as of March 2014, CMS had not begun testing the 

automated system. Rather, the project was still in the pre-production 

phase and prototypes had been presented to CMS staff. CMS staff stated 

that testing with manufacturers had been postponed because of budget 

constraints and that the agency could not commit to a new implementation 

33 OIG, Average Sales Prices: Manufacturer Reporting and CMS Oversight, 

OEI-03-08-00480, February 2010. 

34 Ibid. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 11 
 

 

date at that time. According to CMS staff, the agency may not wish to 

preclude alternative methods for submitting ASP data once the new system 

is implemented, meaning that manufacturers may still have the option of 

sending files by mail or email. 

CMS staff still conduct many data validation procedures 

manually 

The efficiency of the ASP collection process should be substantially 

improved by an automated data collection system similar to the one that 

manufacturers use to report AMPs. However, once the data are submitted, 

CMS staff will still need to validate the manufacturer-reported data, group 

the appropriate NDCs into their associated HCPCS codes, and calculate 

volume-weighted ASPs. 

According to CMS, staff manually check manufacturer-reported ASPs 

(with the assistance of Microsoft Excel and SAS) and seek clarification 

from manufacturers that submitted ASP data with certain errors.35 If CMS 

receives corrected data, the agency incorporates it into payment amount 

calculations as soon as it is available. If data are not resubmitted prior to 

the payment-amount files being put into use by claims processing 

contractors, CMS may reissue new files to be used by pricing contractors. 

CMS staff stated that although the planned automated reporting system 

will better structure some of the data verification procedures, some manual 

checks are unlikely to be fully automated because they require 

interpretation using specialized experience and knowledge of 

pharmaceutical packaging and clinical drug use. 

CMS does not maintain a comprehensive list of manufacturers 

that are required to submit ASP data 

All drug manufacturers that have rebate agreements are required to report 

pricing data to CMS. However, a 2010 OIG study found that CMS does 

not have a list of all manufacturers that have rebate agreements and 

produce Part B drugs.36 CMS still does not maintain such a list. Instead, 

CMS’s quarterly background files list only those NDCs for which 

manufacturers have previously reported ASPs and NDCs that have been 

identified by CMS contractors. 

35 Staff check ASP data for issues including, but not limited to, incorrect NDCs; aberrant 

ASPs and number of units sold; incorrect product information; terminated NDCs; 

over-the-counter products; non-FDA-approved products; and non-Part B products. CMS 

seeks clarification if manufacturers submit ASPs with the following errors: incorrect 

NDCs; aberrant number of units sold and ASPs; and incorrect product information. 

36 OIG, Average Sales Prices: Manufacturer Reporting and CMS Oversight, 

OEI-03-08-00480, February 2010. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 12 
 

CONCLUSION AND RECOMMENDATIONS 

When setting payment amounts for drugs covered under Medicare Part B, 

CMS relies on ASP data and product information reported by 

manufacturers. Our findings—like those of OIG’s previous studies in this 

area—demonstrate that a number of manufacturers are not reporting the 

required ASP data for all of their drugs. Furthermore, because ASP 

reporting requirements are linked to Medicaid drug rebate agreements, 

some manufacturers of Part B drugs are not required to submit ASP data 

because they do not have a rebate agreement in effect. Even when ASPs 

were reported, we identified a small number of instances in which product 

and pricing information listed in CMS’s background and crosswalk files 

were incorrect. 

Unreported ASPs (whether required or not) and incorrect product and 

pricing information may result in Medicare payment amounts that are 

inaccurate and not reflective of all manufacturer sales prices. To improve 

the process for collecting ASP data and calculating ASP-based payment 

amounts, CMS is developing an automated system for manufacturer 

submissions, as previously recommended by OIG. However, even when 

this system has been implemented, certain issues may still present the 

potential for errors and inefficiencies. 

Therefore, we recommend that CMS: 

Continue to assist OIG in identifying and penalizing 

manufacturers that do not meet ASP reporting requirements 

Pursuant to the Act, manufacturers may face CMPs or suspension of their 

rebate agreements if they fail to report ASP data in the required timeframe. 

CMS has worked with OIG to identify manufacturers that do not submit 

pricing data in a timely fashion, and OIG has initiated actions against 

certain manufacturers that failed to satisfy their submission requirements. 

Seek a legislative change to directly require all manufacturers 

of Part B drugs to submit ASPs 

The ASPs included in payment amount calculations for 86 HCPCS codes 

in the third quarter of 2012 were associated with manufacturers that were 

not required to provide ASPs under the current system because they did 

not have Medicaid rebate agreements in effect. Payment amounts for 

36 of the 86 HCPCS codes were based solely on data reported by 

manufacturers that did not have rebate agreements, meaning that payment 

amounts would not be calculated on the basis of ASPs if the manufacturers 

chose to stop reporting ASPs for their Part B-covered products. Instead, 

payment amounts would be calculated on the basis of other pricing 

methodologies that do not reflect actual marketplace prices. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 13 
 

Also, additional manufacturers of Part B drugs are not submitting ASP 

data because they do not have a rebate agreement in effect, yet their 

products meet the definition of at least one Part B HCPCS code. Under 

the current system, CMS has no recourse to obtain pricing data from these 

manufacturers, even though this nonreporting results in Part B payment 

amounts that are not reflective of all marketplace prices. 

As OIG similarly recommended in 2010, legislation that would directly 

require all manufacturers of Part B drugs to submit ASPs, regardless of 

whether the manufacturers have Medicaid drug rebate agreements in 

effect, should be included in the President’s budget for a future year. Any 

provision should also include corresponding penalty language that mirrors 

the language in section 1927(c) of the Act to clearly allow for enforcement 

actions against manufacturers who fail to timely report information or 

provide false information. This would ensure that Medicare payment 

amounts are reflective of all Part B drugs. 

Ensure the accuracy of product information for NDCs listed in 

the background and crosswalk files 

According to our analysis, CMS’s background and crosswalk files listed 

incorrect product information for a small portion of NDCs in the third 

quarter of 2012. In the vast majority of these cases, payment amounts 

were either unaffected or minimally affected. However, for 4 HCPCS 

codes, incorrect product information had a larger impact, ranging from 

$15,000 to $203,000 per quarter. We have provided CMS with a list of the 

NDCs for which we believe product information may be incorrect. 

Finalize the implementation of automated ASP-related 

procedures by using AMP-related processes as a model, and 

subsequently require all manufacturers to submit ASPs 

through the automated system 

When manufacturers electronically enter drug product data and AMP data 

for each of their covered NDCs into the automated system used in 

Medicaid, the system electronically reviews manufacturers’ pricing 

submissions for data errors, notifies manufacturers about potential 

problems, and may reject files with detected errors. In other words, the 

processes for collection, entry, and validation of data occur simultaneously 

upon data collection with minimal manual steps for CMS staff, allowing 

for more timely and accurate Medicaid payment amount calculations. 

In 2010, OIG recommended that CMS establish automated processes for 

collecting ASP data to, among other goals, limit the possibility of data 

entry errors and to increase efficiency. CMS concurred with the 

recommendation and stated that it was working with contractors to 

improve the efficiency of ASP-related processes. As of March 2014, an 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 14 
 

automated system for the collection of ASP data was still in the 

development phase and CMS could not estimate when the system would 

actually be implemented. 

Furthermore, according to CMS staff, the agency may still allow 

manufacturers to submit ASP data files by mail or email even when the 

automated system has been fully implemented and functions reliably. This 

could greatly limit the system’s efficiency and ability to prevent potential 

errors. CMS also stated that it has not determined the extent to which data 

verification will be automated, but there will likely be no substantial 

changes to the overall checks. According to CMS, many of the processes 

that are automated in AMP collection, such as verifying NDCs prior to 

accepting the associated pricing data, may not be automated in ASP 

collection. 

Many manufacturers that submit ASPs already submit AMPs and thus are 

familiar with the concept of an automated price-reporting system. 

Therefore, we believe that CMS should finalize the implementation of 

automated ASP-related processes as soon as possible and should use the 

AMP data system as a model for automated ASP-related systems. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 15 
 

 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

In its comments on the draft report, CMS concurred with our first, third, 

and fourth recommendations. CMS stated that it will continue to assist 

OIG with ongoing efforts to identify and penalize manufacturers that do 

not meet ASP reporting requirements. Further, the agency stated that it 

either has corrected or will correct the product information errors OIG 

identified. Finally, CMS stated that it is continuing its plans to implement 

an automated system for collecting ASPs. However, the agency has not 

yet set an implementation date and is reluctant to eliminate manual data 

collection processes. 

In nonconcurring with our second recommendation, CMS stated that 

a proposal to require manufacturers of Part B drugs to submit ASPs was 

not included in the annual President’s budget. We continue to recommend 

that CMS draft, and submit for review, such a legislative proposal for 

consideration for inclusion in future budget and legislative agendas. 

While CMS cannot dictate what legislative proposals are included in the 

President’s budget, CMS does have the authority to develop legislative 

proposals for Medicare. 

For the full text of CMS’s comments, see Appendix C. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 16 
 

 

APPENDIX A 

Descriptions and 2012 Medicare Part B Spending for Sample of 

87 High-Expenditure HCPCS Codes 

HCPCS Code Description HCPCS Dosage 2012 Part B Spending 

J0129 Abatacept injection 10 mg $206,136,065 

J0152 Adenosine injection 30 mg $23,708,630 

J0475 Baclofen injection 10 mg $19,208,292 

J0490 Belimumab injection 10 mg $20,634,278 

J0585 Botulinum toxin type a 1 unit $127,779,481 

J0641 Levoleucovorin injection 0.5 mg $57,932,049 

J0718 Certolizumab pegol injection 1 mg $32,045,412 

J0775 Collagenase, clost hist injection 0.01 mg $18,281,400 

J0878 Daptomycin injection 1 mg $23,614,809 

J0881 Darbepoetin alfa 1 mcg $224,915,934 

J0885 Epoetin alfa 1000 units $233,726,603 

J0894 Decitabine injection 1 mg $85,857,807 

J0897 Denosumab injection 1 mg $347,264,989 

J1300 Eculizumab injection 10 mg $44,153,474 

J1325 Epoprostenol injection 0.5 mg $23,924,996 

J1440 Filgrastim injection 300 mcg $31,108,731 

J1441 Filgrastim injection 480 mcg $73,962,548 

J1453 Fosaprepitant injection 1 mg $30,406,416 

J1459 Immune globulin (privigen) injection 500 mg $17,461,364 

J1559 Hizentra injection 100 mg $131,956,964 

J1561 Gamunex injection 500 mg $87,051,809 

J1568 Octagam injection 500 mg $43,113,356 

J1569 Gammagard liquid injection 500 mg $100,888,948 

J1745 Infliximab injection 10 mg $704,243,666 

J1786 Imuglucerase injection 10 units $19,257,388 

J2260 Milrinone lactate injection 5 mg $97,917,244 

J2323 Natalizumab injection 1 mg $96,127,091 

J2353 Octreotide depot injection 1 mg $161,290,474 

J2357 Omalizumab injection 5 mg $74,723,773 

J2469 Palonosetron hydrochloride injection 25 mcg $142,771,327 

J2505 Pegfilgrastim injection 6 mg $642,878,567 

J2778 Ranibizumab injection 0.1 mg $1,220,360,809 

J2785 Regadenoson injection 0.1 mg $126,757,965 

J2796 Romiplostim injection 10 mcg $62,699,749 

J3262 Tocilizumab injection 1 mg $66,021,878 

J3285 Treprostinil injection 1 mg $158,706,362 

J3315 Triptorelin pamoate 3.75 mg $17,143,907 

J3487 Zoledronic acid 1 mg $163,850,642 

J3488 Reclast injection 1 mg $115,147,875 

J7187 Humate-P, injection 1 IU $16,768,045 

J7189 Factor viia 1 mcg $104,920,500 

J7190 Factor viii 1 IU $30,207,228 

J7193 Factor IX non-recombinant 1 IU $17,760,145 

(continued on next page) 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 17 
 

Descriptions and 2012 Medicare Part B Spending for Sample of 

87 High-Expenditure HCPCS Codes (continued) 

HCPCS Code Description HCPCS Dosage 2012 Part B Spending 

J7195 Factor IX recombinant 1 IU $43,404,226 

J7198 Anti-inhibitor 1 IU $40,190,843 

J7308 Aminolevulinic acid hydrochloride 354 mg $19,006,023 

J7321 Hyalgan/supartz injection per dose $67,142,161 

J7323 Euflexxa injection per dose $47,210,237 

J7324 Orthovisc injection per dose $56,618,033 

J7325 Synvisc or Synvisc-One 1 mg $144,640,590 

J7507 Tacrolimus oral 1 mg $195,177,053 

J7517 Mycophenolate mofetil oral 250 mg $81,812,303 

J7518 Mycophenolic acid 180 mg $111,639,367 

J7520 Sirolimus oral 1 mg $48,927,996 

J7605 Arformoterol inhalation solution 15 mcg $110,200,481 

J7606 Formoterol fumarate inhalation solution 20 mcg $54,001,470 

J7613 Albuterol non-comp unit 1 mg $26,604,246 

J7620 Albuterol and ipratropium bromide 2.5 mg/0.5 mg $45,068,105 

J7626 Budesonide inhalation solution up to 0.50 mg $214,727,879 

J7682 Tobramycin non-compounded unit 300 mg $28,084,657 

J7686 Treprostinil inhalation solution 1.74 mg $127,959,381 

J9025 Azacitidine injection 1 mg $141,956,248 

J9033 Bendamustine injection 1 mg $160,131,900 

J9035 Bevacizumab injection 10 mg $624,753,554 

J9041 Bortezomib injection 0.1 mg $278,371,303 

J9043 Cabazitaxel injection 1 mg $51,432,612 

J9055 Cetuximab injection 10 mg $153,516,065 

J9070 Cyclophosphamide injection 100 mg $18,900,266 

J9171 Docetaxel injection 1 mg $123,393,142 

J9179 Eribulin mesylate injection 0.1 mg $31,799,237 

J9201 Gemcitabine hydrochloride injection 200 mg $44,953,525 

J9217 Leuprolide acetate suspension 7.5 mg $233,311,653 

J9228 Ipilimumab injection 1 mg $85,176,620 

J9263 Oxaliplatin 0.5 mg $308,803,693 

J9264 Paclitaxel protein bound 1 mg $86,545,808 

J9303 Panitumumab injection 10 mg $30,394,295 

J9305 Pemetrexed injection 10 mg $291,644,303 

J9310 Rituximab injection 100 mg $876,309,447 

J9330 Temsirolimus injection 1 mg $20,141,980 

J9355 Trastuzumab injection 10 mg $272,619,113 

J9395 Fulvestrant injection 25 mg $96,635,702 

Q0138 Ferumoxytol, non-ESRD 1 mg $21,218,364 

Q2037 Fluvirin vaccine 0.5 ml $60,260,767 

Q2038 Fluzone vaccine 0.5 ml $40,468,584 

Q2043 Sipuleucel-T minimum 50 million cells $156,176,155 

Q4074 Iloprost inhalation solution up to 20 mcg $59,385,872 

Q4106 Dermagraft skin substitute 1 SQ CM $22,869,459 

Total $11,798,273,705 

Source: OIG analysis of 2012 PBAR data. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 18 
 

 

APPENDIX B 

Detailed Methodology for Identifying Part B Drug NDCs Not 

Listed in the Background File 

CMS’s background file generally includes an NDC only if an ASP for the 

drug has been previously reported by the manufacturer. Therefore, in 

addition to determining the number of NDCs listed in the third-quarter 

background file for which ASPs were not reported, we also identified 

NDCs that met the definition of a HCPCS code but were not included in 

the background file. Because of the complex steps required to identify 

these NDCs, we focused this segment of the analysis on our purposive 

sample of 87 high-expenditure HCPCS codes. 

Using CMS’s third-quarter background file, we first created a list of all 

known NDCs associated with the 87 HCPCS codes. For these NDCs, we 

then obtained the generic formulation code (GFC) from Red Book and the 

generic code number (GCN) from the National Drug Data File. GFCs 

and GCNs are unique six-digit codes that identify drugs with common 

active ingredients, master dosage forms, strengths, and routes of 

administration. A HCPCS code may be associated with more than one 

GFC or GCN, and multiple HCPCS codes may be associated with the 

same GFC or GCN. We developed a list of all NDCs in Red Book and the 

National Drug Data File with GFCs or GCNs associated with the 

87 HCPCS codes and identified the NDCs that were not included in the 

background file. We used the HCPCS Code Level II Reference Book to 

confirm that each of the NDCs we identified actually met the definition of 

the HCPCS code. 

Manufacturers associated with the remaining NDCs have likely never 

reported ASPs for the drugs to CMS, even though the NDCs represent 

drugs that are in the market and meet the definition of at least one Part B 

HCPCS code. We matched the labeler codes for these NDCs to the 

MDRP-participating manufacturer file to determine whether the associated 

manufacturers were required to report ASPs. We also counted the number 

of manufacturers that did not have rebate agreements to estimate the 

additional number that would be required to report ASP data if previous 

OIG recommendations had been implemented. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 19 
APPENDIXC 

Agency Comments 

Centers tor Medicare & Medicaid Se rvi ces 

Administrator 

Washington, DC 20201 

DATE: JUN 19 Z014 

TO: 	 Daniel R. Levinson 

Inspector General 

FROM: 	 Marilyn Tavtnner 

Administratm1 

SUBJECT: Office oflnspector General (OIG) Draft Report: Limitations in Manufacturer 

Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 

The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to re view and 

comment on the above subject OIG draft report. OIG's objectives were to determine whether 

manufacturers reported average sales prices (ASPs) for all Part B drugs in the third quarter of 

2012 ; to determine the effect on ASP reporting if all manufacturers of Part B drugs were required 

to submit ASPs ; to assess the validity and accuracy of data contained in CMS ' s ASP files ; and to 

determine whether CMS has improved its process for collecting and analyzing ASPs since the 

publication ofOIG's earlier report. 

The OIG compared CMS data from internal ASP data files and the public ASP crosswalk file 

against national price compendia data. CMS ' s files were associated with payment limits that 

were in effect during the first quarter of2013 . Using these files, OIG determined how many 

manufacturers did not report ASP data to CMS, and OIG determined if CMS and compendia 

information for specific drug products as identified by National Drug Codes (NDCs) were 

consistent. OIG also conducted a survey of CMS 's policies to determine if ASP data collection 

processes were being improved. 

Based on the data comparison described above , OIG determined that up to one-third of 

manufacturers with Medicaid drug rebate agreements (that is, manufacturers that must report 

ASP data to CMS) did not submit ASP data for at least some of their Part B drugs. OIG also 

noted that 45 manufacturers without Medicaid drug rebate agreements submitted ASP data . 

OIG ' s assessment ofCMS' s ASP-related processes and procedures found improvements 

compared to previous studies. However, OIG also found potentially inaccurate product 

information for 27 NDCs that may have affected ASP payment limit calculations. OIG believes 

that little impact on payment amounts has resulted in most of these cases. However, for NDCs 

associated with four Healthcare Common Procedural Coding System (HCPCS ) codes, OIG 

estimated a payment impact ranging from $15,000 to $203 ,000 per code during the study period . 

The report also discussed the impact of information that is published on the ASP cro sswalk . 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 20 
 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 21 
 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 22 
 

ACKNOWLEDGMENTS 

This report was prepared under the direction of Dave Tawes, Regional 

Inspector General for Evaluation and Inspections in the Baltimore regional 

office. 

Bahar Adili served as the lead analyst for this study. Central office staff 

who provided support include Mandy Brooks, Althea Hosein, 

Meghan Kearns, and Christine Moritz. 

Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs (OEI-12-13-00040) 23 
 

Office of Inspector General

http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

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

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.