Medicare Part B: CMS Should Take Additional Steps to Verify Accuracy of Data Used to Set Payment Rates for Drugs
Published: 2016-07-01T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Medicare Part B covers drugs typically administered by a physician. Medicare pays physicians and other providers for these drugs at an amount generally equal to the ASP of the drug plus a fixed percentage. These payment rates are calculated quarterly by CMS based on price and volume data reported by drug manufacturers. Members of Congress and others have questioned the amount that both Medicare and its beneficiaries spend on Part B drugs.
GAO was asked to examine Medicare spending for and utilization of Part B drugs and the accuracy of the sales price data reported by drug manufacturers. This report (1) describes Medicare spending and utilization for Part B drugs that are paid based on ASP, including variations in spending and utilization by provider and drug characteristics, and (2) examines the steps CMS takes to ensure the accuracy of the sales price data reported by drug manufacturers. To describe Medicare spending and utilization for Part B ASP drugs, GAO analyzed 2014 Medicare claims data. To examine the accuracy of ASP data, GAO interviewed CMS, the HHS Office of Inspector General, and drug manufacturers and reviewed related documentation.
section_title: What GAO Found
paragraphs: In 2014, the most recent year for which data were available, the Medicare program and its beneficiaries spent about $21 billion on approximately 46 million administrations of 551 Part B drugs paid based on average sales price (ASP). Six drugs—each exceeding $1 billion in expenditures—accounted for 36 percent of all expenditures on Part B ASP drugs, while a different 10 drugs—each administered over 1 million times—accounted for 37 percent of all administrations. Biologics (drugs made from living entities), drugs without generic versions available, and drugs made by a single manufacturer were associated with the vast majority of expenditures on Part B ASP drugs. In contrast, synthetics (drugs produced from chemical ingredients), drugs with generic versions available, and drugs with multiple manufacturers were associated with the vast majority of administrations. Compared with other types of providers, hematology oncologists were associated with the highest percentage of drug expenditures and administrations.
Source: GAO analysis of Centers for Medicare & Medicaid Services, Food and Drug Administration, and RED BOOK data. | GAO-16-594
The Centers for Medicare & Medicaid Services (CMS), an agency within the Department of Health and Human Services (HHS), performs several electronic data checks on the sales price data reported by drug manufacturers each quarter, including checking for missing data or incorrect product information. However, CMS does not routinely verify the underlying data, which is inconsistent with federal internal control standards that call for management to use quality information to achieve its objectives. Without additional verification of the ASP data received from manufacturers, it is possible for the data to be inaccurate, which could result in inaccurate Medicare payment rates. In addition, CMS is unable to use or assess the accuracy of all sales price data because, as directed by statute, only manufacturers with Medicaid drug rebate agreements are required to submit sales price data to CMS. Unless all manufacturers without rebate agreements choose to voluntarily submit sales price data, the payment rates for some drugs will be based on incomplete ASP data or will not be set based on ASP.
section_title: What GAO Recommends
paragraphs: Congress should consider requiring all manufacturers of drugs paid at ASP to submit sales price data to CMS. Further, CMS should periodically verify the data submitted by a sample of drug manufacturers by requesting source documentation. HHS agreed with GAO's recommendation and stated that CMS would take action as warranted.

section_title: Letter
paragraphs: Medicare spent over $24 billion on drugs covered under Part B in 2014.  The majority of these expenditures—over 85 percent—were based on the  drug’s average sales price (ASP), which the Centers for Medicare &  Medicaid Services (CMS) calculates quarterly based on price and volume  data reported by drug manufacturers of all sales to all U.S. purchasers,  including physicians, hospitals, and wholesale distributors. The Medicare  Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)  set the Medicare payment rate for most Part B drugs acquired by a  physician’s office at 106 percent of manufacturers’ reported ASP for the  drug. The MMA did not specify a payment rate for most Part B drugs  acquired by a hospital outpatient department (HOPD) and instead  authorized the Department of Health and Human Services (HHS)—the  agency that oversees CMS—to annually update the payment rate to  reflect HOPDs’ acquisition and overhead costs. Since 2013, CMS has  set the payment rate for most separately payable Part B drugs acquired  by HOPDs at 106 percent of ASP. Beneficiaries are generally  responsible for 20 percent of the payment rate for Part B drugs.
Stakeholders have questioned the amount Medicare spends on Part B  drugs and how drug prices affect Medicare beneficiaries’ ability to afford  needed drugs. For example, members of Congress have noted that due  to the high cost of many Part B drugs and the 20 percent cost sharing  requirement under Part B, patients who face a serious diagnosis or are  living with a chronic health condition are subject to significant financial  burdens. Additionally, the HHS Office of Inspector General (OIG) has  noted that current manufacturer reporting requirements could result in  incomplete information on drug prices being submitted to CMS. In its  report, OIG demonstrated how incomplete drug pricing information could  affect the accuracy of Part B drug payment rates. We and others also  have noted the long-term fiscal challenges facing the Medicare program.  Additional information on Medicare Part B drug spending and utilization  and the accuracy of the sales price data reported by drug manufacturers  may inform congressional efforts to moderate program spending.
You asked us to examine Medicare spending and utilization for Part B  drugs and the accuracy of the sales price data reported by drug  manufacturers. In this report, we describe Medicare spending and utilization for Part B drugs that are  paid based on ASP, including variations in spending and utilization by  provider and drug characteristics and examine the steps CMS takes to ensure the accuracy of the sales  price data reported by drug manufacturers.
To describe Medicare spending and utilization for Part B drugs that are  paid based on ASP, we used Medicare fee-for service (FFS) claims data  from 2014, the most recent full year of claims data available at the time of  our analysis. We first identified all Healthcare Common Procedure  Coding System (HCPCS) codes, which CMS uses to determine payment  for certain Medicare services, for Part B drugs. A single HCPCS code can  cover multiple drugs with different National Drug Codes (NDC), which are  universal product identifiers assigned by the Food and Drug  Administration (FDA). We used the list of HCPCS codes to identify all  claim line items for Part B drugs during 2014. We then restricted the claim  line items to those that were paid based on ASP by removing claim line  items for drugs and facilities that were paid based on other payment  methodologies. Next, for each Part B ASP drug, we calculated Medicare  spending, defined as the total amount spent by the Medicare FFS  program and its beneficiaries, and two measures of utilization: the  number of times the drug was administered—defined as the number of  claim line items for the drug—and the number of unique beneficiaries who  received the drug. To examine variations in spending and utilization by  drug characteristics, such as whether the drug was a brand name or  generic drug, we used the claims data, FDA’s NDC Product Summary  File, and Truven Health Analytics’ RED BOOK. To examine variations  by provider characteristics, such as whether the provider was located in a  rural or urban area, we used the claims data and HHS and Department of  Agriculture’s Rural-Urban Commuting Areas geographic taxonomy.
To examine the steps CMS takes to ensure the accuracy of the sales  price data reported by drug manufacturers, we spoke with officials from  CMS and OIG about the data CMS receives from manufacturers,  including the steps the agency takes to ensure the accuracy of the data.  We also spoke with CMS officials about the guidance CMS provides to  manufacturers for calculating and submitting these data. We also  interviewed representatives from four large and two small drug  manufacturers to gain their perspective on the process of calculating and  submitting ASP data and the guidance provided by CMS. We reviewed  CMS’s guidance related to ASP data and compared data validation  checks conducted by CMS on manufacturers’ reported ASP data with  GAO standards related to ensuring the completeness and accuracy of  data.
To assess the reliability of the Medicare claims and other data used in  this report, we reviewed relevant documentation, performed electronic  data checks, benchmarked our results against published sources,  interviewed agency officials and others familiar with these data sources,  or some combination of the four. We determined that the data used in this  report were sufficiently reliable for the purposes of this report.
We conducted this performance audit from March 2015 to July 2016 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Medicare Part B Drugs
paragraphs: Medicare Part B generally covers both synthetic drugs and biologicals  administered under a physician’s direct supervision, including those  administered in physician offices and in hospital outpatient departments  that are not usually self-administered. These include injectable drugs  (such influenza, pneumococcal, and hepatitis B vaccines); drugs inhaled  through durable medical equipment (such as certain asthma  medications); and oral cancer drugs if the same drug is available in  injectable form.
As with all drugs, Part B drugs can be either single-source or multi- source. Single-source drugs have only one manufacturer. Multi-source  drugs have at least two, and often several, versions produced by different  manufacturers. While each of these versions will have its own NDC,  Medicare pays a single rate for any NDC associated with a given HCPCS  code.
section_title: Medicare Payment for Part B Drugs
paragraphs: Part B drugs administered to Medicare beneficiaries are generally  purchased by physicians or hospitals. In 2014, Medicare spent  approximately $24 billion on these drugs. The majority of these  expenditures—approximately $21 billion, or 87 percent—were for drugs  paid based on ASP. The remaining 13 percent of expenditures were for  drugs paid based on different methodologies. For example, several Part B  drugs, including certain vaccines and drugs provided through DME, are  paid for on the basis of average wholesale prices (AWP) or reasonable  cost and not on the basis of ASPs. Part B ASP drugs accounted for a  somewhat smaller percentage of administrations than expenditures of all  Part B drugs in 2014—63 percent—as drugs paid based on AWP or  reasonable cost, primarily flu, pneumonia, and hepatitis B vaccines,  accounted for 26 percent of all administrations of Part B drugs. (See   fig. 1.) Over 9 million Medicare beneficiaries received at least one Part B  ASP drug during 2014, which accounted for approximately 43 percent of  all beneficiaries who received a Part B drug that year. These 9 million  beneficiaries were responsible for 20 percent of Medicare’s payment for  these drugs via cost-sharing requirements, or about $4 billion in 2014.
section_title: Manufacturer Reporting of Sales Price Data
paragraphs: According to statute, drug manufacturers that participate in the Medicaid  Drug Rebate Program are required to submit data to CMS on sales of  Part B drugs to most U.S. purchasers, including physicians, hospitals,  and wholesale distributors within 30 days of the end of every calendar  quarter. Sales must be reported net of rebates, discounts, and other  price concessions. CMS officials have stated that most manufacturers  participate in the Medicaid Drug Rebate Program. Other manufacturers  may voluntarily submit sales price data to CMS. CMS reviews these data,  which are typically reported at the NDC level, and calculates payment  rates at the HCPCS level. According to CMS officials, the agency then  publicly releases the revised quarterly payment rates so that stakeholders  can comment on the new rates before they take effect. These officials  noted that due to the time it takes for manufacturers to submit the data to  CMS, CMS to review the data and then update the payment rates, and  the public to review and comment on the revised rates, there is a two- quarter (6-month) lag between the sale and when the payment rate takes  effect.
CMS produces a web page titled “Medicare Part B Drug Average Sales  Price” that provides guidance for drug manufacturers on submitting ASP  data. Manufacturers submit two forms to CMS: the ASP Data Collection  Form—an Excel document in which manufacturers insert all relevant  sales data—and the ASP Certification Form signed by the manufacturer’s  CEO or CFO to affirm the accuracy of the submitted data. Where there  is no specific guidance in federal statute or regulations regarding how to  calculate ASP, CMS has indicated that it allows manufacturers to make  reasonable assumptions in their calculations of ASP and to submit these  assumptions with the required data. CMS’s web page also includes a  common e-mail address for manufacturers to send ASP-related questions  to the agency.
section_title: OIG Studies of CMS Oversight of ASP Data
paragraphs: The OIG has conducted two studies related to manufacturer reporting and  CMS oversight of ASP data. The first report, published in 2010, found  that CMS lacks complete ASP data for certain drugs because not all  manufacturers of Part B drugs are required to report ASPs. OIG  recommended that CMS consider seeking a legislative change to require  all manufacturers of Part B drugs to submit ASPs. CMS did not concur  with this recommendation, stating that the President’s budget for the  upcoming fiscal year did not include any proposals to require  manufacturers of Part B drugs to submit ASPs. The second report,  published in 2014, further explored this policy and found that at least one- third of the more than 200 manufacturers of Part B drugs included in the  study 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. OIG again  recommended that CMS seek a legislative change to directly require all  manufacturers of Part B drugs to submit ASPs. CMS again did not concur  with this recommendation, stating that the President’s budget for the  upcoming fiscal year did not include any proposals to require  manufacturers of Part B drugs to submit ASPs. However, the agency said  it would take the recommendation into consideration in the future. These  reports also recommended that CMS develop or implement an automated  system for the submission of ASP data to potentially limit the possibility of  data entry errors, reduce the amount of time it takes to calculate ASP- based payment amounts and adjust ASP payment limits, and enable  CMS to track ASPs with greater ease. CMS concurred with these  recommendations.
section_title: Medicare Expenditures on and Administrations of Part B ASP Drugs Were Concentrated in a Small Number of Drugs in 2014 Expenditures on and Administrations of Part B ASP Drugs Were Each Concentrated in a Small Number of Drugs, with Few Drugs among Highest in Both
paragraphs: Medicare expenditures were concentrated in a small number of the 551  Part B drugs that were paid based on ASP in 2014. (See fig. 2.) In  particular, 6 drugs each had expenditures of over $1 billion and  collectively accounted for 36 percent of all expenditures on Part B ASP  drugs that year. (See table 1 and, for a list of characteristics associated  with the highest expenditure drugs in 2014, see table 6 in app. I.) Beyond  the 6 highest expenditure drugs, an additional 43 drugs each had  between $100 million and $1 billion in expenditures and collectively  accounted for an additional 48 percent of expenditures on Part B ASP  drugs. In contrast, 306 drugs (56 percent of all Part B ASP drugs) each  had less than $1 million in expenditures and collectively accounted for  less than 1 percent of all expenditures on Part B ASP drugs. (For a list of  the 50 Part B ASP drugs with the highest expenditures in 2014, see table  7 in app. I.)
Administrations of Part B ASP drugs were also concentrated in a small  number of drugs in 2014. (See fig. 3.) In particular, 10 drugs were each  administered over 1 million times and collectively accounted for 37  percent of all administrations of Part B ASP drugs that year. (See table 2  and, for a list of characteristics associated with the highest administration  drugs in 2014, see table 8 in app. I.) Beyond the 10 drugs with the highest  number of administrations, an additional 75 drugs were each  administered between 100,000 and 1 million times, and collectively  accounted for an additional 51 percent of all administrations of Part B  drugs paid based on ASP. In contrast, 187 drugs (34 percent of all Part B  ASP drugs) were each administered fewer than 1,000 times and  collectively accounted for less than 1 percent of all administrations of Part  B ASP drugs. (For a list of the 50 Part B ASP drugs with the highest  number of administrations in 2014, see table 9 in app. I.)
Few Part B ASP drugs were among both the highest expenditure and the  highest administration drugs in 2014. For example, no Part B ASP drug  had over $1 billion in expenditures and over 1 million administrations that  year. Additionally, of the 102 Part B ASP drugs with either $100 million or  more in expenditures or 100,000 or more administrations, only 32 were in  both categories. These 32 drugs included all 6 drugs with expenditures  over $1 billion, but none of the 10 drugs with over 1 million  administrations.
section_title: Drug Characteristics Associated with the Highest Percentage of Expenditures Generally Differed from Those Associated with the Highest Percentage of Administrations
paragraphs: The characteristics of drugs associated with the majority of expenditures  on Part B ASP drugs tended to differ from the characteristics of drugs  associated with the majority of administrations. For example, the majority  of Medicare expenditures for Part B ASP drugs in 2014 were for biologics,  brand name drugs, drugs made by a single manufacturer, and drugs that  came onto the market since 2000. In contrast, the majority of  administrations of Part B ASP drugs were for synthetics, generics, drugs  made by multiple manufacturers, and drugs that came onto the market  prior to 2000. Additionally, the therapeutic categories associated with the  largest percentage of expenditures tended to differ from the categories  associated with the largest percentage of administrations. However,  injections accounted for the majority of both expenditures and  administrations (See table 3.)
The majority of expenditures were for drugs with average expenditures  per beneficiary over $10,000 and for drugs received by fewer than  100,000 beneficiaries. The majority of administrations were for drugs with  average expenditures per beneficiary under $100 and for drugs received  by over 100,000 beneficiaries. (See table 4.)
section_title: Provider Characteristics Associated with the Highest Percentage of Expenditures and the Highest Percentage of Administrations Were Generally Similar
paragraphs: Expenditures on and administrations of Part B ASP drugs were generally  associated with the same provider characteristics in 2014. In particular,  the majority of expenditures and administrations occurred in physicians’  offices (rather than hospital outpatient departments or other settings) and  in urban areas (rather than suburban or rural areas). Additionally, the  highest percentage of both expenditures and administrations generally  were for Part B ASP drugs that were prescribed by the same provider  specialty: hematology oncology. (See table 5.)
section_title: CMS Checks Reported Sales Prices for Potential Data Errors, but Does Not Routinely Verify the Underlying Data or Receive All Relevant Data
subsections: section_title: CMS Performs Several Electronic Data Checks on Manufacturer-Reported Sales Price Data, but these Checks Do Not Verify the Accuracy of the Underlying Data
paragraphs: CMS takes three main steps to validate that the sales price data reported  by drug manufacturers are complete and accurate. First, CMS requires  that, before a manufacturer submits a report containing data to CMS, the  CEO, CFO, or authorized official of each drug manufacturer attests to the  accuracy of the information provided in that report by signing the ASP  Certification Form. Second, according to CMS officials, once CMS  receives the sales data from the manufacturer, it performs a series of  electronic data checks to assess the completeness of the submitted data.  CMS’s data checks include  checking for missing data or duplicate entries,  checking for incorrect product information, and  comparing submissions to those of previous quarters.
In cases where CMS identifies discrepancies through its data checks,  agency officials stated that they attempt to resolve the issue directly with  the manufacturer. If CMS is unable to resolve the issue directly with the  manufacturer, the agency refers the case to OIG and OIG determines  appropriate enforcement, if needed. Third, officials from CMS stated the  agency holds a 7 to 10 day public comment period where manufacturers  and providers have an opportunity to comment on the payment amounts  before they are published.
CMS officials believe that the steps the agency takes to validate  manufacturer-reported sales price data are sufficient, but CMS does not  verify that the reported data reflect actual sales prices. Federal standards  for internal control call for management to use quality information to  achieve its objectives. According to GAO’s guidance for assessing the  reliability of computer-processed data, completeness and accuracy are  the two key components of quality data. CMS officials noted that, since  2009, only one drug manufacturer has incurred civil monetary penalties  as a result of OIG’s review of manufacturer reporting discrepancies. CMS  officials told us that there have been few other issues with drug  manufacturers’ ASP submissions over the past couple of years and that  any issues that did arise were minor. These officials also noted that  during the public comment period, they receive few comments from  stakeholders. Additionally, CMS’s electronic data checks described earlier  are consistent with recommendations in GAO’s guidance related to  verifying the completeness of data. Specifically, examples of GAO’s  guidance include  testing electronic data for missing or duplicate data,  looking for values outside of a desired range, and  testing relationships between data elements.
However, CMS does not take sufficient steps to verify the accuracy of the  data. Officials from CMS told us that they do not routinely verify the  underlying data from manufacturers either by tracing the data to and from  source documents, such as sales invoices, or through CMS’s referrals to  OIG. The Social Security Act authorizes CMS to survey manufacturers  that have Medicaid drug rebate agreements when necessary to verify  ASP. However, CMS officials told us that this authority does not allow  them to conduct blanket surveys to routinely collect information regarding  manufacturers’ ASP data beyond what is on the ASP data collection form.  CMS officials indicated they may also request that OIG use its authority to  audit ASP data submitted by manufacturers. However, CMS has limited  such referrals to situations where the agency has identified potential  consistent or repeated problems with calculating and reporting ASP data.  In situations where CMS requires additional information about the data  submission, the agency officials stated that the requests are typically for  information that could be considered public.
Officials from CMS indicated the agency is developing an automated ASP  submission system to use with drug manufacturers; however, the new  system will not help to ensure the accuracy of the underlying sales price  data. According to OIG, this automated system could limit the possibility  of data entry errors, reduce the amount of time it takes to calculate and  adjust ASP payments, and enable CMS to track ASPs with greater ease  and efficiency. CMS began working on an automated system following a  2010 OIG recommendation. CMS officials told us that the agency is still  testing the system and hopes to begin implementation at the end of 2016.  Four of the six drug manufacturers we spoke with stated that  implementation of an automated submission system would improve the  ASP submission process. The two manufacturers that did not believe an  automated submission system would improve the ASP submission  process already submit their data exclusively via e-mail instead of by  mail. CMS officials stated that due to the time it takes for manufacturers  to calculate and submit ASP data and for CMS to review the data and  update the payment rates, the automated system may not reduce the  two-quarter lag between when drugs are sold and CMS receives all data  and updates the payment rates.
section_title: CMS Is Unable to Assess the Accuracy of All Sales Price Data because Not All Manufacturers Submit Sales Price Data
paragraphs: CMS is unable to assess the accuracy of all drug manufacturers’ sales  price data because not all drug manufacturers submit these data to CMS.  As stated previously, only drug manufacturers with Medicaid drug rebate  agreements are required to submit ASP data on a quarterly basis.  However, not all manufacturers of Medicare Part B drugs have these  agreements; therefore, not all manufacturers are required to submit ASP  data to CMS. Further, CMS officials said that the agency lacks the  authority to require manufacturers not participating in the Medicaid Drug  Rebate Program to submit ASP data. CMS officials also said that most  manufacturers of Part B drugs do submit sales price data because they  have Medicaid drug rebate agreements or submit the data voluntarily, but  not all do. Without complete data from manufacturers that have been  assessed for accuracy by CMS, the agency risks setting payment rates  based on inaccurate information. This is inconsistent with federal  standards for internal control, which call for management to use quality  information to achieve objectives.
Drugs manufactured by multiple sources are more likely to have  inaccurate payment rates than are drugs manufactured by a single source  because, according to CMS officials, the payment system provides an  incentive for single-source manufacturers to report their data. CMS  officials told us that single-source drug manufacturers have an incentive  to report ASP data so that health care providers will know Medicare’s  payment rate for their drug. These officials stated that providers prefer to  use drugs with published Medicare payment rates because they know  what they will be paid. If the manufacturer of a single-source drug did not  submit sales price data, ASP data for that billing code would be  unavailable, and CMS would substitute ASP with another metric that  might be less accurate. Other metrics include rates published in national  pricing compendia such as Truven Health Analytics’ RED BOOK or First  Databank’s National Drug Data File, which publish product information for  drugs such as strength, package size, and package quantity. OIG has  found that prices published in national pricing compendia do not  accurately reflect actual market prices. In contrast, CMS officials told us  if a manufacturer did not submit ASP data for a drug that is manufactured  by multiple sources, the sales price would still be based on ASP data  submitted by the other manufacturers of the drug. This gives multi-source  drug manufacturers less incentive to report ASP data, particularly if the  inclusion of their data would result in a lower Medicare payment rate for  the drug.
To assess the potential impact of manufacturers without rebate  agreements that do not voluntarily report ASP data, in its 2014 report,  OIG looked at 50 high-expenditure multi-source Part B drugs in the third  quarter of 2012. These drugs included those with payment rates that  used sales price data from both manufacturers that were required to  report their data and manufacturers that voluntarily reported their data. If  manufacturers had not voluntarily reported their data, 12 of the 50 drug  payment rates would have changed. Payment rates would have  increased for 5 drugs (between 3 and 40 percent) and decreased for 7  drugs (between 1 and 49 percent). Payment rates for the remaining 38  drugs would have stayed the same.
section_title: Conclusions
paragraphs: In 2014, Medicare spent approximately $21 billion on Part B drugs paid  based on ASP. The substantial expenditures for Part B ASP drugs  underscore how important it is that CMS ensure that the data on which  the agency bases Medicare’s payment rates for these drugs are accurate.  Federal standards for internal control call for management to use quality  information to achieve its objectives. According to GAO’s guidance for  assessing the reliability of computer-processed data, completeness and  accuracy are the two key components of quality data. CMS conducts  certain data checks to assess the completeness of the ASP data  submitted by drug manufacturers. However, CMS does not verify the  accuracy of the underlying data by tracing the data to and from source  documents, such as sales invoices. Because CMS does not verify the  accuracy of the underlying data used to determine Medicare payment  rates, the resulting payment rates may be inaccurate if drug  manufacturers do not report accurate data.
CMS is unable to assess the accuracy of all sales price data because the  agency does not receive data from all drug manufacturers. Currently, only  drug manufacturers with Medicaid drug rebate agreements are required  to submit ASP data to CMS. Although agency officials told us that most  drug manufacturers have rebate agreements or choose to voluntarily  submit ASP data, some manufacturers do not. Federal standards for  internal control call for management to use quality information to achieve  its objectives. Without complete data from all manufacturers that have  been assessed for accuracy by CMS, the agency risks setting payment  rates based on inaccurate information.
section_title: Matter for Congressional Consideration
paragraphs: To help the Department of Health and Human Services ensure accuracy  in Part B drug payment rates, Congress should consider requiring all  manufacturers of Part B drugs paid at ASP, not only those with Medicaid  drug rebate agreements, to submit sales price data to CMS, and ensure  that CMS has authority to request source documentation to periodically  validate all such data.
section_title: Recommendation for Executive Action
paragraphs: CMS should periodically verify the sales price data submitted by a sample  of drug manufacturers by requesting source documentation from  manufacturers to corroborate the reported data, either directly or by  working with OIG as necessary.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report for review to HHS and received written  comments that are summarized below and reprinted in appendix II.
In its comments, HHS agreed with our recommendation.  HHS stated that  CMS will work with OIG as appropriate regarding collecting source  documentation from drug manufacturers and that CMS will take action as  it is warranted. To fulfill this recommendation, CMS will have to take  additional actions relative to what it has done in the past. As we noted in  the report, CMS has previously requested that OIG use its authority to  audit ASP data submitted by manufacturers when it has identified  potential consistent or repeated problems with calculating and reporting  ASP data. HHS also noted in its comments that the OIG reviews average  manufacturer price (AMP) data for Part B drugs and that CMS has the  authority to adjust the ASP-based payment amount in situations where  the OIG finds that ASP exceeds AMP by a certain threshold percentage.  However, AMP data are also reported by manufacturers and would be  inaccurate if the data do not represent actual manufacturer prices.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  Secretary of Health and Human Services and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
section_title: Appendix I: Characteristics Associated with the Part B Drugs Paid Based on ASP with the Highest Expenditures and Highest Number of Administrations (2014)
paragraphs: Appendix I: Characteristics Associated with  the Part B Drugs Paid Based on ASP with the  Highest Expenditures and Highest Number of  Administrations (2014)
Methylprednisolone  acetate (40mg)
Number of  beneficiaries  (thousands)
Methylprednisolone acetate  injection (40mg)
Albuterol and ipratropium  bromide inhalation solution  Methylprednisolone acetate  injection (80mg)
section_title: Appendix II: Comments from the Department of Health and Human Services
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, individuals who made key  contributions to this report included Gregory Giusto, Assistant Director;  Alison Binkowski; George Bogart; Alexander Cattran; Daniel Lee; Lauren  Metayer; Elizabeth T. Morrison; and Aubrey Naffis.
section_title: Related GAO Products
paragraphs: Medicare Part B: Expenditures for New Drugs Concentrated among a  Few Drugs and Most Were Costly for Beneficiaries. GAO-16-12.  Washington, D.C.: October 23, 2015.
Medicare: Information on Highest-Expenditure Part B Drugs.   GAO-13-739T. Washington, D.C.: June 28, 2013.
Medicare: High-Expenditure Part B Drugs. GAO-13-46R. Washington,  D.C.: October 12, 2012.
Medicare Part B Drugs: CMS Data Source for Setting Payments Is  Practical but Concerns Remain. GAO-06-971T. Washington, D.C.: July  13, 2006.
Medicare Hospital Pharmaceuticals: Survey Shows Price Variation and  Highlights Data Collection Lessons and Outpatient Rate-Setting  Challenges for CMS. GAO-06-372. Washington, D.C.: April 28, 2006.
Medicare: Comments on CMS Proposed 2006 Rates for Specified  Covered Outpatient Drugs and Radiopharmaceuticals Used in Hospitals.  GAO-06-17R. Washington, D.C.: October 31, 2005.
Medicare: Radiopharmaceutical Purchase Prices for CMS Consideration  in Hospital Outpatient Rate-Setting. GAO-05-733R. Washington, D.C.:  July 14, 2005.
Medicare: Drug Purchase Prices for CMS Consideration in Hospital  Outpatient Rate-Setting. GAO-05-581R. Washington, D.C.: June 30,  2005.