HHS OIG Examines Medicare Part B Drug Payments and Evaluates Policy to Substitute Lower Average Manufacturer Price (AMP) When Average Sales Price (ASP) is Higher

This week, the Office of Inspector General (OIG) for the Department of Health and Human Services (HHS) released a report on Medicare Part B drug payments. Currently, physicians are reimbursed for drugs administered in the office at the average sales price (ASP) plus 6%. However, if the average manufacturer’s price (AMP) is determined to be at least 5% lower than ASP, CMS is required to reimburse physicians at the lower AMP rate. The report compared the ASP with the AMP of drugs and found that CMS lowered Part B drug reimbursement rates for 14 drugs, saving Medicare beneficiaries and the program $24 million in CY2014. In addition, OIG estimated that if CMS expanded the price-substitution policy, there would be $9 million in additional savings.