Drug Price Substitution Could Have Saved $7 Million in Medicare Payments
Feb. 27—Under a proposed Medicare drug price substitution policy, payment amounts for more than 40 percent of 58 drug codes would have been reduced, saving an estimated $7 million in 2011, according to a federal agency report.
The 58 drug codes identified had average sales prices (ASPs) that exceeded average manufacturer prices (AMPs) by at least 5 percent in any quarter of 2011, according to Comparison of Average Sales Prices and Average Manufacturer Prices: An Overview of 2011, released by the U.S. Department of Health and Human Services’ Office of Inspector General.
ASPs are the primary basis for Medicare Part B drug payments. Under the proposed rule methodology implemented in January 2005, the Centers for Medicare & Medicaid Services (CMS) is directed to lower payments for drugs with ASPs that exceed AMPs by the 5 percent threshold.
If payment amounts for the 58 drug codes had been lowered to 103 percent of the AMPs during the applicable quarter(s) in 2011, Medicare expenditures would have been reduced by an estimated $14.4 million over the year, according to the report.
Publication Date: Wednesday, February 27, 2013