Medicare Hospital Pharmaceuticals
Survey Shows Price Variation and Highlights Data Collection Lessons and Outpatient Rate-Setting Challenges for CMS Gao ID: GAO-06-372 April 28, 2006In 2003, the Medicare Modernization Act required the Centers for Medicare & Medicaid Services (CMS) to establish payment rates for a set of new pharmaceutical products--drugs and radiopharmaceuticals--provided to beneficiaries in a hospital outpatient setting. These products were classified for payment purposes as specified covered outpatient drugs (SCOD). The legislation directed CMS to set 2006 Medicare payment rates for SCODs equal to hospitals' average acquisition costs and included requirements for GAO. As directed, GAO surveyed hospitals and issued two reports, providing information to use in setting 2006 SCOD rates. To address other requirements in the law, this report analyzes SCOD price variation across hospitals, advises CMS on future surveys it might undertake, and examines both lessons from the GAO survey and future challenges facing CMS.
Analyzing pharmaceutical price data collected from its 2004 survey of hospitals, GAO found that prices hospitals paid for SCOD products varied across hospitals. Certain factors--namely, whether the hospital had a major teaching program or not, was in an urban or rural area, and had a large or small hospital outpatient department--were associated with whether hospitals paid higher or lower prices for SCOD products. Major teaching hospitals paid prices that were an estimated 3.2 percent lower than those paid by nonteaching hospitals for drug SCODs; rural hospitals paid prices an estimated 4.4 percent higher than those paid by urban hospitals for radiopharmaceutical SCODs; and large hospitals paid prices an estimated 1.4 percent lower than those paid by small hospitals for drug SCODs and 3.1 percent lower for radiopharmaceutical SCODs. Combining these factors, GAO found that large, urban, major teaching hospitals--compared with other hospitals--generally paid lower prices, on average, for all SCOD products. From conducting its hospital survey, GAO learned a key lesson that CMS could use in the future: such a survey would not be practical for collecting the data needed to set and update SCOD rates routinely but would be useful for validating, on occasion, CMS's rate-setting data. GAO's survey produced accurate hospital drug price data, but it also created a considerable burden for hospitals as the data suppliers and considerable costs for GAO as the data collector. Nonetheless, the benefit of collecting actual prices paid by hospitals could make such surveys advantageous for occasionally validating CMS's proxy for SCODs' average acquisition costs--the average sales price (ASP) data that manufacturers report. CMS will face important challenges as it seeks to obtain accurate data on hospitals' acquisition costs for drug and radiopharmaceutical SCODs. Regarding drugs, CMS lacks the detail on manufacturers' ASP data needed to determine if rates developed from these data are appropriate for hospitals. Manufacturers report ASP as a single price paid by all purchasers, making it impossible to distinguish the price paid by hospitals alone. CMS instructs manufacturers to report ASP net of rebates but does not specify how to allocate individual product rebates when several products are purchased. Regarding radiopharmaceuticals, GAO found that the diversity of forms in which they can be purchased--ready-to-use unit doses, multidoses, or separately purchased radioactive and non-radioactive substances--complicates CMS's efforts to select a data source that can provide reasonably accurate price data efficiently. Efficiency as well as accuracy is a factor in selecting a data source because radiopharmaceuticals account for only 1.5 percent of Medicare hospital outpatient spending. GAO's experience suggests that the best option available to CMS, in terms of accuracy and efficiency, is to collect price data on radiopharmaceuticals purchased in ready-to-use unit doses, the form in which an estimated three-quarters of hospitals purchase these products.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-372, Medicare Hospital Pharmaceuticals: Survey Shows Price Variation and Highlights Data Collection Lessons and Outpatient Rate-Setting Challenges for CMS
This is the accessible text file for GAO report number GAO-06-372
entitled 'Medicare Hospital Pharmaceuticals: Survey Shows Price
Variation and Highlights Data Collection Lessons and Outpatient Rate-
Setting Challenges for CMS' which was released on April 28, 2006.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to Congressional Committees:
United States Government Accountability Office:
GAO:
April 2006:
Medicare Hospital Pharmaceuticals:
Survey Shows Price Variation and Highlights Data Collection Lessons and
Outpatient Rate-Setting Challenges for CMS:
Medicare:
GAO-06-372:
GAO Highlights:
Highlights of GAO-06-372, a report to congressional committees.
Why GAO Did This Study:
In 2003, the Medicare Modernization Act required the Centers for
Medicare & Medicaid Services (CMS) to establish payment rates for a set
of new pharmaceutical products”drugs and radiopharmaceuticals”provided
to beneficiaries in a hospital outpatient setting. These products were
classified for payment purposes as specified covered outpatient drugs
(SCOD). The legislation directed CMS to set 2006 Medicare payment rates
for SCODs equal to hospitals‘ average acquisition costs and included
requirements for GAO. As directed, GAO surveyed hospitals and issued
two reports, providing information to use in setting 2006 SCOD rates.
To address other requirements in the law, this report analyzes SCOD
price variation across hospitals, advises CMS on future surveys it
might undertake, and examines both lessons from the GAO survey and
future challenges facing CMS.
What GAO Found:
Analyzing pharmaceutical price data collected from its 2004 survey of
hospitals, GAO found that prices hospitals paid for SCOD products
varied across hospitals. Certain factors”namely, whether the hospital
had a major teaching program or not, was in an urban or rural area, and
had a large or small hospital outpatient department”were associated
with whether hospitals paid higher or lower prices for SCOD products.
Major teaching hospitals paid prices that were an estimated 3.2 percent
lower than those paid by nonteaching hospitals for drug SCODs; rural
hospitals paid prices an estimated 4.4 percent higher than those paid
by urban hospitals for radiopharmaceutical SCODs; and large hospitals
paid prices an estimated 1.4 percent lower than those paid by small
hospitals for drug SCODs and 3.1 percent lower for radiopharmaceutical
SCODs. Combining these factors, GAO found that large, urban, major
teaching hospitals”compared with other hospitals”generally paid lower
prices, on average, for all SCOD products.
From conducting its hospital survey, GAO learned a key lesson that CMS
could use in the future: such a survey would not be practical for
collecting the data needed to set and update SCOD rates routinely but
would be useful for validating, on occasion, CMS‘s rate-setting data.
GAO‘s survey produced accurate hospital drug price data, but it also
created a considerable burden for hospitals as the data suppliers and
considerable costs for GAO as the data collector. Nonetheless, the
benefit of collecting actual prices paid by hospitals could make such
surveys advantageous for occasionally validating CMS‘s proxy for SCODs‘
average acquisition costs--the average sales price (ASP) data that
manufacturers report.
CMS will face important challenges as it seeks to obtain accurate data
on hospitals‘ acquisition costs for drug and radiopharmaceutical SCODs.
* Regarding drugs, CMS lacks the detail on manufacturers‘ ASP data
needed to determine if rates developed from these data are appropriate
for hospitals. Manufacturers report ASP as a single price paid by all
purchasers, making it impossible to distinguish the price paid by
hospitals alone. CMS instructs manufacturers to report ASP net of
rebates but does not specify how to allocate individual product rebates
when several products are purchased.
* Regarding radiopharmaceuticals, GAO found that the diversity of forms
in which they can be purchased”ready-to-use unit doses, multidoses, or
separately purchased radioactive and non-radioactive
substances”complicates CMS‘s efforts to select a data source that can
provide reasonably accurate price data efficiently. Efficiency as well
as accuracy is a factor in selecting a data source because
radiopharmaceuticals account for only 1.5 percent of Medicare hospital
outpatient spending. GAO‘s experience suggests that the best option
available to CMS, in terms of accuracy and efficiency, is to collect
price data on radiopharmaceuticals purchased in ready-to-use unit
doses, the form in which an estimated three-quarters of hospitals
purchase these products.
What GAO Recommends:
GAO recommends that the Secretary of Health and Human Services seek to
ensure that CMS‘s SCOD payment rates are based on sufficiently reliable
data by (1) validating data collected on drug prices and (2) basing
payment rates for each radiopharmaceutical SCOD on the price of a ready-
to-use unit dose. Although expressing some reservations, particularly
concerning the burden of data collection, HHS agreed to consider GAO‘s
recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-372].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact A. Bruce Steinwald at
(202) 512-7119 or steinwalda@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
Hospitals' Teaching Status, Location, and Size Affected Prices for SCOD
Products by Different Magnitudes:
Our Survey of Hospitals Suggests that the Burden of Large-Scale Annual
Surveys Could Outweigh Gains in Data Accuracy:
CMS Faces Challenges in Future Data Collection Efforts to Set SCOD
Payment Rates Accurately:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Methodology for Analysis of SCOD Price Differences among
Hospital Types:
Appendix II: Purchase Prices for Drug SCODs:
Appendix III: Purchase Prices for Radiopharmaceuticals SCODs:
Appendix IV: Comments from the Department of Health and Human Services:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Factors Accounting for Variation in SCOD Prices among
Hospitals:
Table 2: Factors Included in Analysis of Price Variation among
Hospitals Purchasing SCODs:
Table 3: Estimated Effects of Selected Factors on Prices Hospitals Paid
for Drug SCODs:
Table 4: Estimated Effects of Selected Factors on Prices Hospitals Paid
for Radiopharmaceutical SCODs:
Table 5: Purchase Prices for SCODs Accounting for 86 Percent of
Medicare Spending on SCODs:
Table 6: Purchase Prices for Radiopharmaceutical Accounting for 9
Percent of Medicare Spending on SCODs:
Abbreviations:
ASP: average sales price:
CMS: Centers for Medicare & Medicaid Services:
HHS: Department of Health and Human Services:
MMA: Medicare Prescription Drug, Improvement, and Modernization Act of
2003:
MSA: metropolitan statistical area:
NDC: national drug code:
OPPS: outpatient prospective payment system:
SCOD: specified covered outpatient drug:
Washington, DC 20548:
April 28, 2006:
The Honorable Charles E. Grassley:
Chairman:
The Honorable Max Baucus:
Ranking Minority Member:
Committee on Finance United States Senate:
The Honorable Joe Barton:
Chairman:
The Honorable John D. Dingell:
Ranking Minority Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable William M. Thomas:
Chairman:
The Honorable Charles B. Rangel:
Ranking Minority Member:
Committee on Ways and Means:
House of Representatives:
In 2003, federal legislation required the establishment of Medicare
payment rates for a particular set of new pharmaceutical products that
were provided to beneficiaries in hospital outpatient settings but were
generally paid for differently than other services paid under
Medicare's hospital outpatient prospective payment system (OPPS). These
products were newly introduced drugs, biologicals, and
radiopharmaceuticals used to treat and in some cases diagnose serious
conditions such as cancer.[Footnote 1] Specifically, the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)
required the Centers for Medicare & Medicaid Services (CMS) in the
Department of Health and Human Services (HHS) to set rates for these
pharmaceuticals. MMA classified them for payment purposes as specified
covered outpatient drugs (SCOD).[Footnote 2] In addition, MMA defined a
SCOD as a drug or radiopharmaceutical, used in hospital outpatient
departments, covered by Medicare, and paid for as an individual product
for which CMS established a separate payment category rather than
placing it in a category that included other services.
The MMA directed CMS to set 2006 payment rates for SCOD products equal
to hospitals' average acquisition costs--the cost to hospitals of
acquiring a product, net the cost of rebates.[Footnote 3] In several
related requirements, the MMA directed us to provide information on
SCOD costs and CMS's proposed rates.[Footnote 4] First, we were
required to conduct a survey of a large sample of hospitals to obtain
data on their acquisition costs of SCODs and provide information based
on these data to the Secretary of Health and Human Services for his
consideration in setting 2006 Medicare payment rates.[Footnote 5] We
provided information from this survey in two reports[Footnote 6]--one
on drugs and another on radiopharmaceuticals. These reports presented
systematic information on hospitals' purchase prices of SCODs and
limited information on rebates.[Footnote 7] Second, we were required to
evaluate CMS's proposed rates for SCODs and comment on their
appropriateness in light of the survey of SCOD prices we conducted. We
provided our comments in a report issued in October 2005.[Footnote 8]
Two other MMA requirements had a role for us--to report on any
variation found in our survey results in acquisition costs among
hospitals and to advise on future data collection efforts by CMS based
on our survey experience.[Footnote 9] This report addresses these
requirements and examines (1) the extent to which SCOD prices
identified in our survey differed among hospitals with different
characteristics, (2) lessons the MMA-mandated survey experience
provided for the methodology and frequency of future collection of SCOD
price data, and (3) the challenges CMS faces in collecting data to set
SCOD payment rates accurately after 2006.
To examine price variation among a sample consisting of 1,157 hospitals
purchasing SCOD products, we conducted a multivariate statistical
analysis and grouped hospitals by certain key characteristics,
including teaching status, location, and size. We defined a hospital's
teaching status as major, other teaching, or nonteaching, based on the
hospital's intern/resident-to-bed ratio;[Footnote 10] location as urban
or rural based on metropolitan statistical areas (MSA); and size as a
hospital's total Medicare outpatient charges, classifying a hospital as
large if its Medicare charges were at or above the 80th percentile of
all hospital outpatient charges. The prices we examined were drawn from
our survey of hospitals' purchase prices for 62 SCODs for the period
July 1, 2003, through June 30, 2004.[Footnote 11] We determined that
our survey data were reliable for estimating SCOD prices. For details
on our methodology, see appendix I.
To identify lessons learned from our hospital survey experience as well
as challenges for CMS's future data collection,[Footnote 12] we
reviewed the findings from our issued reports on SCOD drug
prices,[Footnote 13] SCOD radiopharmaceutical prices,[Footnote 14] and
CMS's proposed SCOD rates;[Footnote 15] consulted on methodological
issues with an advisory panel of experts in pharmaceutical economics,
pharmacy, medicine, survey sampling, and Medicare payment;[Footnote 16]
interviewed officials from CMS and several dozen hospitals; and
reviewed CMS's final rule on Medicare's 2006 payment rates for
SCODs.[Footnote 17] In particular, we reviewed CMS's published method
for collecting the average sales prices (ASP) of drug SCODs:
manufacturers report their ASPs quarterly to CMS, which uses them as a
proxy for average acquisition costs in setting drug SCOD payment rates.
We performed our work according to generally accepted government
auditing standards from September 2005 through April 2006.
Results in Brief:
In an analysis of price data collected from our survey of hospitals, we
found that prices hospitals paid for the SCOD products they purchased
varied across hospitals. Certain factors--namely, whether the hospital
had a major teaching program or not, was in an urban or rural area, and
had a large or small hospital outpatient department--were associated
with whether hospitals paid higher or lower prices for the SCOD
products they purchased. Specifically,
* compared with nonteaching hospitals, major teaching hospitals paid
prices that were, on average, an estimated 3.2 percent lower for drug
SCODs;
* compared with urban hospitals, rural hospitals paid prices that were,
on average, an estimated 4.4 percent higher for radiopharmaceutical
SCOD;, and:
* compared with smaller hospitals, large hospitals paid prices that
were, on average, an estimated 1.4 percent lower for drug SCODs and 3.1
percent lower for radiopharmaceutical SCODs.
Combining the three factors, we found that large, urban, major teaching
hospitals generally paid lower prices, on average, for all SCOD
products than did hospitals grouped by other combinations of factors.
A key lesson for CMS that we learned from conducting the 2004 MMA-
mandated hospital survey is that such a survey would not be practical
for collecting the data needed to set and update SCOD rates routinely.
However, it would be useful, on occasion, for CMS to survey hospitals
so that the rate-setting data it obtained from other sources could be
validated by an independent source. Our 2004 hospital survey produced
accurate hospital drug price data, but it also created a considerable
burden for hospitals as data suppliers and considerable costs for us as
the data collector--signaling the difficulties that CMS would face in
implementing similar surveys in the future. Hospitals told us that, to
submit the required price data, they had to divert staff from their
normal duties, thereby incurring additional costs. Similarly, we
incurred substantial staff and contractor costs to make data obtained
from diverse information systems comparable and usable for SCOD rate-
setting. Nevertheless, we found that the benefit of obtaining data on
actual prices paid by hospitals could make such surveys advantageous
for validating, on an occasional basis--possibly every 5 or 10 years--
ASP data that manufacturers report to CMS for developing SCOD payment
rates.
CMS will face important challenges as it seeks to obtain accurate data
on hospitals' acquisition costs for both drug and radiopharmaceutical
SCODs.
* With regard to drug SCODs, CMS lacks the detail on manufacturers' ASP
data needed to determine if the Medicare payment rates developed from
these data are appropriate specifically for hospitals. Manufacturers
report ASP as a single price paid by all purchasers--as defined by law-
-but do not identify purchasers by type or share of purchases.
Therefore, CMS could not determine whether hospitals pay more or less
than physicians, for example, for drug SCODs. If other providers paid
more or less than hospitals, that could result in an average that was
either higher or lower than what hospitals paid. In our October 2005
report, we recommended that CMS collect information on manufacturers'
ASP that would identify purchaser types.[Footnote 18] In addition, CMS
instructs manufacturers to report ASP net of rebates but does not
provide guidance on how to allocate to an individual product rebates
that are based on purchases of more than one product.
* With regard to radiopharmaceutical SCODs, their complex nature as
compared with drugs poses challenges for collecting and interpreting
cost data. Because radiopharmaceuticals consist of a radioisotope and a
medicine or pharmaceutical agent, hospitals can purchase them in ready-
to-use unit dose form, as most hospitals do, multidose, or as separate
components to be subsequently compounded. The different purchase
options available to hospitals make pricing radiopharmaceuticals
uniformly across hospitals infeasible. In addition, the short half-life
of certain radioisotopes, which causes these products to decay over
time, makes the hospital's distance from its supplier a factor in how
much is purchased. This can lead to differences among hospitals in the
amount purchased per beneficiary served. Given the complexities of
radiopharmaceuticals, it is also important to note that the amount
spent on radiopharmaceuticals is less than 1.5 percent of total
Medicare spending on hospital outpatient services. This small
percentage together with the complexities of radiopharmaceuticals
complicate CMS's ability to select a data source that can provide
reasonably accurate data efficiently.
In this report, we make recommendations to the Secretary of Health and
Human Services regarding both drugs and radiopharmaceuticals. We
recommend that CMS occasionally validate manufacturers' reported ASPs
as a measure of hospitals' acquisition costs, using hospital purchases
obtained from a survey or other method. We also recommend the use of
ready-to-use unit-dose prices as the data source for
radiopharmaceutical SCOD rate-setting. In commenting on a draft of this
report, HHS agreed to consider our recommendations, but expressed
several reservations. In particular, it was concerned about the burden
of a hospital survey for both hospital staff and the agency. We
recognize the burden of hospital surveys and for this reason
recommended only occasional hospital surveys--or an alternative method-
-to validate price data reported by manufacturers.
Background:
In the period following the enactment of legislation establishing
Medicare's OPPS and leading up to the MMA in 2003, concerns were
expressed about the adequacy of payments for innovative pharmaceutical
products. The MMA addressed these concerns by establishing a payment
policy for SCODs. As mandated by the MMA, we conducted a hospital
survey and provided HHS with information about prices hospitals paid
for SCOD products. Details follow on the background of SCODs, our
survey, CMS's new rates for drug SCODs, and the nature of
radiopharmaceutical products.
MMA Established SCOD Payment Categories for Certain Pharmaceutical
Products to Ensure Beneficiary Access to New Products:
CMS uses OPPS to pay hospitals for services that Medicare beneficiaries
receive as part of their treatment in hospital outpatient departments.
Under OPPS, Medicare pays hospitals predetermined rates for most
services. When OPPS was first developed as required by the Balanced
Budget Act of 1997,[Footnote 19] the rates for hospital outpatient
services, drugs, and radiopharmaceuticals were based on hospitals' 1996
median costs. However, these rates prompted concerns that payments to
hospitals would not reflect the costs of newly introduced
pharmaceutical products used to treat, for example, cancer, rare blood
disorders, and other serious conditions. In turn, congressional
concerns were raised that beneficiaries might lose access to some of
these products if hospitals avoided providing them because of a
perceived shortfall in payments. In response to these concerns, the
Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999
authorized pass-through payments, which were a way to temporarily
augment the OPPS payments for newly introduced pharmaceutical products
first used after 1996.[Footnote 20] The MMA modified this payment
method for some of these pharmaceutical products. As part of the
modification, the MMA defined the new SCOD payment category, which
includes many of these newly introduced pharmaceutical products. The
MMA requires that SCODs be placed in separate payment categories--that
is, not packaged with related services.
MMA Required Us to Survey Hospitals to Determine Their Acquisition
Costs for SCOD Products:
As directed by the MMA, we conducted a survey of a large sample of
hospitals to determine their acquisition costs for SCOD products. We
surveyed 1,400 hospitals and received usable data from 83 percent of
the hospitals for drug SCODs and from 61 percent of the 1,322 hospitals
that had submitted Medicare claims for radiopharmaceutical SCODs in the
first 6 months of 2003. We found that we could not obtain data that
would permit calculation of hospitals' acquisition costs, because, in
general, hospitals were unable to report accurately or comprehensively
on rebates.[Footnote 21] Consequently, we reported average purchase
prices for drug and radiopharmaceutical SCODs, which are prices net of
discounts but not rebates.[Footnote 22] Of the 251 SCODs that we
identified, we reported average purchase prices for the 62 SCODs that
accounted for 95 percent of Medicare spending on all SCODs in the first
9 months of 2004. (These prices and related information are included as
app. II and app. III.)
MMA Defined ASP, Which Is Reported by Manufacturers and Used to Set
Rates for Drug SCODs:
ASP is a price measure established in the MMA to provide a basis for
payment rates for physician-administered drugs and now used by CMS in
setting rates for drug SCODs.[Footnote 23] CMS instructs pharmaceutical
manufacturers to report ASP data to CMS within 30 days after the end of
each quarter. The MMA defined ASP as the average sales price for all
U.S. purchasers of a drug, net of volume, prompt pay, and cash
discounts; free goods contingent on a purchase requirement; and charge-
backs and rebates.[Footnote 24] Under CMS's final rule governing 2006
payment rates for hospital outpatient services, including SCOD
products, CMS uses manufacturers' ASPs in setting drug SCOD
rates.[Footnote 25] For radiopharmaceuticals, CMS has set 2006 rates
based on an estimate of hospitals' costs derived from charges, but the
agency has not decided how to pay for radiopharmaceutical SCODs after
2006.[Footnote 26]
Radiopharmaceuticals Can Be Purchased in Different Forms:
Hospitals can purchase radiopharmaceuticals, which consist of a
radioisotope and a medicine or pharmaceutical agent, in different
forms. They can purchase vials of the product in ready-to-use unit
doses or in multidoses, or they can purchase a product's radioactive
and nonradioactive components separately and compound them in-house. In
a survey conducted by the Society of Nuclear Medicine and the Society
of Nuclear Medicine Technologist Section, 76 percent of hospitals
reported that they purchased their radiopharmaceuticals in unit
doses.[Footnote 27]
Hospitals' Teaching Status, Location, and Size Affected Prices for SCOD
Products by Different Magnitudes:
Using our hospital survey of prices hospitals paid for SCOD drugs and
radiopharmaceuticals, we examined the extent to which prices varied
among the approximately 1,200 hospitals that submitted survey data. To
do this, we looked at several hospital characteristics, or factors--
including teaching status, location, and size of the outpatient
department--while controlling for differences in the costliness of the
mix of SCODs that hospitals purchased. We analyzed both (1) the
separate effect of each factor, controlling for other factors; and (2)
the effect of the three factors combined. We found that teaching status
had the largest separate effect on drug SCOD prices, whereas location
had the largest effect on radiopharmaceutical SCOD prices. Combining
the three factors, we found, for example, that large, urban, hospitals
with major teaching programs paid lower prices, on average, for drug
SCODs--compared with small urban hospitals with other teaching
programs.
Teaching Status, Location, and Size Were Each Significant Factors
Affecting Price Variation among Hospitals:
The importance of the three factors in accounting for variation in SCOD
prices among hospitals differed by type of product purchased--that is,
drug or radiopharmaceutical.[Footnote 28] A hospital's teaching status,
for example, affected prices paid for drug SCODs but did not matter for
the radiopharmaceutical SCOD prices pertaining to unit dose purchases
in our survey. In contrast, a hospital's location was an important
factor linked to price differences for radiopharmaceuticals but did not
matter with respect to prices for drugs. In addition, hospital size was
important in affecting price differences for both drugs and
radiopharmaceuticals. (See table 1.)
Table 1: Factors Accounting for Variation in SCOD Prices among
Hospitals:
Hospital characteristic: Teaching status; Drugs: X;
Radiopharmaceuticals:
Hospital characteristic: Location; Drugs: [Empty];
Radiopharmaceuticals: X.
Hospital characteristic: Size; Drugs: X;
Radiopharmaceuticals: X.
Sources: GAO analysis of GAO survey data and CMS data on hospital
characteristics.
Note: We determined the importance of these factors using a
multivariate statistical analysis that examined how prices varied for
SCODs by hospitals' teaching status, location, and size of outpatient
department, while controlling for differences in the costliness of the
mix of SCODs that hospitals purchased. Factors marked with an "x" are
statistically significant at the 5 percent level.
[End of table]
In assessing the magnitude of each factor's separate effect on prices,
we found the following results:
* Teaching status: Compared with nonteaching hospitals, major teaching
hospitals paid prices that were, on average, an estimated 3.2 percent
lower for drug SCODs. Teaching status had no independent effect on the
prices of radiopharmaceutical SCODs purchased in ready-to-use unit
doses.[Footnote 29]
* Location: Compared with hospitals located in urban areas, the prices
paid by hospitals located in rural areas for radiopharmaceutical SCODs
were, on average, an estimated 4.4 percent higher.
* Size: Compared with smaller hospitals, hospitals with large
outpatient departments paid prices, on average, that were an estimated
1.4 percent lower for drugs and 3.1 percent lower for
radiopharmaceuticals.
Certain circumstances may help explain why each factor had an effect on
price. Regarding the effect of teaching status on drug prices, for
example, manufacturers may want to influence prescribing patterns of
physicians in training and may therefore offer drugs at lower prices to
hospitals with teaching programs. As for location's effect on
radiopharmaceutical SCOD prices, industry experts suggested that the
short half-life of certain radioactive products could make transporting
them to hospitals in rural areas more costly. As for hospital size,
hospitals with large outpatient departments may have benefited from
volume discounts.
Hospitals with Combination of Major Teaching Status, Urban Location,
and Large Size Obtained Lowest SCOD Prices:
To examine the combined effect of the three key factors on prices paid
by hospitals, we compared hospitals grouped by one combination--major
teaching program, urban location, and large outpatient department--with
hospitals grouped by other combinations. Our analysis indicates that
large, urban, major teaching hospitals generally paid lower prices, on
average, for all SCOD products than did hospitals grouped by other
combinations of factors. For example, compared with small urban
hospitals with other teaching programs, large major teaching hospitals
in urban areas paid prices, on average, that were an estimated 4
percent lower for drugs and 3 percent lower for radiopharmaceuticals.
In contrast, compared with small urban hospitals with other teaching
programs, small rural hospitals with no teaching programs paid prices,
on average, that were about the same for drugs and 4 percent higher for
radiopharmaceuticals.[Footnote 30]
Our Survey of Hospitals Suggests that the Burden of Large-Scale Annual
Surveys Could Outweigh Gains in Data Accuracy:
Our MMA-mandated survey of hospitals produced accurate hospital price
data. However, for CMS to use such a survey to routinely collect data
in the future for SCOD rate-setting, the burden could outweigh the
benefit. Instead, similar surveys of hospitals could be a useful tool
to validate price data obtained from manufacturers, if conducted on an
occasional basis.
Using Hospitals as Data Source for SCOD Prices Had A Major Advantage
and Serious Drawbacks:
Based on our survey experience, we noted that hospitals as a SCOD data
source had one important advantage as well as substantial drawbacks. We
found that, as a data source for estimating hospitals' SCOD acquisition
costs, hospitals offered a key advantage: our average purchase prices
obtained from hospitals, by definition, represent actual prices paid by
hospitals.[Footnote 31] In this respect, our data differ from other
data sources available to CMS--such as suggested list prices, ASPs, and
hospitals' Medicare claims. As a result, none of these alternatives
provide, as our survey data do, nationwide data on the actual purchase
prices paid by hospitals for drugs and radiopharmaceutical SCODs.
However, based on our experience, we found that there would be
drawbacks in using hospitals as an annual data source on SCOD prices,
owing primarily to the considerable burden created for hospitals as
suppliers of data and the considerable costs we incurred as data
collectors, signaling the difficulties that CMS would face in
implementing similar surveys in the future. Hospitals told us that, to
submit the required price data, they had to divert staff from their
normal duties, thereby incurring additional staff and contractor costs.
The burden was more taxing for some hospitals than for others. Most
hospitals had the advantage of relying on price data downloaded from
their drug wholesalers' information systems. A number of hospitals,
however, either collected the data manually, provided us with copies of
paper invoices, or had automated information systems that were not
designed to retrieve the detailed price data needed and required
additional data processing effort. Hospitals' data collection
difficulties were particularly pronounced regarding information on
manufacturers' rebates, which affect a drug's net acquisition cost.
Typically, hospitals did not systematically track all manufacturers'
rebates on drug purchases, although nearly 60 percent of hospitals
reported receiving one or more rebates.[Footnote 32]
As collectors of data on SCOD prices, we also experienced difficulties
obtaining the information needed from hospitals. Hospitals' information
systems were diverse and produced data in many different formats,
causing substantial resource and timing difficulties in the data
collection process.[Footnote 33] Specifically, we had to reconfigure
data submitted in multiple formats to produce data comparable across
hospitals and usable for SCOD rate-setting. This reconfiguration
required us to deploy substantial resources and to allow additional
time for processing before the data could be made available to CMS. The
difficulties we encountered would likely be faced by any organization
undertaking a survey using a similar approach.
As we previously reported, using SCOD price and related data from drug
manufacturers--as CMS is doing in 2006--is a practical strategy for
setting Medicare payment rates to hospitals for SCODs.[Footnote 34]
However, our experience obtaining information on actual purchase prices
and our observation of the pace of change in the drug marketplace
suggest that an occasional survey of hospitals--possibly once or twice
in a decade--may be advantageous for validating the accuracy of
manufacturers' price information as a proxy for hospital acquisition
cost.[Footnote 35] Drawing on our experience and using data about
sampling variability from our 2004 hospital survey,[Footnote 36] CMS
could design a similar but streamlined hospital survey.[Footnote 37]
Other options available to CMS for validating the accuracy of the price
data as a proxy for hospitals' acquisition costs include audits of
manufacturers' price submissions or an examination of proprietary data
the agency considers reliable for validation purposes.
Survey Indicates that Accounting for Dynamic Drug Market and
Infrequently Purchased Drugs Has Implications for Accuracy and
Efficiency:
Our hospital survey experience not only identified data collection
issues associated with hospitals but also underscored accuracy and
efficiency concerns in collecting SCOD data from any source.
Specifically, the accuracy of the rates Medicare pays for drugs within
a SCOD payment category, based on the average price of drugs included
in the SCOD, may be compromised if the price of any drug--that is, any
national drug code (NDC)--is omitted from the average price of the SCOD
category.[Footnote 38] In the conduct of our 2004 survey, we began with
a list, which CMS provided to us, of drug categories that included
SCODs as well as other drugs that potentially could be considered SCODs
in the future. To ensure the accuracy of our calculation of a
hospital's average purchase price for SCODs, we took additional steps
using industry experts and data sources to classify the NDCs and assign
them to the appropriate SCOD categories.[Footnote 39] Since the drug
market is dynamic--new drugs enter the market and other drugs drop out
in the course of a year--CMS's list of SCOD drugs and their component
NDCs could become out of date unless updated frequently to ensure that
all SCOD drugs purchased by hospitals are identified and figured into
the calculation of a SCOD's average price.
With regard to efficiency in analyzing our survey results, we
concentrated our data processing and statistical resources on the
roughly one-quarter of SCODs that account for most of Medicare's total
SCOD spending. In particular, the 62 SCODs for which we produced price
estimates accounted for 95 percent of Medicare spending on all 251
SCODs in the first 9 months of 2004.[Footnote 40] We would not have
been able to produce price estimates for all SCODs in time for CMS to
take account of our data in setting the 2006 rates. Our experience--
especially the amount of time and resources necessary for each step in
the data collection and analysis process--could be used by CMS to
determine in advance the number of SCODs on which to collect data and
estimate prices. There might be some benefit in gathering data and
producing price estimates for all SCODs; on the other hand, if
resources were limited, CMS might choose to focus on fewer SCODs.
CMS Faces Challenges in Future Data Collection Efforts to Set SCOD
Payment Rates Accurately:
CMS will face important challenges in its efforts to collect accurate
data for setting SCOD payment rates. In our October 2005 report on
CMS's proposed SCOD rates, we expressed reservations about the ASP data
CMS used to set 2006 payment rates for drug SCODs. We cautioned that
manufacturers' reporting of ASPs in summary form--without any further
detail--does not provide the agency the information needed to ensure
that ASPs are a sufficiently accurate measure of hospitals' acquisition
costs. Data collection and rate-setting for radiopharmaceutical SCODs
present unique challenges because of these products' distinctive
characteristics.
Validating ASP Would Pose Challenges for CMS Because of Lack of Detail
in Data:
Under CMS's current policy, manufacturers are required to report only
summary ASP data, limiting CMS's ability to validate the data's
accuracy. Specifically, manufacturers report ASP as a single price,
with no breakdown of price and volume by type of purchaser. CMS
instructs manufacturers to average together prices for each drug paid
by all U.S. purchasers. However, different purchaser types--for
example, hospitals, physicians, and wholesalers--may receive prices
that, by purchaser type, are on average higher or lower than one
another's. Because CMS does not receive price data at this level of
detail, it cannot determine whether price differences among purchaser
types exist. To the extent that nonhospital providers pay different
prices than hospitals and account for a proportion of the SCODs
purchased, ASP will differ from the prices paid on average by
hospitals.[Footnote 41] CMS has not presented evidence, in its final
rule or in discussions with us, that physicians and hospitals pay the
same prices.
An additional weakness in CMS's instructions for computing ASPs
compounds the challenge of testing the accuracy of the ASPs that
manufacturers report. No instruction is provided to manufacturers on
the treatment of rebates that apply to several drug products in
calculating ASP.[Footnote 42] This is of particular concern to the
extent that manufacturers differ in their rules for calculating these
rebates. When a rebate applies to a group of a manufacturer's products-
-which may include several SCODs, other pharmaceuticals, and other
products--netting out the rebate attributable to a specific SCOD's
purchase is less than straightforward. In the absence of clear and
specific instructions, each manufacturer must identify or develop a
method for allocating rebates to each of its drug SCOD products. To the
extent that manufacturers' methods differ, they are likely to yield
inconsistent results. Moreover, CMS's final rule does not provide for a
follow-up process to check that rebate allocations have been made or
have been made appropriately.
Radiopharmaceuticals Pose Unique Challenges for Obtaining Accurate Cost
Data Efficiently:
The complex nature of radiopharmaceuticals as compared with drugs poses
special challenges for collecting and interpreting cost data. These
challenges include (1) obtaining consistent data for
radiopharmaceutical SCODs produced in very different forms and (2) the
short half-life for certain products. Moreover, since Medicare spends
relatively little on radiopharmaceuticals--less than 1.5 percent of
Medicare spending on hospital outpatient services--the challenge is to
find a source of data for setting rates that is low cost and reasonably
accurate.
In our hospital survey, we faced the challenge of uniformly pricing
products purchased in very different forms. We focused on prices for
radiopharmaceuticals purchased in unit doses. Most of the hospitals
purchased radiopharmaceuticals in this ready-to-use form, and only a
small fraction of hospitals purchased radiopharmaceuticals in separate
components (the radioisotope and the nonradioactive substance), which
need to be compounded.[Footnote 43] We were unable to make prices for
separately purchased components comparable to those obtained for unit
doses, as the labor costs for compounding the products are included in
hospitals' reported prices of ready-to-use products but not in their
reported prices of products they purchased as separate components.
The short half-life of certain radiopharmaceutical SCODs can also pose
challenges for collecting and interpreting price data. Because the
radioactive component decays over time, the amount of the product
purchased for a given patient may vary with the distance between where
the radiopharmaceutical is compounded and where it is administered. The
result is that for those short-lived radiopharmaceuticals paid on a per-
dose basis, the cost per dose is more for the doses prepared far from
the point of administration than for those prepared closer by, as more
of a radioactive product must be purchased to account for its decay in
transit. This applies most commonly to F-18 radiopharmaceuticals, the
most common of which, F-18 FDG, has a half- life of 1.8 hours.[Footnote
44] F-18 radiopharmaceuticals, including F- 18 FDG, are used in the
diagnosis of various diseases, such as cancer, heart disease, and liver
disease.
Finally, CMS faces the challenge of balancing accuracy and efficiency
in obtaining price data on radiopharmaceutical SCODs. Our approach in
estimating prices from our survey data was to use only information on
unit dose prices, the form purchased by most hospitals.[Footnote 45]
CMS, as stated in the 2006 final rule governing payment rates for
SCODs, has not found what it considers a satisfactory method for
obtaining data on acquisition costs of radiopharmaceuticals and is
continuing to explore both ASP and other alternatives.[Footnote 46]
Hospitals and manufacturers[Footnote 47] are the most direct source of
price data because both are parties to the transactions in which the
hospitals acquire the radiopharmaceuticals.[Footnote 48] In its notice
of proposed rulemaking for radiopharmaceutical SCODs, CMS proposed
collecting ASPs from manufacturers for use in setting 2007 payment
rates.[Footnote 49] In light of many comments regarding the difficulty
of this undertaking, CMS decided not to collect radiopharmaceutical
ASPs for 2007 rates, but left open the possibility of using ASP in the
future.
CMS has also discussed the possibility of using charges from hospitals'
Medicare claims to approximate acquisition costs for
radiopharmaceutical SCODs, rather than obtaining price data from
invoices provided by hospitals or from manufacturers. Using claims data
may be a more efficient but less accurate means of obtaining price
estimates than obtaining price data directly from manufacturers or from
hospitals' invoices. In its final rule, CMS stated that it was basing
2006 payments on hospitals' charges (derived from outpatient claims)
for radiopharmaceuticals. CMS plans to adjust these charges to reflect
costs and noted that it did not plan to use this methodology
permanently. For rate-setting after 2006, CMS also noted the
possibility of using invoice data submitted to Medicare by physicians
who administer radiopharmaceuticals in their offices.[Footnote 50] In
its final rule, CMS did not present evidence that hospitals and
physicians pay similar prices for these radiopharmaceutical drugs nor,
if these prices differ, whether using these physician data would be
appropriate for use in setting hospital outpatient rates.
Conclusions:
Basing Medicare's payment rates for hospitals' SCOD purchases on
current, accurate price data is important both to ensuring that
Medicare pays appropriately--neither too much nor too little--and to
ensuring beneficiary access to these innovative pharmaceutical
products. As we previously reported, we agree with CMS that ASP is a
practical data source for setting and updating rates for drug SCODs on
a routine basis. However, we remain concerned about whether CMS can
determine that ASP accurately represents purchases made by hospitals
and believe that CMS should implement our October 2005 recommendation
to collect sufficient information on ASP to make such a determination.
We are also concerned about the likelihood that ASPs are not calculated
consistently across all manufacturers, owing to CMS's lack of detailed
instructions. As for validating the data CMS collects to set payment
rates equal to hospitals' acquisition costs, an examination of
hospitals' actual purchase prices, by definition, is optimal for
assessing accuracy. Recognizing the operational difficulties of a
hospital survey and using the knowledge gained from our survey, CMS
could conduct a similar but streamlined hospital survey, possibly once
or twice in a decade. Other options available to CMS for validating
price data could include audits of manufacturers' price submissions or
an examination of proprietary data the agency considers reliable for
validation purposes.
In contrast, we found that the diversity of forms in which
radiopharmaceutical SCODs can be purchased--ready-to-use unit doses,
multidoses, or separately purchased radioactive and nonradioactive
components--complicates CMS's efforts to select a data source that can
provide reasonably accurate price data efficiently. Our experience
suggests that the best option available to CMS, in terms of accuracy
and efficiency, is to collect price data on radiopharmaceuticals
purchased in ready-to-use unit doses, the form in which an estimated
three-quarters of hospitals purchase these products.
Recommendations for Executive Action:
To ensure that Medicare payments for SCOD products are based on
sufficiently accurate data, we recommend that the Secretary of Health
and Human Services take the following two actions:
* validate, on an occasional basis, manufacturers' reported drug ASPs
as a measure of hospitals' acquisition costs using a survey of
hospitals or other method that CMS determines to be similarly accurate
and efficient; and:
* use unit-dose prices paid by hospitals when available as the data
source for setting and updating Medicare payment rates for
radiopharmaceutical SCODs.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from HHS (see
app. IV), which noted that it had considered information from our
survey of hospitals in developing 2006 hospital outpatient payment
policy and expressed appreciation for our effort and analysis.
Regarding the first recommendation--that HHS validate ASPs as a measure
of hospital acquisition costs through occasional hospital surveys or
other methods--HHS highlighted our finding that an annual hospital
survey could place considerable burdens on both the agency and hospital
staff. However, HHS agreed to consider this recommendation, saying that
it would continue to analyze the best approach for setting payment
rates for drugs and radiopharmaceutical SCODs in view of our
recommendation. It will also continue to analyze the adequacy of paying
for drugs at ASP+6 percent in the light of claims data, which persuaded
HHS that for 2006 ASP + 6 percent was the best available proxy for
hospital acquisition and handling costs.
Regarding the second recommendation--that HHS use unit-dose prices to
set and update payment rates for radiopharmaceuticals--HHS agreed with
us that the multiple forms in which radiopharmaceuticals can be
purchased makes setting their payment rates difficult. While agreeing
to consider our recommendation, HHS expressed several reservations.
First, it noted that we had not specified whether the survey to collect
acquisition cost data should be a survey of hospitals or manufacturers
and asked that we clarify this point. Second, it noted that we had
emphasized the burden of annual surveys of hospital drug prices and
expressed the concern that an annual survey of hospital
radiopharmaceutical prices would be equally burdensome. Finally, HHS
noted that we had confined our report to 9 of the approximately 55
radiopharmaceuticals that are paid separately, and questioned whether
unit-dose data would be available for all or most radiopharmaceuticals.
Our recommendation that HHS validate ASPs through occasional surveys or
by using other methods is based in considerable part on our experience
of the difficulty of a hospital survey. The burden that annual surveys
would place on both hospitals and the agency is the reason that we
rejected annual surveys as a source of acquisition cost data and
instead proposed only occasional surveys to validate ASPs. Furthermore,
as we noted in the recommendation, HHS could use a method other than a
survey if that method were similarly accurate and efficient.
In our recommendation on radiopharmaceuticals, we did not comment on
whether the survey to collect acquisition cost data should be a survey
of hospitals or manufacturers, because we have not analyzed the
feasibility of obtaining these data from manufacturers. We recognize
the potential burden of hospital surveys; this burden would need to be
taken into account in weighing the merits of a hospital survey versus
other alternatives. Regarding our recommendation to collect unit-dose
prices, we have clarified it, saying that unit-dose prices should be
used when available. In our survey, we used unit-dose data when we
reported purchase prices for the 9 radiopharmaceuticals that accounted
for 90 percent of Medicare's costs for hospital outpatient drugs. For
radiopharmaceuticals that are prepared exclusively in-house HHS could,
if necessary, establish an alternative method for determining payment
rates.
We are sending copies of this report to the Secretary of Health and
Human Services, the Administrator of the Centers for Medicare &
Medicaid Services, and other interested parties. We will also make
copies available to others upon request. In addition, the report will
be available at no charge on the GAO Web site at [Hyperlink,
http://www.gao.gov].
If you or your staff members have any questions about this report,
please contact me at (202) 512-7119 or at steinwalda@gao.gov. Contact
points for our Office of Congressional Relations and Public Affairs may
be found on the last page of this report. GAO staff who made major
contributions to this report are listed in appendix V.
Signed by:
A. Bruce Steinwald:
Director, Health Care:
[End of section]
Appendix I: Methodology for Analysis of SCOD Price Differences among
Hospital Types:
This appendix describes the data and methods we used to examine SCOD
price variation among hospitals purchasing SCOD products. In
particular, we describe (1) the SCOD price data we analyzed, (2) the
factors potentially affecting SCOD prices and the measurement of these
factors, and (3) the methods underlying the statistical analysis of
prices we conducted and the statistical results we obtained.
SCOD Price Data:
Drawing on data from our survey of 1,157 hospitals,[Footnote 51] we
examined hospitals' purchase prices for 53 drug SCODs and 9
radiopharmaceutical SCODs for the period July 1, 2003, through June 30,
2004.[Footnote 52] Combined, these 62 SCOD categories represented 95
percent of Medicare spending on SCOD products during the first 9 months
of 2004. We analyzed invoice data that hospitals submitted to us;
specifically, our analysis included one SCOD price for each SCOD
purchase listed on an invoice. As a result, for a hospital that
purchased SCODs and other drugs once a month, our analysis included 1
price for each month's purchase of a particular SCOD or a total of up
to 12 invoice prices for that SCOD during the 12-month period. We were
advised in our analysis by an expert panel consisting of Joseph P.
Newhouse, John D. MacArthur Professor of Health Policy and Management,
Harvard University; Robert A. Berenson, Senior Fellow, Urban Institute;
Ernst R. Berndt, Professor of Applied Economics, Sloan School of
Management, Massachusetts Institute of Technology; Andrea G. Hershey,
Clinical Coordinator and Pharmacy Residency Program Director, Union
Memorial Hospital (Baltimore, Md.); and Richard L. Valliant, Senior
Research Scientist, University of Michigan.
Factors Potentially Affecting SCOD Prices:
To analyze SCOD price variation among hospitals purchasing SCODs, we
identified characteristics of hospitals that could plausibly explain
why prices vary: teaching status, location, and size. We also
identified a fourth factor: differences in the costliness of the mix of
SCODs that hospitals purchased. Table 2 lists these factors and
describes operational measures of these factors and the sources of data
used to calculate these measures.
Table 2: Factors Included in Analysis of Price Variation among
Hospitals Purchasing SCODs:
Factor: Teaching status[A];
Measure: Major teaching: Binary variable equal to;
* 1 if the hospital had a major teaching program;
* 0 if hospital had no major teaching program;
Other teaching: Binary variable equal to;
* 1 if the hospital had other teaching program;
* 0 if hospital had no other teaching program;
Nonteaching: Binary variable equal to;
* 1 if the hospital had no teaching program;
* 0 if hospital had a teaching program;
Source and date of data used to calculate measure: CMS: Medicare
Hospital Cost Report, 2002.
Factor: Location;
Measure: Binary variable equal to;
* 1 if the hospital was in a rural area--that is, outside a
metropolitan statistical area (MSA);
* 0 if the hospital was in an urban area--that is, in an MSA;
Source and date of data used to calculate measure: CMS: Provider of
Services File, end of 2004.
Factor: Size[B];
Measure: Binary variable equal to;
* 1 if hospital is large-indicated by outpatient Medicare charges at or
above the 80th percentile of all Medicare hospital outpatient charges;
* 0 if small-- less than this amount;
Source and date of data used to calculate measure: CMS: Health Care
Information System, 2003.
Factor: Mix of SCODs purchased;
Measure: Binary variable equal to;
* 1 if the product purchased as a given SCOD - that is, the it h SCOD,
where i = 1,—n;
* 0 if the product purchased were any other SCOD;
Source and date of data used to calculate measure: GAO: Survey of
Hospitals' SCOD Prices, 2003 and 2004.
Sources: GAO analysis of CMS and GAO information.
[A] Major teaching hospitals were defined as hospitals with an intern/
resident-to-bed ratio of 0.25 or more. Hospitals with other teaching
programs were defined as hospitals with an intern/resident-to-bed ratio
above 0 but less than 0.25.
[B] Hospitals with outpatient Medicare charges of $59.1 million or
higher were at the 80th percentile or higher of hospitals, ranked by
their outpatient Medicare charges, for our analysis of drug SCODs.
[End of table]
In addition to the measures listed in table 2, we considered
alternative measures for location and for size:
* We examined two geographic classification systems as alternatives to
an MSA (metropolitan statistical area)/nonMSA classification: (1) urban
influence codes, which classify counties based on each county's largest
city and its proximity to other areas with large, urban, populations;
and (2) rural-urban continuum codes, which classify metropolitan
counties (that is, those in an MSA) by the size of the urban area and
classify nonmetropolitan counties by the size of the urban population
and proximity to a metropolitan area.[Footnote 53]
* Before selecting our preferred measure of hospital size (hospital
outpatient charges at the 80th percentile or higher, where hospitals
were ranked by their outpatient Medicare charges), we considered other
measures of hospital size: the number of hospital beds, the number of
unique SCODs purchased by a hospital, and the number of hospital
outpatient visits.
In assessing our regression results for each of the several measures of
location and size that we considered, we took into account statistical
criteria including the statistical significance of each measure and the
overall explanatory power of each model. We also considered qualitative
factors when selecting our preferred measures of location and size. For
example, we selected hospital outpatient charges as our measure of
size, instead of number of hospital beds, because both measures had
similar statistical properties and our analysis focuses on the hospital
outpatient setting.
In addition to conducting separate regression analyses of the price
data for drug SCODs and for radiopharmaceutical SCODs, we analyzed
price variation separately for each of four therapeutic categories of
drug SCODs. We also conducted separate regression analyses of SCOD
price variation for drugs without biologicals, for biologicals, and for
radiopharmaceuticals. We determined that any gains in statistical
properties did not outweigh the greater complexity of these analyses.
Methods and Results of Price Analysis:
In analyzing SCOD price variation, our dependent variable was the
natural logarithm of SCOD price.[Footnote 54] SCOD prices are not
distributed symmetrically around the average. SCOD prices are skewed to
the right and are not distributed normally, reflecting some SCODs with
particularly high prices. Taking the natural logarithm of price is
intended to take skewness into account and make the resulting
distribution consistent with the statistical assumptions of a
regression.
We weighted prices paid by hospitals for individual drugs and
radiopharmaceuticals by the purchase amount of each invoice. That is,
we weighted prices more heavily in the statistical analysis for
invoices that represented a larger proportion of total annual purchases
of a particular SCOD than for invoices that represented a smaller
proportion of purchases. In addition, our analysis took into account
the fact that multiple prices paid by a particular hospital were not
necessarily statistically independent of each other--a phenomenon known
as clustering. In estimating our statistical models, we corrected the
potential bias in our estimates due to clustering by using the robust
and cluster options in STATA, a statistical software package.[Footnote
55]
To gauge the effects of our explanatory factors on price variation
among hospitals, we estimated one regression model for drug SCODs and a
separate model for radiopharmaceutical SCODs. Table 3 shows estimates
of the first model, which indicate the effects of three hospital
characteristics on the natural logarithm of price of drug SCODs.
Table 3: Estimated Effects of Selected Factors on Prices Hospitals Paid
for Drug SCODs:
Factor: Teaching status;
Measure of factor: Major teaching program;
Estimated coefficient: -.0321;
t-value: -5.33[A].
Measure of factor: Other teaching program;
Estimated coefficient: -.0054;
t-value: -1.54.
Measure of factor: Nonteaching (reference group);
Estimated coefficient: n/a[B];
t-value: n/a[B].
Factor: Location;
Measure of factor: Rural;
Estimated coefficient: .0009;
t-value: 0.17.
Measure of factor: Urban (reference group);
Estimated coefficient: n/a[B];
t-value: n/a[B].
Factor: Size;
Measure of factor: Large;
Estimated coefficient: -.0138;
t-value: -2.18[A].
Measure of factor: Mix of SCODs purchased by a particular hospital:
Small (reference group);
Estimated coefficient: Mix of SCODs purchased by a particular hospital:
n/a[B];
t-value: Mix of SCODs purchased by a particular hospital: n/a[B].
Factor: Mix of SCODs purchased by a particular hospital;
Measure of factor: SCOD category (one binary variable for each of 53
drug SCODs);
Estimated coefficient: (not reported);
t-value:
Measure of factor: Intercept;
Estimated coefficient: 4.11;
t-value: 1810.16[A].
Measure of factor: R-squared;
Estimated coefficient: .9974;
t-value: [Empty].
Measure of factor: Number of observations;
Estimated coefficient: 439,988;
t-value: [Empty].
Source: GAO analysis.
Notes: SCOD refers to a specified covered outpatient drug. The results
in this table pertain to the top 53 drug SCOD products, ranked by
Medicare spending on SCODs during the first 9 months of 2004.
This table presents estimates from a regression model. The model's
dependent variable is the natural logarithm of the purchase price paid
by a particular hospital for a SCOD. SCOD prices are not distributed
symmetrically around the average SCOD price but are skewed to the
right, reflecting some SCODs with particularly high prices. Taking the
natural logarithm of price takes this skewness into account. The effect
of a measure, such as rural location, is estimated relative to a
reference group (urban location). Therefore, the reference group is not
explicitly included in the model. A major teaching program refers to a
hospital that has an intern/resident-to-bed ratio of 0.25 or more.
Urban refers to a hospital inside a metropolitan statistical area.
Large refers to a hospital at or above the 80th percentile of
hospitals, ranked by Medicare outpatient charges.
[A] Significant at the 5 percent level.
[B] Not available because the method calculates estimated coefficients
for the included groups relative to the reference group.
[End of table]
To examine the separate effect of each factor, holding constant the
effects of the remaining factors, we referred to the estimated
coefficients for each factor in the model. From the estimated
coefficient, we calculated the percentage difference in price
attributable to each factor.[Footnote 56] For example, major teaching
hospitals paid lower prices for drugs compared to nonteaching
hospitals: major teaching hospitals paid 3.2 percent less than
nonteaching hospitals, holding constant location, size, and the mix of
SCODs purchased. In contrast, we found no statistically significant
difference in prices paid by hospitals with other teaching programs and
those paid by nonteaching hospitals, holding the other factors
constant.
Although the R-squared statistic in table 3 indicates that the model
accounts for over 99 percent of the variation in the logarithm of the
SCOD price, this feature of the estimated model requires careful
interpretation. Most of the variation in the logarithm of the drug SCOD
price was due to the particular SCODs that were purchased--for some,
hospitals paid on average about $300 per unit while for others,
hospitals paid about $3 per unit. Consequently, after accounting for
differences in the mix of SCODs purchased by different hospitals, only
a small amount of variation in price remains to be explained by other
factors. As a result, the R-squared for this model should not be
interpreted as an indicator of the three factors' success in explaining
SCOD price variation. Instead, the t-statistics associated with
teaching status, location, and size are more useful, since they signal
these factors' statistical significance--that is, whether the
difference between the estimated effect of each factor and zero is
statistically significant.
Table 4 presents the results for the second model, which estimates the
effects of the three factors on the prices of radiopharmaceutical
SCODs.
Table 4: Estimated Effects of Selected Factors on Prices Hospitals Paid
for Radiopharmaceutical SCODs:
Factor: Teaching status;
Measure of factor: Major teaching program;
Estimated coefficient: -.0021;
t-value: -.12.
Measure of factor: Other teaching program;
Estimated coefficient: -.0001;
t-value: -.01.
Measure of factor: Nonteaching (reference group);
Estimated coefficient: n/a[A];
t-value: n/a[A].
Factor: Location;
Measure of factor: Rural;
Estimated coefficient: .0434;
t-value: 2.23[B].
Measure of factor: Urban (reference group);
Estimated coefficient: n/a[A];
t-value: n/a[A].
Factor: Size;
Measure of factor: Large;
Estimated coefficient: -.0311;
t-value: -2.55[B].
Measure of factor: Mix of SCODs purchased by a particular hospital:
Small (reference group);
Estimated coefficient: Mix of SCODs purchased by a particular hospital:
n/a[A];
t-value: Mix of SCODs purchased by a particular hospital: n/a[A].
Factor: Mix of SCODs purchased by a particular hospital;
Measure of factor: SCOD category (one binary variable for each of 9
radiopharmaceutical SCODs);
Estimated coefficient: (not reported);
t- value:
Measure of factor: Intercept;
Estimated coefficient: 4.74;
t-value: 522.06.
Measure of factor: R-squared;
Estimated coefficient: .9913;
t-value: [Empty].
Measure of factor: Number of observations;
Estimated coefficient: 185,237;
t-value: [Empty].
Source: GAO analysis.
Notes: SCOD refers to a specified covered outpatient drug. The results
in this table pertain to the top nine radiopharmaceutical SCOD
products, ranked by Medicare spending on SCODs during the first 9
months of 2004. This table presents estimates from a regression model.
The model's dependent variable is the natural logarithm of the purchase
price paid by a particular hospital for a radiopharmaceutical SCOD.
SCOD prices are not distributed symmetrically around the average SCOD
price but are skewed to the right, reflecting some SCODs with
particularly high prices. Taking the natural logarithm of price takes
this skewness into account. The effect of a measure, such as rural
location, is estimated relative to a reference group (urban location).
Therefore, the reference group is not explicitly included in the model.
A major teaching program refers to a hospital that has an intern/
resident-to-bed ratio of 0.25 or more. Urban refers to a hospital
inside a metropolitan statistical area. Large refers to a hospital at
or above the 80th percentile of hospitals, ranked by Medicare
outpatient charges.
[A] Not available because the method calculates estimated coefficients
for the included groups relative to the reference group.
[B] Significant at the 5 percent level.
[End of table]
As table 4 shows, two factors--location and size--are statistically
significant in the model examining radiopharmaceutical SCOD prices.
Other things equal, a rural hospital paid prices for
radiopharmaceutical SCODs that were an estimated 4.4 percent higher
than urban hospitals, while large hospitals paid prices an estimated
3.1 percent lower than small hospitals.
To examine the effect of the three factors combined, while controlling
for differences in the costliness of SCODs that hospitals purchased, we
used the estimates from two models--one for drug SCODs and one for
radiopharmaceutical SCODs--to simulate the prices that certain groups
of hospitals paid. In particular, we focused on comparing the prices
paid by hospitals with one combination of characteristics--major
teaching, urban, and large--with the prices paid by hospitals with a
different combination of characteristics--nonteaching, rural, and
small.
[End of section]
Appendix II: Purchase Prices for Drug SCODs:
Table 5 appears as table 1 in our report Medicare: Drug Purchase Prices
for CMS Consideration in Hospital Outpatient Rate-Setting, GAO-05-581R
(Washington, D.C.: June 30, 2005). The label of the second column--
HCPCS code--refers to the Healthcare Common Procedure Coding System,
which CMS uses to define SCODs.
Table 5: Purchase Prices for SCODs Accounting for 86 Percent of
Medicare Spending on SCODs:
Rank in Medicare spending on drug SCODs: 1;
HCPCS code: Q0136;
Description: Injection, Epoetin Alpha (for non-ESRD use), per 1,000
units;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 199.8;
% of Medicare spending on SCODs, 2004[B]: 10.1;
Number of hospitals in sample: 973;
Rank in Medicare spending on drug SCODs: 2;
HCPCS code: J9310;
Description: Rituximab, 100 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 158.4;
% of Medicare spending on SCODs, 2004[B]: 8.0;
Number of hospitals in sample: 871;
Rank in Medicare spending on drug SCODs: 3;
HCPCS code: J2505;
Description: Injection, Pegfilgrastim, 6 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 144.8;
% of Medicare spending on SCODs, 2004[B]: 7.3;
Number of hospitals in sample: 759;
Rank in Medicare spending on drug SCODs: 4[J];
HCPCS code: Q9941;
Description: Injection, Immune Globulin, Intravenous, Lyophilized, 1 g;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): k;
% of Medicare spending on SCODs, 2004[B]: k;
Number of hospitals in sample: 626;
Rank in Medicare spending on drug SCODs: 4[J];
HCPCS code: Q9943;
Description: Injection, Immune Globulin, Intravenous, Non-Lyophilized,
1 g;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): k;
% of Medicare spending on SCODs, 2004[B]: k;
Number of hospitals in sample: 281;
Rank in Medicare spending on drug SCODs: 5;
HCPCS code: J1745;
Description: Injection, Infliximab, 10 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 114.8;
% of Medicare spending on SCODs, 2004[B]: 5.8;
Number of hospitals in sample: 897;
Rank in Medicare spending on drug SCODs: 6;
HCPCS code: Q0137;
Description: Injection, Darbepoetin alfa, 1 mcg (non-ESRD use);
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 100.6;
% of Medicare spending on SCODs, 2004[B]: 5.1;
Number of hospitals in sample: 743;
Rank in Medicare spending on drug SCODs: 7;
HCPCS code: J9170;
Description: Docetaxel, 20 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 73.7;
% of Medicare spending on SCODs, 2004[B]: 3.7;
Number of hospitals in sample: 829;
Rank in Medicare spending on drug SCODs: 8;
HCPCS code: J9045;
Description: Carboplatin, 50 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 70.7;
% of Medicare spending on SCODs, 2004[B]: 3.6;
Number of hospitals in sample: 893;
Rank in Medicare spending on drug SCODs: 9;
HCPCS code: C9205;
Description: Injection, Oxaliplatin, per 5 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 67.0;
% of Medicare spending on SCODs, 2004[B]: 3.4;
Number of hospitals in sample: 708;
Rank in Medicare spending on drug SCODs: 10;
HCPCS code: J3487;
Description: Injection, Zoledronic Acid, 1 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 66.9;
% of Medicare spending on SCODs, 2004[B]: 3.4;
Number of hospitals in sample: 862;
Rank in Medicare spending on drug SCODs: 11;
HCPCS code: J9201;
Description: Gemcitabine Hcl, 200 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 55.0;
% of Medicare spending on SCODs, 2004[B]: 2.8;
Number of hospitals in sample: 855;
Rank in Medicare spending on drug SCODs: 12;
HCPCS code: J9206;
Description: Irinotecan, 20 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 39.4;
% of Medicare spending on SCODs, 2004[B]: 2.0;
Number of hospitals in sample: 786;
Rank in Medicare spending on drug SCODs: 13;
HCPCS code: J2324;
Description: Injection, Nesiritide, 0.25 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 37.6;
% of Medicare spending on SCODs, 2004[B]: 1.9;
Number of hospitals in sample: 892;
Rank in Medicare spending on drug SCODs: 14;
HCPCS code: J9265;
Description: Paclitaxel, 30 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 32.0;
% of Medicare spending on SCODs, 2004[B]: 1.6;
Number of hospitals in sample: 792;
Rank in Medicare spending on drug SCODs: 15;
HCPCS code: J9355;
Description: Trastuzumab, 10 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 31.4;
% of Medicare spending on SCODs, 2004[B]: 1.6;
Number of hospitals in sample: 679;
Rank in Medicare spending on drug SCODs: 16;
HCPCS code: J9217;
Description: Leuprolide Acetate (for depot suspension), 7.5 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 30.8;
% of Medicare spending on SCODs, 2004[B]: 1.6;
Number of hospitals in sample: 804;
Rank in Medicare spending on drug SCODs: 17;
HCPCS code: J0256;
Description: Injection, Alpha 1 - Proteinase Inhibitor - Human, 10 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 20.9;
% of Medicare spending on SCODs, 2004[B]: 1.1;
Number of hospitals in sample: 38;
Rank in Medicare spending on drug SCODs: 18;
HCPCS code: J9035[M];
Description: Injection, Bevacizumab, 10 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 19.8;
% of Medicare spending on SCODs, 2004[B]: 1.0;
Number of hospitals in sample: 436;
Rank in Medicare spending on drug SCODs: 19;
HCPCS code: J1441;
Description: Injection, Filgrastim (G-CSF), 480 mcg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 17.1;
% of Medicare spending on SCODs, 2004[B]: 0.9;
Number of hospitals in sample: 928;
Rank in Medicare spending on drug SCODs: 20;
HCPCS code: J1950;
Description: Injection, Leuprolide Acetate (for depot suspension), per
3.75 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 16.9;
% of Medicare spending on SCODs, 2004[B]: 0.9;
Number of hospitals in sample: 541;
Rank in Medicare spending on drug SCODs: 21;
HCPCS code: J9001;
Description: Doxorubicin Hydrochloride, all lipid formulations, 10 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 16.3;
% of Medicare spending on SCODs, 2004[B]: 0.8;
Number of hospitals in sample: 614;
Rank in Medicare spending on drug SCODs: 22;
HCPCS code: J2353;
Description: Injection, Octreotide, depot form for intramuscular
injection, 1 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 15.7;
% of Medicare spending on SCODs, 2004[B]: 0.8;
Number of hospitals in sample: 545;
Rank in Medicare spending on drug SCODs: 23;
HCPCS code: J9055[M];
Description: Injection, Cetuximab, 10 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 15.1;
% of Medicare spending on SCODs, 2004[B]: 0.8;
Number of hospitals in sample: 286;
Rank in Medicare spending on drug SCODs: 24;
HCPCS code: J9041[M];
Description: Injection, Bortezomib, 0.1 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 14.1;
% of Medicare spending on SCODs, 2004[B]: 0.7;
Number of hospitals in sample: 452;
Rank in Medicare spending on drug SCODs: 25;
HCPCS code: J9350;
Description: Topotecan, 4 mg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 13.9;
% of Medicare spending on SCODs, 2004[B]: 0.7;
Number of hospitals in sample: 585;
Rank in Medicare spending on drug SCODs: 26;
HCPCS code: J1440;
Description: Injection, Filgrastim (G-CSF), 300 mcg;
Description: [Empty];
Description: [Empty];
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 13.0;
% of Medicare spending on SCODs, 2004[B]: 0.7;
Number of hospitals in sample: 956;
Rank in Medicare spending on drug SCODs: 2,758;
HCPCS code: [Empty];
Description: 11.09;
Description: [Empty];
Description: 9.25;
Description: 9.74;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 9.55-9.94;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 10.12;
10.11-10.13.
Rank in Medicare spending on drug SCODs: 1,418;
HCPCS code: [Empty];
Description: 437.83;
Description: [Empty];
Description: 414.92;
Description: 412.31;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 407.43-417.20;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 412.30;
412.13-412.52.
Rank in Medicare spending on drug SCODs: 1,177;
HCPCS code: [Empty];
Description: 2,448.50;
Description: [Empty];
Description: 2,017.55;
Description: i;
Medicare spending on SCOD, 2004[A[($ IN] in millions): i;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: i;
i.
Rank in Medicare spending on drug SCODs: [L];
HCPCS code: [Empty];
Description: 80.68;
Description: [Empty];
Description: 36.54;
Description: 36.50;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 36.37-36.63;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 37.24;
37.15-37.24.
Rank in Medicare spending on drug SCODs: [L];
HCPCS code: [Empty];
Description: 80.68;
Description: [Empty];
Description: 53.04;
Description: 50.63;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 50.11-51.15;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 50.96;
50.96-52.06.
Rank in Medicare spending on drug SCODs: 1,903;
HCPCS code: [Empty];
Description: 57.40;
Description: [Empty];
Description: 50.20;
Description: i;
Medicare spending on SCOD, 2004[A[($ IN] in millions): i;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: i;
i.
Rank in Medicare spending on drug SCODs: 1,117;
HCPCS code: [Empty];
Description: 3.66;
Description: [Empty];
Description: 3.04;
Description: 3.00;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 2.95-3.05;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 3.09;
3.06-3.11.
Rank in Medicare spending on drug SCODs: 1,257;
HCPCS code: [Empty];
Description: 312.69;
Description: [Empty];
Description: 278.95;
Description: 295.03;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 294.10-295.96;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 294.61;
294.46-294.89.
Rank in Medicare spending on drug SCODs: 1,482;
HCPCS code: [Empty];
Description: 129.96;
Description: [Empty];
Description: 71.46;
Description: 132.10;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 131.65-132.55;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 132.69;
132.55-132.83.
Rank in Medicare spending on drug SCODs: 1,172;
HCPCS code: [Empty];
Description: 82.53;
Description: [Empty];
Description: 77.86;
Description: 75.91;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 74.90-76.91;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 77.69;
77.65-77.76.
Rank in Medicare spending on drug SCODs: 1,316;
HCPCS code: [Empty];
Description: 197.87;
Description: [Empty];
Description: 187.47;
Description: 185.27;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 183.71-186.83;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 190.67;
190.26-191.01.
Rank in Medicare spending on drug SCODs: 1,317;
HCPCS code: [Empty];
Description: 105.73;
Description: [Empty];
Description: 108.79;
Description: 105.69;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 105.13-106.24;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 106.54;
106.44-106.65.
Rank in Medicare spending on drug SCODs: 1,109;
HCPCS code: [Empty];
Description: 127.33;
Description: [Empty];
Description: 119.56;
Description: 116.31;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 113.87-118.75;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 122.67;
122.16-123.13.
Rank in Medicare spending on drug SCODs: 1,619;
HCPCS code: [Empty];
Description: 66.23;
Description: [Empty];
Description: 69.64;
Description: i;
Medicare spending on SCOD, 2004[A[($ IN] in millions): i;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: i;
i.
Rank in Medicare spending on drug SCODs: 1,398;
HCPCS code: [Empty];
Description: 79.04;
Description: [Empty];
Description: 17.70;
Description: 14.45;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 14.44-14.46;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 14.45;
14.45-21.34.
Rank in Medicare spending on drug SCODs: 1,089;
HCPCS code: [Empty];
Description: 50.79;
Description: [Empty];
Description: 49.99;
Description: 46.72;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 45.92-47.53;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 47.97;
47.93-48.04.
Rank in Medicare spending on drug SCODs: 1,319;
HCPCS code: [Empty];
Description: 543.72;
Description: [Empty];
Description: 213.83;
Description: 234.05;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 223.21-244.90;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 198.88;
195.83-215.41.
Rank in Medicare spending on drug SCODs: 279;
HCPCS code: [Empty];
Description: 3.72;
Description: [Empty];
Description: 3.06;
Description: 2.35;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 2.33-2.37;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 2.46;
2.27-2.46.
Rank in Medicare spending on drug SCODs: 916;
HCPCS code: [Empty];
Description: 57.11;
Description: [Empty];
Description: 53.88;
Description: 53.31;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 53.01-53.61;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 53.72;
53.69-53.75.
Rank in Medicare spending on drug SCODs: 1,679;
HCPCS code: [Empty];
Description: 274.40;
Description: [Empty];
Description: 261.46;
Description: 257.21;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 253.46-260.96;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 253.64;
253.45-253.78.
Rank in Medicare spending on drug SCODs: 904;
HCPCS code: [Empty];
Description: 451.98;
Description: [Empty];
Description: 409.18;
Description: 454.10;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 453.04-455.17;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 454.66;
454.03-455.72.
Rank in Medicare spending on drug SCODs: 955;
HCPCS code: [Empty];
Description: 343.78;
Description: [Empty];
Description: 338.66;
Description: 336.33;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 332.22-340.44;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 338.70;
338.28-338.97.
Rank in Medicare spending on drug SCODs: 852;
HCPCS code: [Empty];
Description: 69.44;
Description: [Empty];
Description: 80.95;
Description: 71.13;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 69.63-72.62;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 74.04;
73.54-74.87.
Rank in Medicare spending on drug SCODs: 506;
HCPCS code: [Empty];
Description: 49.66;
Description: [Empty];
Description: 46.85;
Description: i;
Medicare spending on SCOD, 2004[A[($ IN] in millions): i;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: i;
i.
Rank in Medicare spending on drug SCODs: 631;
HCPCS code: [Empty];
Description: 28.38;
Description: [Empty];
Description: 26.77;
Description: i;
Medicare spending on SCOD, 2004[A[($ IN] in millions): i;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: i;
i.
Rank in Medicare spending on drug SCODs: 858;
HCPCS code: [Empty];
Description: 697.76;
Description: [Empty];
Description: 699.75;
Description: 674.91;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 656.60-693.21;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 709.19;
706.34-710.50.
Rank in Medicare spending on drug SCODs: 1,914;
HCPCS code: [Empty];
Description: 162.41;
Description: [Empty];
Description: 165.23;
Description: 161.61;
Medicare spending on SCOD, 2004[A[($ IN] in millions): 156.81-166.42;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 159.18;
159.04-159.31.
Rank in Medicare spending on drug SCODs: 27;
HCPCS code: [Empty];
Description: J1785;
Description: Injection, Imiglucerase, per unit;
Description: 12.9;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.7;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 41;
Rank in Medicare spending on drug SCODs: 28;
HCPCS code: [Empty];
Description: J3396;
Description: Injection, Verteporfin, 0.1 mg;
Description: 12.3;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.6;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 10;
Rank in Medicare spending on drug SCODs: 29;
HCPCS code: [Empty];
Description: J9202;
Description: Goserelin Acetate Implant, per 3.6 mg;
Description: 11.4;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.6;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 392;
Rank in Medicare spending on drug SCODs: 30;
HCPCS code: [Empty];
Description: J1626;
Description: Injection, Granisetron Hydrochloride, 100 mcg;
Description: 11.1;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.6;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 682;
Rank in Medicare spending on drug SCODs: 31;
HCPCS code: [Empty];
Description: J0585;
Description: Botulinim Toxin Type A, per unit;
Description: 10.8;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.5;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 480;
Rank in Medicare spending on drug SCODs: 32;
HCPCS code: [Empty];
Description: J0207;
Description: Injection, Amifostine, 500 mg;
Description: 10.5;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.5;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 477;
Rank in Medicare spending on drug SCODs: 33;
HCPCS code: [Empty];
Description: J2430;
Description: Injection, Pamidronate Disodium, per 30 mg;
Description: 10.2;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.5;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 945;
Rank in Medicare spending on drug SCODs: 34;
HCPCS code: [Empty];
Description: J9390;
Description: Vinorelbine Tartrate, per 10 mg;
Description: 9.3;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.5;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 568;
Rank in Medicare spending on drug SCODs: 35;
HCPCS code: [Empty];
Description: J2993;
Description: Injection, Reteplase, 18.1 mg;
Description: 8.9;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.4;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 505;
Rank in Medicare spending on drug SCODs: 36;
HCPCS code: [Empty];
Description: J9293;
Description: Injection, Mitoxantrone Hydrochloride, per 5 mg;
Description: 8.4;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.4;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 672;
Rank in Medicare spending on drug SCODs: 37;
HCPCS code: [Empty];
Description: J9185;
Description: Fludarabine Phosphate, 50 mg;
Description: 7.6;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.4;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 669;
Rank in Medicare spending on drug SCODs: 38;
HCPCS code: [Empty];
Description: C1305;
Description: Apligraf[®] , per 44 square centimeters;
Description: 7.0;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.4;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 63;
Rank in Medicare spending on drug SCODs: 39;
HCPCS code: [Empty];
Description: J9395;
Description: Injection, Fulvestrant, 25 mg;
Description: 6.9;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.3;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 468;
Rank in Medicare spending on drug SCODs: 40;
HCPCS code: [Empty];
Description: J3100;
Description: Injection, Tenecteplase, 50 mg;
Description: 6.8;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.3;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 509;
Rank in Medicare spending on drug SCODs: 41;
HCPCS code: [Empty];
Description: J9305[M];
Description: Injection, Pemetrexed, 10 mg;
Description: 5.6;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.3;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 162;
Rank in Medicare spending on drug SCODs: 42;
HCPCS code: [Empty];
Description: J9160;
Description: Denileukin Diftitox, 300 mcg;
Description: 5.6;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.3;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 73;
Rank in Medicare spending on drug SCODs: 43;
HCPCS code: [Empty];
Description: J0180[M];
Description: Injection, Agalsidase Beta, 1 mg;
Description: 5.3;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.3;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 29;
Rank in Medicare spending on drug SCODs: 44;
HCPCS code: [Empty];
Description: Q0166;
Description: Granisetron Hydrochloride, 1 mg, oral[N];
Description: 4.8;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.2;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 541;
Rank in Medicare spending on drug SCODs: 45;
HCPCS code: [Empty];
Description: J2469[M];
Description: Injection, Palonosetron Hcl, 25 mcg;
Description: 4.6;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.2;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 295;
Rank in Medicare spending on drug SCODs: 46;
HCPCS code: [Empty];
Description: J9010;
Description: Alemtuzumab, 10 mg;
Description: 4.4;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.2;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 236;
Rank in Medicare spending on drug SCODs: 47[O];
HCPCS code: [Empty];
Description: Q9942;
Description: Injection, Immune Globulin, Intravenous, Lyophilized, 10
mg;
Description: p;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): p;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 626;
Rank in Medicare spending on drug SCODs: 47[O];
HCPCS code: [Empty];
Description: Q9944;
Description: Injection, Immune Globulin, Intravenous, Non-Lyophilized,
10 mg;
Description: p;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): p;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 281;
Rank in Medicare spending on drug SCODs: 48;
HCPCS code: [Empty];
Description: J7190;
Description: Factor VIII (Antihemophilic Factor, Human) per I.U;
Description: 4.2;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.2;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 55;
Rank in Medicare spending on drug SCODs: 49;
HCPCS code: [Empty];
Description: J0130;
Description: Injection, Abciximab, 10 mg;
Description: 4.0;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.2;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 570;
Rank in Medicare spending on drug SCODs: 50;
HCPCS code: [Empty];
Description: J0850;
Description: Injection, Cytomegalovirus Immune Globulin Intravenous
(Human), per vial;
Description: 3.8;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.2;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 156;
Rank in Medicare spending on drug SCODs: 51;
HCPCS code: [Empty];
Description: J1327;
Description: Injection, Eptifibatide, 5 mg;
Description: 3.7;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.2;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 911;
Rank in Medicare spending on drug SCODs: 52;
HCPCS code: [Empty];
Description: J9214;
Description: Interferon, Alfa-2B, Recombinant, 1 million units;
Description: 3.6;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.2;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 619;
Rank in Medicare spending on drug SCODs: 53;
HCPCS code: [Empty];
Description: C9201;
Description: Dermagraft[®] , per 37.5 square centimeters;
Description: 3.4;
Description: [Empty];
Medicare spending on SCOD, 2004[A[($ IN] in millions): 0.2;
% of Medicare spending on SCODs, 2004[B]: [Empty];
Number of hospitals in sample: 2;
Total number of hospitals[C]: 59;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 3.91;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 3.69;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 3.62;
95% confidence interval of the average purchase price[G] ($): 3.60-
3.64;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 3.62;
95% confidence interval of the median purchase price[G] ($): 3.61-3.66.
Total number of hospitals[C]: 45;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 8.49;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 8.48;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 529;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 390.09;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 181.78;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 201.76;
95% confidence interval of the average purchase price[G] ($): 193.30-
210.23;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 206.56;
95% confidence interval of the median purchase price[G] ($): 175.73-
323.33.
Total number of hospitals[C]: 988;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 16.20;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 6.71;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 6.45;
95% confidence interval of the average purchase price[G] ($): 6.27-
6.62;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 6.61;
95% confidence interval of the median purchase price[G] ($): 6.60-6.64.
Total number of hospitals[C]: 1,062;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 4.32;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 4.44;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 705;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 395.75;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 403.84;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 1,567;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 128.74;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 54.10;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 58.49;
95% confidence interval of the average purchase price[G] ($): 51.51-
65.47;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 72.59;
95% confidence interval of the median purchase price[G] ($): 71.50-
72.72.
Total number of hospitals[C]: 833;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 52.78;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 58.20;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 48.15;
95% confidence interval of the average purchase price[G] ($): 48.13-
48.16;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 48.14;
95% confidence interval of the median purchase price[G] ($): 48.13-
52.05.
Total number of hospitals[C]: 1,073;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 1,192.09;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 832.49;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 846.53;
95% confidence interval of the average purchase price[G] ($): 844.18-
848.87;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 845.36;
95% confidence interval of the median purchase price[G] ($): 844.48-
846.87.
Total number of hospitals[C]: 1,181;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 313.96;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 305.36;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 297.00;
95% confidence interval of the average purchase price[G] ($): 296.19-
297.82;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 295.62;
95% confidence interval of the median purchase price[G] ($): 295.46-
295.78.
Total number of hospitals[C]: 891;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 311.09;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 243.05;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 293.99;
95% confidence interval of the average purchase price[G] ($): 291.43-
296.56;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 298.44;
95% confidence interval of the median purchase price[G] ($): 298.37-
298.68.
Total number of hospitals[C]: 450;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 1,130.88;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 1,114.74;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 778;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 79.65;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 76.78;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 74.63;
95% confidence interval of the average purchase price[G] ($): 74.45-
74.80;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 75.03;
95% confidence interval of the median purchase price[G] ($): 74.95-
75.18.
Total number of hospitals[C]: 1,181;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 2,350.98;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 1,901.29;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 251;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 40.54;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 38.25;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 95;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 1,438.80;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 1,144.18;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 49;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 121.11;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 114.26;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 111.33;
95% confidence interval of the average purchase price[G] ($): 111.08-
111.58;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 109.71;
95% confidence interval of the median purchase price[G] ($): 108.18-
111.09.
Total number of hospitals[C]: 886;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 39.04;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 31.04;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 24.86;
95% confidence interval of the average purchase price[G] ($): 24.82-
24.89;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 23.99;
95% confidence interval of the median purchase price[G] ($): 21.58-
24.94.
Total number of hospitals[C]: 525;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 18.09;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 17.06;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 356;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 541.46;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 478.73;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: [Q];
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 0.75;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 0.37;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 0.37;
95% confidence interval of the average purchase price[G] ($): 0.36-
0.37;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 0.37;
95% confidence interval of the median purchase price[G] ($): 0.37-0.37.
Total number of hospitals[C]: [Q];
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 0.75;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 0.53;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 0.51;
95% confidence interval of the average purchase price[G] ($): 0.50-
0.51;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 0.51;
95% confidence interval of the median purchase price[G] ($): 0.51-0.52.
Total number of hospitals[C]: 122;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 0.76;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 0.60;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 0.46;
95% confidence interval of the average purchase price[G] ($): 0.46-
0.46;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 0.46;
95% confidence interval of the median purchase price[G] ($): r.
Total number of hospitals[C]: 797;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 448.22;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 417.35;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 260;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 622.13;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 632.67;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Total number of hospitals[C]: 1,661;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 11.21;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 11.79;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 12.49;
95% confidence interval of the average purchase price[G] ($): 12.35-
12.63;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 11.03;
95% confidence interval of the median purchase price[G] ($): 10.75-
12.39.
Total number of hospitals[C]: 954;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 13.00;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 12.25;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): 11.20;
95% confidence interval of the average purchase price[G] ($): 11.02-
11.37;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): 11.93;
95% confidence interval of the median purchase price[G] ($): 11.78-
11.98.
Total number of hospitals[C]: 80;
Total number of hospitals[C]: [Empty];
CMS payment rate for 2005[D] ($): 529.54;
CMS payment rate for 2005[D] ($): [Empty];
ASP (average sales price)[E] ($): 545.10;
ASP (average sales price)[E] ($): [Empty];
Average purchase price[F] ($): i;
95% confidence interval of the average purchase price[G] ($): i;
95% confidence interval of the average purchase price[G] ($): [Empty];
Median purchase price[H] ($): i;
95% confidence interval of the median purchase price[G] ($): i.
Sources: GAO survey and CMS.
Notes: ESRD = end-stage renal disease, g = gram, I.U. = international
unit, mcg = microgram, and mg = milligram.
[A] Medicare spending is for the period January 1, 2004, through
September 30, 2004.
[B] The percentage of Medicare spending is based on Medicare spending
for all SCODs--both drugs and radiopharmaceuticals.
[C] This estimate of the total number of hospitals in the population is
based on our sample.
[D] This is the payment rate specified for each HCPCS for 2005. It
incorporates CMS's April 2005 update.
[E] CMS publishes the ASP plus 6 percent for certain drugs used in
physicians' offices. These amounts are based on data provided by
manufacturers each quarter. We are reporting ASPs for the quarter
beginning in April 2005. ASPs reported here do not include the 6
percent added by CMS.
[F] This price is based on data provided by the hospitals in our survey
and does not reflect any other costs associated with purchasing or
administering the product. We asked hospitals to report prices for
drugs purchased from July 1, 2003, through June 30, 2004. We weighted
the prices by the volume purchased as well as by the sample weights. We
have excluded prices under the 340B program, a federal program that
provides drug price discounts for certain health care entities,
including those that provide health care services for low-income
individuals and individuals in medically underserved areas. (42 U.S.C.
§ 256b (2000)).
[G] The confidence interval measures the precision of the estimate. The
narrower the interval, the greater the precision.
[H] The median purchase price is the midpoint of all prices reported by
hospitals in our sample. Half of the prices reported by hospitals are
above the median and half are below. The median is weighted by volume
purchased and by hospital sample weights. The average purchase price
excludes prices paid under the 340B program.
[I] For HCPCS codes that contain only one National Drug Code (NDC), we
do not include information on the average or median purchase price
because of the potential proprietary sensitivity of such information.
[J] On April 1, 2005, CMS replaced J1563, Injection, Immune Globulin,
Intravenous, 1g, with two new codes: Q9941 and Q9943. J1563 was ranked
fourth in total Medicare spending on SCODs from January 1, 2004, to
September 30, 2004.
[K] J1563, Injection, Immune Globulin, Intravenous, 1g, accounted for
$127.1 million in Medicare spending from January 1, 2004, through
September 30, 2004, which was 6.4 percent of total Medicare spending on
SCODs for that time period.
[L] On April 1, 2005, CMS replaced J1563, Injection, Immune Globulin,
Intravenous, 1g, with two new codes: Q9941 and Q9943. Because J1563 was
replaced by two codes, we could not estimate the total number of
hospitals in the population for these new codes individually.
[M] On January 1, 2005, CMS replaced C9214, C9215, C9207, C9213, C9208,
and C9210 with J9035, J9055, J9041, J9305, J0180, and J2469,
respectively. The ranks for the new codes correspond to the ranks in
total Medicare spending on SCODs from January 1, 2004, to September 30,
2004, for the former codes.
[N] The complete description for HCPCS Q0166 is "Granisetron
Hydrochloride, 1 mg, Oral, Food and Drug Administration (FDA) Approved
Prescription Anti-Emetic, for Use as a Complete Therapeutic Substitute
for an IV (intravenous) Anti-Emetic at the Time of Chemotherapy
Treatment, Not to Exceed a 24 Hour Dosage Regimen."
[O] On April 1, 2005, CMS replaced J1564, Injection, Immune Globulin,
Intravenous, 10 mg, with two new codes: Q9942 and Q9944. J1564 was
ranked 47th in total Medicare spending on SCODs from January 1, 2004,
to September 30, 2004.
[P] J1564, Injection, Immune Globulin, Intravenous, 10 mg accounted for
$4.4 million in Medicare spending from January 1, 2004, through
September 30, 2004, which was 0.2 percent of total Medicare spending on
SCODs for that time period.
[Q] On April 1, 2005, CMS replaced J1564, Injection, Immune Globulin,
Intravenous, 10 mg, with two new codes: Q9942 and Q9944. Because J1564
was replaced by two codes, we could not estimate the total number of
hospitals in the population for these new codes individually.
[R] For this SCOD, our sample data cannot be extrapolated to compute a
confidence interval for the median.
[End of table]
[End of section]
Appendix III: Purchase Prices for Radiopharmaceuticals SCODs:
Table 6 appears as table 1 in our report Medicare: Radiopharmaceutical
Purchase Prices for CMS Consideration in Hospital Outpatient Rate-
Setting, GAO-05-733R (Washington, D.C.: July 14, 2005). The label of
the second column--HCPCS code--refers to the Healthcare Common
Procedure Coding System, which CMS uses to define SCODs.
Table 6: Purchase Prices for Radiopharmaceutical Accounting for 9
Percent of Medicare Spending on SCODs:
Rank in Medicare spending on radio-pharmaceutical SCODs: 1;
HCPCS code: A9500;
Description: Technetium Tc 99m Sestamibi, per dose;
Medicare spending on SCOD, 2004[A]: ($ in millions): 66.5;
% of Medicare spending on SCODs, 2004[A]: 3.4;
Number of hospitals in sample: 405.
Rank in Medicare spending on radio-pharmaceutical SCODs: 2;
HCPCS code: A9502;
Description: Technetium Tc 99m Tetrofosmin, per dose;
Medicare spending on SCOD, 2004[A]: ($ in millions): 38.8;
% of Medicare spending on SCODs, 2004[A]: 2.0;
Number of hospitals in sample: 174.
Rank in Medicare spending on radio-pharmaceutical SCODs: 3;
HCPCS code: C1775;
Description: Fluorodeoxyglucose (FDG) F18, per dose (4-40 mCi/ ml);
Medicare spending on SCOD, 2004[A]: ($ in millions): 32.1;
% of Medicare spending on SCODs, 2004[A]: 1.6;
Number of hospitals in sample: 71.
Rank in Medicare spending on radio-pharmaceutical SCODs: 4;
HCPCS code: C1083;
Description: Yttrium 90 Ibritumomab Tiuxetan, per dose;
Medicare spending on SCOD, 2004[A]: ($ in millions): 7.1;
% of Medicare spending on SCODs, 2004[A]: 0.4;
Number of hospitals in sample: 80.
Rank in Medicare spending on radio-pharmaceutical SCODs: 5;
HCPCS code: A9505;
Description: Thallous Chloride TL 201, per mCi;
Medicare spending on SCOD, 2004[A]: ($ in millions): 6.7;
% of Medicare spending on SCODs, 2004[A]: 0.3;
Number of hospitals in sample: 292.
Rank in Medicare spending on radio-pharmaceutical SCODs: 6;
HCPCS code: Q3005;
Description: Technetium Tc 99m Mertiatide, per mCi[G];
Medicare spending on SCOD, 2004[A]: ($ in millions): 6.2;
% of Medicare spending on SCODs, 2004[A]: 0.3;
Number of hospitals in sample: 292.
Rank in Medicare spending on radio-pharmaceutical SCODs: 7;
HCPCS code: A9507;
Description: Indium In 111 Capromab Pendetide, per dose;
Medicare spending on SCOD, 2004[A]: ($ in millions): 4.8;
% of Medicare spending on SCODs, 2004[A]: 0.2;
Number of hospitals in sample: 56.
Rank in Medicare spending on radio-pharmaceutical SCODs: 8;
HCPCS code: Q3008;
Description: Indium In 111 Pentetreotide, per 3 mCi[H];
Medicare spending on SCOD, 2004[A]: ($ in millions): 4.5;
% of Medicare spending on SCODs, 2004[A]: 0.2;
Number of hospitals in sample: 193.
Rank in Medicare spending on radio-pharmaceutical SCODs: 9;
HCPCS code: A9521;
Description: Technetium Tc 99m Exametazime, per dose;
Medicare spending on SCOD, 2004[A]: ($ in millions): 3.8;
% of Medicare spending on SCODs, 2004[A]: 0.2;
Number of hospitals in sample: 180.
Rank in Medicare spending on radio-pharmaceutical SCODs: 2,477;
HCPCS code: 106.32;
Description: 75.15;
Medicare spending on SCOD, 2004[A]: ($ in millions): 73.24 - 77.06;
% of Medicare spending on SCODs, 2004[A]: 76.47;
Number of hospitals in sample: 75.58 - 77.85.
Rank in Medicare spending on radio-pharmaceutical SCODs: 964;
HCPCS code: 104.58;
Description: 70.70;
Medicare spending on SCOD, 2004[A]: ($ in millions): 67.92 - 73.48;
% of Medicare spending on SCODs, 2004[A]: 67.59;
Number of hospitals in sample: 66.23 - 70.98.
Rank in Medicare spending on radio-pharmaceutical SCODs: 687;
HCPCS code: 221.11;
Description: 287.90;
Medicare spending on SCOD, 2004[A]: ($ in millions): 263.24 - 312.55;
% of Medicare spending on SCODs, 2004[A]: 272.80;
Number of hospitals in sample: 261.83 - 308.52.
Rank in Medicare spending on radio-pharmaceutical SCODs: 130;
HCPCS code: 20,948.25;
Description: 19,614.96;
Medicare spending on SCOD, 2004[A]: ($ in millions): 19,498.98 -
19,730.95;
% of Medicare spending on SCODs, 2004[A]: 19,516.70;
Number of hospitals in sample: 19,459.55
- 19,565.02.
Rank in Medicare spending on radio-pharmaceutical SCODs: 1,199;
HCPCS code: 18.29;
Description: 17.18;
Medicare spending on SCOD, 2004[A]: ($ in millions): 16.32 - 18.05;
% of Medicare spending on SCODs, 2004[A]: 15.49;
Number of hospitals in sample: 15.06 - 17.06.
Rank in Medicare spending on radio-pharmaceutical SCODs: 1,655;
HCPCS code: 31.13;
Description: 27.40;
Medicare spending on SCOD, 2004[A]: ($ in millions): 26.47 - 28.34;
% of Medicare spending on SCODs, 2004[A]: 27.58;
Number of hospitals in sample: 27.56 - 27.60.
Rank in Medicare spending on radio-pharmaceutical SCODs: 262;
HCPCS code: 1,915.23;
Description: 1,801.12;
Medicare spending on SCOD, 2004[A]: ($ in millions): 1,760.80 -
1,841.43;
% of Medicare spending on SCODs, 2004[A]: 1,841.23;
Number of hospitals in sample: 1,703.46 - 1,860.22.
Rank in Medicare spending on radio-pharmaceutical SCODs: 666;
HCPCS code: 1,079.00;
Description: 1,279.55;
Medicare spending on SCOD, 2004[A]: ($ in millions): 1,198.35 -
1,360.76;
% of Medicare spending on SCODs, 2004[A]: 1,423.87;
Number of hospitals in sample: 1,395.49 - 1,437.61.
Rank in Medicare spending on radio-pharmaceutical SCODs: 773;
HCPCS code: 778.13;
Description: 455.59;
Medicare spending on SCOD, 2004[A]: ($ in millions): 358.29 - 552.89;
% of Medicare spending on SCODs, 2004[A]: 456.30;
Number of hospitals in sample: 379.90 - 523.95.
Sources: GAO survey and CMS.
Notes: mCi = millicurie, ml = milliliter:
[A] Medicare spending is for the period January 1, 2004, through
September 30, 2004. The percentage of Medicare spending is based on all
SCODs--both drugs and radiopharmaceuticals.
[B] This estimate of the total number of hospitals in the population is
based on our sample.
[C] This is the payment rate specified for each HCPCS for 2005. It
incorporates CMS's April 2005 update.
[D] This price is based on data provided by the hospitals in our survey
and does not reflect delivery fees or any other ancillary costs
associated with purchasing or administering this product. We asked
hospitals to report prices for drugs purchased from July 1, 2003,
through June 30, 2004. We weighted the prices by the volume purchased
as well as by the sample weights.
[E] The confidence interval measures the precision of the estimate. The
narrower the interval, the greater the precision.
[F] The median purchase price is the midpoint of all prices reported by
hospitals in our sample. This price does not reflect delivery fees or
any other ancillary costs associated with purchasing or administering
this product. Half of the prices reported by hospitals are above the
median and half are below. The median is weighted by volume purchased
and by hospital sample weights.
[G] The billing unit of measure for Q3005, Technetium Tc 99m
Mertiatide, is per mCi. The per mCi purchase price reported is based on
purchase prices for two commonly reported dose sizes, 5 mCi and 10 mCi.
Since in our data the 5 mCi dose is more common than the 10 mCi dose
and the purchase price of a 5 mCi dose and of a 10 mCi dose were
similar, we treated a 10 mCi dose as if it were a 5 mCi dose.
[H] The billing unit of measure for Q3008, Indium In 111 Pentetreotide,
is per 3 mCi. The per mCi purchase price reported is based on purchase
prices for two commonly reported dose sizes, 3 mCi and 6 mCi. Since a 3
mCi dose is the billing unit specified by CMS for Q3008 and since in
our data the purchase price of a 3 mCi dose and of a 6 mCi dose varied
relatively little, we treated a 6 mCi dose as if it were a 3 mCi dose.
[End of table]
[End of section]
Appendix IV: Comments from the Department of Health and Human Services:
Department Of Health & Human Services:
Office of Inspector General:
Washington, D.C. 20201:
April 12 2006:
Mr. A. Bruce Steinwald:
Director, Health Care:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Steinwald:
Enclosed are the Department's comments on the U.S. Government
Accountability Office's (GAO) draft report entitled "MEDICARE HOSPITAL
PHARMACEUTICALS: Survey Shows Price Variation and Highlights Data
Collection Lessons and Outpatient Rate-Setting Challenges for CMS" (GAO-
06-372). These comments represent the tentative position of the
Department and are subject to reevaluation when the final version of
this report is received.
The Department appreciates the opportunity to comment on this draft
report before its publication.
Sincerely,
Signed by:
Daniel R. Levinson:
Inspector General:
Enclosure:
The Office of Inspector General (OIG) is transmitting the Department's
response to this draft report in our capacity as the Department's
designated focal point and coordinator for U.S. Government
Accountability Office reports. OIG has not conducted an independent
assessment of these comments and therefore expresses no opinion on
them.
COMMENTS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES ON THE U.S.
GOVERNMENT ACCOUNTABILITY OFFICE'S DRAFT REPORT ENTITLED "MEDICARE
HOSPITAL PHARMACEUTICALS: SURVEY SHOWS PRICE VARIATION AND HIGHLIGHTS
DATA COLLECTION LESSONS AND OUTPATIENT RATE-SETTING CHALLENGES FOR CMS"
(GAO-06-372):
The Department of Health and Human Services (HHS) appreciates the
opportunity to comment on the draft report.
General Comments:
The Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA) instructed the Centers for Medicare & Medicaid Services
(CMS) to pay hospitals for outpatient drugs based on average
acquisition costs, beginning in 2006. The MMA also included a provision
requiring GAO to conduct a survey in years 2004 and 2005 on hospital
acquisition costs of drugs in the outpatient department and share the
results with CMS for purposes of informing hospital drug acquisition
costs. CMS is committed to ensuring appropriate payment for drugs, and
continued beneficiary access to drugs being provided in a hospital
outpatient department.
The GAO survey data were provided to CMS in time for consideration in
the calendar year:
(CY) 2006 outpatient prospective payment system (OPPS) proposed rule,
and we considered this information when developing our proposed and
final CY 2006 OPPS payment policy. In our CY 2006 OPPS final rule with
comment period, we explain our methodology for arriving at a payment
rate of average sales price (ASP) +6 for CY 2006, and we discuss the
various data we used to inform our final policy, including the GAO
survey data.
This report includes information specific to the MMA mandate to GAO to
conduct surveys in each of 2004 and 2005 to determine hospital
acquisition costs for each specific covered outpatient drug (SCOD),
provide recommendations on the frequency and methodology for subsequent
surveys, and to report on the variation in hospital acquisition costs
for drugs among hospitals based on the volume of covered outpatient
department services performed. Additional GAO reports mandated by the
MMA that are specific to the OPPS include reports on CY 2006 OPPS
proposed payment rates for drugs and biologicals and a report on
appropriate payment amounts for brachytherapy sources.
This GAO report supports the concerns noted in the CY 2006 OPPS
proposed rule regarding the difficulty, both for CMS and for
participating hospitals, in recreating the GAO survey in future years
in order to update SCOD payment rates. In addition, the GAO report
reinforces previous findings that there is no simple methodology for
determining radiopharmaceutical acquisition costs.
We appreciate the effort that went into this report and the
considerable analysis included in these recommendations. We look
forward to working with GAO on this and other pertinent issues
addressed in this report.
Recommendations:
To ensure that Medicare payments for specified covered outpatient drug
(SCOD) products are based on sufficiently accurate data, GAO recommends
that the Secretary of Health and Human Services take the following two
actions:
GAO Recommendation 1:
Validate, on an occasional basis, manufacturers' reported drug average
sales prices (ASPS) as a measure of hospitals' acquisition costs using
a survey of hospitals or other method that CMS determines to be
similarly accurate and efficient.
HHS Response:
As in all aspects of our payment system, we are committed to providing
appropriate payments to hospitals for the resources expended during the
care of a Medicare beneficiary. While we strive to make payments as
accurate as possible, we are also interested in eliminating unnecessary
administrative burdens hospitals encounter. CMS agrees with GAO's
finding that an annual survey could place an onerous burden on hospital
staff in order to produce such information,
and additional burdens on Agency staff in preparing submitted
information for analysis. We will continue to consider the best
approach for setting payment rates for drugs and biologicals in light
of GAO's recommendation, and we will consider performing such an
occasional hospital survey in order to validate our payment
methodologies. We will also continue to analyze the adequacy of ASP-
based pricing in the light of our claims data, which indicated for CY
2006 that ASP +6 was the best available proxy for hospitals' average
acquisition costs, plus the handling costs of drugs.
GAO Recommendation 2:
Use unit-dose prices paid by hospitals as the data source for setting
and updating Medicare payment rates for radiopharmaceutical SCODs.
HHS Response:
CMS appreciates GAO's comments on this difficult payment issue. We
agree with GAO that various purchasing options provided to hospitals
make uniform pricing difficult, and that any methodology for setting
radiopharmaceutical payment rates should be low cost and reasonably
accurate. For CY 2006, we therefore adopted the methodology of paying
for radiopharmaceuticals on the basis of charges adjusted to cost as
the best available proxy for capturing both the acquisition costs and
the handling costs of radiopharmaceuticals. We appreciate GAO's
recommendation to collect price data on radiopharmaceuticals purchased
in ready-to-use doses, and to use unit-dose prices as the basis for
payment rates. We will consider this methodology in developing our
policy for radiopharmaceutical payments.
However, we wish to raise several questions, and to express some
reservations about this recommendation. First, GAO did not specify
whether the survey would be conducted with hospitals or manufacturers.
Several statements in the report seem to imply that the survey would be
conducted with hospitals, but it might be advisable to clarify this
point in the report.
Second, the report emphasizes the expense, administrative burden, and
other difficulties of conducting surveys of drug purchase prices in
general. The report concludes that the burden of annual surveys of
hospital drug purchase prices could outweigh the potential gains in
data accuracy. We suspect that surveys of the unit dose prices paid by
hospitals for radiopharmaceuticals might pose similar levels of expense
and administrative burden. GAO's assessment of the expense and burdens
of such a survey in relation to the potential gains in data accuracy
would be useful in fully evaluating the recommendation.
Third, GAO conducted its study on only 9 of the approximately 55
radiopharmaceutical agents for which we pay separately under the
outpatient prospective payment system. In order for a survey of unit
dose prices to be effective, we would need to be able to obtain unit
price data for all, or very nearly all, of the radiopharmaceuticals for
which we pay separately. However, we believe that certain
radiopharmaceuticals would rarely be available for purchase in ready-
to-use doses, but would, rather, tend to be manufactured by hospitals
in-house. We would, therefore, not be able to obtain useable data on
the prices of these radiopharmaceuticals by collecting data on the
prices paid by hospitals for ready-to-use doses. GAO's assessment of
this limitation on the usefulness of a survey of prices for ready-to-
use radiopharmaceutical doses would be valuable in fully evaluating
this recommendation.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
A. Bruce Steinwald, (202) 512-7119 or steinwalda@gao.gov:
Acknowledgments:
Phyllis Thorburn, Assistant Director; Hannah Fein; Dae Park; Jonathan
Ratner; and Thomas Walke made key contributions to this report.
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site (www.gao.gov). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site.
To have GAO e-mail you a list of newly posted products every afternoon,
go to www.gao.gov and select "Subscribe to Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125
Washington, D.C. 20548:
Public Affairs:
Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548:
FOOTNOTES
[1] In this report, the term drugs refers to both drugs and
biologicals. Biologicals are products derived from living sources,
including humans, animals, and microorganisms. Radiopharmaceuticals are
radioactive substances used for diagnostic or therapeutic purposes.
[2] Pub. L. No. 108-173, sec. 621(a), § 1833(t)(14), 117 Stat. 2066,
2307--08 (to be codified at 42 U.S.C. § 1395l(t)(14)).
[3] Specifically, the MMA required that payment rates equal the average
acquisition costs as determined by the Secretary of Health and Human
Services, unless hospital acquisition cost data are not available. If
such data are not available, the law permitted payment rates to equal
one of several amounts, including average sales price, as calculated
and adjusted by the Secretary. MMA 117 Stat. 2307.
[4] MMA 117 Stat. 2308--09. The law also required the Medicare Payment
Advisory Commission (MedPAC) to report on overhead and related expenses
(such as pharmacy services and handling costs) and authorized the
Secretary to adjust the SCOD rates for these costs. MMA 117 Stat. 2309.
See ch. 6, "Payment for pharmacy handling costs in hospital outpatient
departments," in MedPAC's mandated report, Issues in a Modernized
Medicare Program (Washington, D.C.: June 2005).
[5] The Secretary of HHS considered the price data we provided but
elected not to use these data as the basis for 2006 rates.
[6] GAO, Medicare: Drug Purchase Prices for CMS Consideration in
Hospital Outpatient Rate Setting, GAO-05-581R (Washington, D.C.: June
30, 2005), and GAO, Medicare: Radiopharmaceutical Purchase Prices for
CMS Consideration in Hospital Outpatient Rate Setting, GAO-05-733R
(Washington, D.C.: July 14, 2005).
[7] The term purchase price refers to the price that hospitals paid
upon receiving a product. The term rebates refers to price concessions
given to hospitals by manufacturers subsequent to receipt of the
product.
[8] GAO, Medicare: Comments on CMS Proposed 2006 Rates for Specified
Covered Outpatient Drugs and Radiopharmaceuticals Used in Hospitals,
GAO-06-17R (Washington, D.C.: Oct. 31, 2005).
[9] MMA 117 Stat. 2308-09.
[10] Major teaching hospitals were defined as having an intern/
resident-to-bed ratio of 0.25 or more. Hospitals with other teaching
programs had an intern/resident-to-bed ratio above 0 but less than
0.25.
[11] The products in these SCOD categories represented 95 percent of
all Medicare spending on SCOD products (53 drugs and 9
radiopharmaceuticals) during the first 9 months of 2004. The nine
radiopharmaceuticals accounted for 90 percent of all Medicare hospital
outpatient spending on radiopharmaceutical SCODs.
[12] For setting SCOD payment rates after 2006, the Secretary was
directed to conduct periodic surveys to obtain cost information.
[13] GAO-05-581R.
[14] GAO-05-733R.
[15] GAO-06-17R.
[16] See app. I.
[17] 70 Fed. Reg. 68,516 (Nov. 10, 2005).
[18] GAO-06-17R.
[19] Pub. L. No. 105-33, § 4523, 111 Stat. 251, 445--50.
[20] Pub. L. No. 106-113, app. F, § 201(b), 113 Stat. 1501A-321, 1501A-
337--1501A-339.
[21] Rebates are price concessions given to hospitals by manufacturers
subsequent to receipt of the product. For a discussion of rebates and
their relationship to hospital acquisition costs, see GAO-06-17R, p. 5.
[22] Discounts are price concessions given by manufacturers and
wholesalers that are reflected in the purchase price--the price
hospitals pay at the time of delivery.
[23] MMA 117 Stat. 2239-45. MMA specifically required use of ASP to set
rates for drugs furnished in physicians' offices on or after January 1,
2005; CMS began using ASP to set rates for SCOD products delivered in
hospital outpatient departments on or after January 1, 2006.
[24] MMA 177 Stat. 2240--41.
[25] 70 Fed. Reg. 68,642. In total, the payment rate for drug SCODs is
ASP+6 percent, which includes overhead and handling that CMS had
previously estimated at 2 percent of ASP. The implied rate for the
product without overhead is ASP+4 percent.
[26] 70 Fed. Reg. 68,654.
[27] See Denise A. Merlino, "Nuclear Medicine Faculty Survey: SNM 2003
Survey Reporting on 2002 Cost and Utilization," Journal of Nuclear
Medicine Technology, vol. 32, no. 4 (2004), pp. 215-219.
[28] Our estimated purchase prices for radiopharmaceutical SCODs were
based on hospitals' purchases of ready-to-use unit-doses only; we did
not report prices for the generally less prevalent forms--multidoses or
doses prepared in-house using a kit.
[29] Compared with nonteaching hospitals, some teaching hospitals may
obtain a larger proportion of their radiopharmaceuticals by compounding
components purchased separately than by purchasing unit doses.
Therefore, the result might have been different had we been able to
include the prices hospitals paid for radiopharmaceuticals purchased as
multidoses or as separate components.
[30] The estimated percentage differences were derived from two
multivariate statistical models--one explaining variation in prices of
53 drug SCODs, the second explaining price variation of 9
radiopharmaceutical SCODs. Each model attributed variation in SCOD
prices to three hospital characteristics (teaching status, size, and
location) and to the particular set of SCODs purchased by each
hospital.
[31] CMS collects ASPs from manufacturers that include prices paid by
all purchasers, not just hospitals. Average prices paid by hospitals
may not be equal to average prices paid by other purchasers, such as
physicians' offices.
[32] Many hospitals reported receiving rebates for a set of drugs (and
sometimes drugs and other products). In these cases, it was generally
not feasible to allocate rebates to specific drugs.
[33] We accepted data from hospitals in any format. We believed that we
had to make the task of submitting data as easy as possible for
hospitals in order to gain their cooperation. Reflecting on our
experience, we think that this decision was critical to achieving good
response rates.
[34] GAO, Medicare: Comments on CMS Proposed 2006 Rates for Specified
Covered Outpatient Drugs and Radiopharmaceuticals Used in Hospitals,
GAO-06-17R (Washington, D.C.: Oct. 31, 2005). In addition to the
product's ASP, manufacturers must report the manufacturer's name, the
product's National Drug Code (NDC), and the number of units.
[35] Although HHS chose to use ASP data submitted by manufacturers to
set 2006 payment rates, it is required to conduct hospital surveys
subsequent to ours to determine hospital acquisition costs. MMA 117
Stat. 2308.
[36] We refer to our survey of hospitals as the 2004 survey because
data collection began in 2004. We collected data for SCODs purchased
from July 1, 2003, through June 30, 2004.
[37] For details on the sample design for our survey, see GAO-05-581R,
enclosure I.
[38] A SCOD category may contain one or many NDCs. NDCs may differ by
manufacturer, strength, or package size.
[39] Each SCOD and each NDC is assigned a specific number of units (for
example, 10 mg.), and the NDC units must also be converted to SCOD
units, in order to place on the same basis all the NDCs that make up a
SCOD. For a discussion of issues in converting NDC prices to SCOD
prices, see Department of Health and Human Services, Office of
Inspector General, Calculation of Volume-Weighted Average Sales Price
for Medicare Part B Prescription Drugs, OEI-03-05-00310 (Washington,
D.C.: February 2006).
[40] The number of SCODs can change from year to year as CMS designates
additional SCODs or combines previously separate SCODs.
[41] We recommended in a previous report that CMS collect information
on ASP by purchaser type to validate its reasonableness as a measure of
hospital acquisition cost. See GAO-06-17R.
[42] 42 C.F.R. §§ 414.800--414.806 (2005).
[43] In a survey conducted by the Society of Nuclear Medicine and the
Society of Nuclear Medicine Technologist Section, 76 percent of
hospitals reported that they purchased their radiopharmaceuticals in
unit doses. See Merlino, pp. 215-219.
[44] Of the nine radiopharmaceuticals for which we estimated prices, F-
18 FDG is the only one that is an F-18 radiopharmaceutical. However, as
more F-18 labeled products become available, the category may expand.
[45] See GAO-05-733R.
[46] 70 Fed. Reg. 68,656--57.
[47] We consider manufacturers to include independent nuclear
pharmacies and hospitals that compound radiopharmaceuticals that they
supply to other hospitals.
[48] A small part of the business of some independent nuclear
pharmacies, as well as retail outlets for large radiopharmaceutical
manufacturers, involves supplying ready-to-use radiopharmaceuticals
from their parent companies and other manufacturers.
[49] 70 Fed. Reg. 42,674, 42,727--28 (July 25, 2005).
[50] 70 Fed. Reg. 68,656.
[51] See GAO-05-581R for technical details on the survey we conducted.
[52] Purchase price refers to the price that hospitals paid upon
receiving a product. Purchase price incorporates a manufacturer's or
other vendor's discounts but excludes any rebates, which manufacturers
may pay a hospital purchaser at a later date. In this appendix, price
refers to purchase price, unless otherwise stated.
[53] For more information on urban influence codes, see Measuring
Rurality: Urban Influence Codes, http://www.ers.usda.gov/Briefing/
Rurality/urbaninf/ (downloaded Feb. 2, 2006). For more information on
rural-urban continuum codes, see Rural-Urban Commuting Area Codes,
http://www.ers.usda.gov/Briefing/Rurality/RuralurbCon/ (downloaded Feb.
14, 2006).
[54] Each observation of price was drawn from a particular invoice for
the purchase of a particular SCOD purchased by a particular hospital.
[55] StataCorp, Stata Statistical Software: Release 9 (College Station,
Tex.: StataCorp LP, 2003).
[56] Since each of the three "hospital characteristic" factors
(teaching status, location, and size) is measured as one or more binary
variables and the dependent variable, price, is measured as the natural
logarithm, we used a standard method to calculate the percentage
difference in price attributable to a particular measure of the factor,
relative to its comparison group. Paul Kennedy, A Guide to
Econometrics, 4th Ed. (Cambridge, Mass.: MIT Press, 1998), p. 108.
GAO's Mission:
The Government Accountability Office, the investigative arm of
Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order
GAO Products" heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office
441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm
E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director,
NelliganJ@gao.gov
(202) 512-4800
U.S. Government Accountability Office,
441 G Street NW, Room 7149
Washington, D.C. 20548:
