Medicare Part B Drugs
CMS Data Source for Setting Payments Is Practical but Concerns Remain Gao ID: GAO-06-971T July 13, 2006In 2005, the Centers for Medicare & Medicaid Services (CMS), as required by law, began paying for physician-administered Part B drugs using information on the drugs' average sales price (ASP). Subsequently, CMS selected ASP as the basis to pay for a subset of Part B drugs provided at hospital outpatient departments. To calculate ASP, CMS uses price data submitted quarterly by manufacturers. GAO was asked to discuss its work on Medicare payment rates for Part B drugs. This testimony is based on several GAO products: Medicare Hospital Pharmaceuticals: Survey Shows Price Variation and Highlights Data Collection Lessons and Outpatient Rate-Setting Challenges for CMS, GAO-06-372, Apr. 28, 2006; Medicare: Comments on CMS Proposed 2006 Rates for Specified Covered Outpatient Drugs and Radiopharmaceuticals Used in Hospitals, GAO-06-17R, Oct. 31, 2005; and Medicare: Payments for Covered Outpatient Drugs Exceed Providers' Costs, GAO-01-1118, Sept. 21, 2001. Specifically, GAO's statement discusses (1) ASP as a practical and timely data source for use in setting Medicare Part B drug payment rates and (2) components of ASP that are currently unknown and implications for Medicare rate-setting.
In summary, using an ASP-based method to set payment rates for Part B drugs is a practical approach compared with methods based on alternative data sources, for several reasons. First, ASP is based on actual transactions and is a better proxy for providers' acquisition costs than average wholesale price or providers' charges included on claims for payment, neither of which is based on transaction data. Second, ASPs, which manufacturers update quarterly, offer information that is relatively timely for rate-setting purposes. In comparison, rates for other Medicare payment systems are based on data that may be at least 2 years old. Finally, using manufacturers as the data source for prices is preferable to collecting such data from health care providers, as the manufacturers have data systems in place to track prices, whereas health care providers generally do not have systems designed for that purpose. CMS lacks certain information about the composition of ASP that prompted GAO, in commenting on CMS's 2006 proposed payment rates for a subset of Part B drugs, to call ASP "a black box." Significantly, CMS lacks sufficient information on how manufacturers allocate rebates to individual drugs sold in combination with other drugs or other products; this is important, as CMS does not have the detail it needs to validate the reasonableness of the data underlying the reported prices. In addition, CMS does not instruct manufacturers to provide a breakdown of price and volume data by purchaser type--that is, by physicians, hospitals, other health providers, and wholesalers, which purchase drugs for resale to health care providers. As a result, CMS cannot determine how well average price data represent acquisition costs for different purchaser types. In particular, to the extent that some of the sales are to wholesalers that subsequently mark up the manufacturer's price in their sales to providers, the ASP's representation of providers' acquisition costs is weakened. Additionally, a sufficient empirical foundation does not exist for setting the payment rate for Medicare Part B drugs at 6 percent above ASP, further complicating efforts to determine the appropriateness of the rate. Given these information gaps, CMS is not well-positioned to validate the accuracy or appropriateness of its ASP-based payment rates.
GAO-06-971T, Medicare Part B Drugs: CMS Data Source for Setting Payments Is Practical but Concerns Remain
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Testimony:
Before the Subcommittee on Health, Committee on Ways and Means, House
of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 1:00 p.m. EDT:
Thursday, July 13, 2006:
Medicare Part B Drugs:
CMS Data Source for Setting Payments Is Practical but Concerns Remain:
Statement of A. Bruce Steinwald:
Director, Health Care:
GAO-06-971T:
GAO Highlights:
Highlights of GAO-06-971T, a testimony before the Subcommittee on
Health, Committee on Ways and Means, House of Representatives
Why GAO Did This Study:
In 2005, the Centers for Medicare & Medicaid Services (CMS), as
required by law, began paying for physician-administered Part B drugs
using information on the drugs‘ average sales price (ASP).
Subsequently, CMS selected ASP as the basis to pay for a subset of Part
B drugs provided at hospital outpatient departments. To calculate ASP,
CMS uses price data submitted quarterly by manufacturers. GAO was asked
to discuss its work on Medicare payment rates for Part B drugs. This
testimony is based on several GAO products:
* Medicare Hospital Pharmaceuticals: Survey Shows Price Variation and
Highlights Data Collection Lessons and Outpatient Rate-Setting
Challenges for CMS, GAO-06-372, Apr. 28, 2006.
* Medicare: Comments on CMS Proposed 2006 Rates for Specified Covered
Outpatient Drugs and Radiopharmaceuticals Used in Hospitals, GAO-06-
17R, Oct. 31, 2005.
* Medicare: Payments for Covered Outpatient Drugs Exceed Providers‘
Costs, GAO-01-1118, Sept. 21, 2001.
Specifically, GAO‘s statement discusses (1) ASP as a practical and
timely data source for use in setting Medicare Part B drug payment
rates and (2) components of ASP that are currently unknown and
implications for Medicare rate-setting.
What GAO Found:
In summary, using an ASP-based method to set payment rates for Part B
drugs is a practical approach compared with methods based on
alternative data sources, for several reasons. First, ASP is based on
actual transactions and is a better proxy for providers‘ acquisition
costs than average wholesale price or providers‘ charges included on
claims for payment, neither of which is based on transaction data.
Second, ASPs, which manufacturers update quarterly, offer information
that is relatively timely for rate-setting purposes. In comparison,
rates for other Medicare payment systems are based on data that may be
at least 2 years old. Finally, using manufacturers as the data source
for prices is preferable to collecting such data from health care
providers, as the manufacturers have data systems in place to track
prices, whereas health care providers generally do not have systems
designed for that purpose.
CMS lacks certain information about the composition of ASP that
prompted GAO, in commenting on CMS‘s 2006 proposed payment rates for a
subset of Part B drugs, to call ASP ’a black box.“ Significantly, CMS
lacks sufficient information on how manufacturers allocate rebates to
individual drugs sold in combination with other drugs or other
products; this is important, as CMS does not have the detail it needs
to validate the reasonableness of the data underlying the reported
prices. In addition, CMS does not instruct manufacturers to provide a
breakdown of price and volume data by purchaser type”that is, by
physicians, hospitals, other health providers, and wholesalers, which
purchase drugs for resale to health care providers. As a result, CMS
cannot determine how well average price data represent acquisition
costs for different purchaser types. In particular, to the extent that
some of the sales are to wholesalers that subsequently mark up the
manufacturer‘s price in their sales to providers, the ASP‘s
representation of providers‘ acquisition costs is weakened.
Additionally, a sufficient empirical foundation does not exist for
setting the payment rate for Medicare Part B drugs at 6 percent above
ASP, further complicating efforts to determine the appropriateness of
the rate. Given these information gaps, CMS is not well-positioned to
validate the accuracy or appropriateness of its ASP-based payment rates.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-971T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact A. Bruce Steinwald at
(202) 512-7101 or steinwalda@gao.gov.
[End of Section]
Madam Chairman and Members of the Subcommittee:
I am pleased to be here as you discuss Medicare's method of paying for
outpatient drugs covered under the program's Part B, the part of
Medicare that covers a broad range of medical services, including
physician, laboratory, and hospital outpatient department (HOPD)
services and durable medical equipment (DME). Part B-covered drugs are
typically administered by a physician or other medical professional
rather than by patients themselves. In contrast, drugs covered under
the new prescription drug benefit, known as Part D, are generally self-
administered by patients.[Footnote 1] In 2005, Medicare paid more than
$9 billion for Part B drugs furnished in conjunction with physician
services, HOPD services, dialysis services, and services performed
using DME, such as nebulizers.[Footnote 2],[Footnote 3]
Until 2005, Medicare's method of paying physicians for Part B drugs was
based on the drug's average wholesale price (AWP), which, despite its
name, was neither an average nor what wholesalers charged.[Footnote 4]
It was a price that manufacturers derived using their own criteria;
there were no requirements or conventions that AWP reflect the price of
an actual sale of drugs by a manufacturer.[Footnote 5] An analysis we
conducted in 2001 on Part B drug prices found that Medicare's AWP-based
payments often far exceeded market prices that were widely available to
health care providers.[Footnote 6]
The Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA) mandated that, beginning in 2005, payments for physician-
administered drugs be based on the drug's average sales price (ASP)--
that is, an average, calculated from price and volume data reported by
drug manufacturers, of sales to all U.S. purchasers.[Footnote 7] The
law directed that ASPs be net of rebates and other price concessions
and that 2005 payments to physicians for these drugs be set at 106
percent of ASP.[Footnote 8]
The MMA took a different approach to setting rates for a subset of
Medicare Part B drugs delivered in the HOPD setting. Prior to the MMA,
Medicare paid HOPDs for Part B drugs based on hospitals' 1996 median
costs for these drugs. In response to concerns that payments would not
reflect the cost of newly introduced pharmaceutical products--such as
those used to treat cancer or rare blood disorders--1999 legislation
authorized augmented payments for these drugs on a temporary
basis.[Footnote 9] Subsequently, the MMA defined a new payment category
for these drugs called specified covered outpatient drugs (SCOD). The
MMA required the Centers for Medicare & Medicaid Services (CMS) in the
Department of Health and Human Services (HHS) to set rates for this
subset of Part B drugs. Specifically, it 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 of rebates.
Subsequently, CMS selected ASP as the basis to pay for SCODs provided
at HOPDs.
In several related requirements, the MMA directed us to provide
information on SCOD costs and CMS's proposed rates. Among them was a
requirement to conduct a survey of a large sample of hospitals to
obtain data on their acquisition costs for 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 10] We were also required to evaluate CMS's proposed
rates for SCODs, comment on their appropriateness in light of the
survey we conducted, and advise on future data collection efforts by
CMS based on our survey experience.[Footnote 11] We issued reports in
2005 and 2006 in response to these requirements, and my remarks about
ASP are based on that work. Specifically, my remarks today will focus
on (1) ASP as a practical and timely data source for use in setting
Medicare Part B drug payment rates and (2) components of ASP that are
currently unknown and implications for Medicare rate-setting. Our work
was conducted in accordance with generally accepted government auditing
standards.
In summary, using an ASP-based method to set payment rates for Part B
drugs is a practical approach compared with methods based on
alternative data sources, for several reasons. First, ASP is based on
actual transactions and is a better proxy for health care providers'
acquisition costs than AWP or health care providers' charges included
on claims for payment, neither of which is based on transaction data.
Second, ASPs, which manufacturers update quarterly, offer information
that is relatively timely for rate-setting purposes. In comparison,
rates for other Medicare payment systems are based on data that may be
at least 2 years old. Finally, using manufacturers as the data source
for prices is preferable to collecting such data from health care
providers, as the manufacturers have data systems in place to track
prices, whereas health care providers generally do not have systems
designed for that purpose.
Despite these advantages, CMS lacks certain information about the
composition of ASP that prompted us, in our report commenting on CMS's
proposed 2006 SCOD rates, to call ASP "a black box."[Footnote 12]
Significantly, CMS lacks sufficient information on how manufacturers
allocate rebates to individual drugs sold in combination with other
drugs or other products; this is important, as CMS does not have the
detail it needs to validate the reasonableness of the data underlying
the reported prices. In addition, CMS does not instruct manufacturers
to provide a breakdown of price and volume data by purchaser type--that
is, by physicians, hospitals, other health care providers, and
wholesalers, which purchase drugs for resale to health care providers.
As a result, CMS cannot determine how well average price data represent
acquisition costs for different purchaser types. In particular, to the
extent that some of the sales are to wholesalers that may subsequently
mark up the manufacturer's price in their sales to health care
providers, the ASP's representation of providers' acquisition costs is
weakened. Additionally, a sufficient empirical foundation does not
exist for setting the payment rate for Medicare Part B drugs at 6
percent above ASP, further complicating efforts to determine the
appropriateness of the rate. Given these information gaps, CMS is not
well-positioned to validate the accuracy or appropriateness of its ASP-
based payment rates.
Background:
CMS calculates payment rates for each Part B drug with information on
price data that manufacturers report quarterly to the agency. In
reporting their price data to CMS, manufacturers are required to
account for price concessions, such as discounts and rebates, which can
affect the amount health care providers actually pay for a drug.
ASP Is a Price Measure Established in Law and Calculated with
Manufacturers' Data:
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; charge-backs
and rebates. Certain prices, including prices paid by federal
purchasers, are excluded, as are prices for drugs furnished under
Medicare Part D. CMS instructs pharmaceutical manufacturers to report
data to CMS--within 30 days after the end of each quarter--on the
average sale price for each Part B drug sold by the manufacturer. For
drugs sold at different strengths and package sizes, manufacturers are
required to report price and volume data for each product, after
accounting for price concessions. CMS then aggregates the manufacturer-
reported ASPs to calculate a national ASP for each drug
category.[Footnote 13]
Varying Payment Arrangements Affect the Price Purchasers Pay at the
Time of Sale:
Common drug purchasing arrangements can substantially affect the amount
health care providers actually pay for a drug. Physicians and hospitals
may belong to group purchasing organizations (GPO) that negotiate
prices with wholesalers or manufacturers on behalf of GPO members. GPOs
may negotiate different prices for different purchasers, such as
physicians, suppliers of DME, or hospitals. In addition, health care
providers can purchase covered outpatient drugs from general or
specialty pharmaceutical wholesalers or can have direct purchase
agreements with manufacturers. In these arrangements, providers may
benefit from discounts, rebates, and charge-backs that reduce the
actual costs providers incur. Discounts are applied at the time of
purchase, while rebates are paid by manufacturers some time after the
purchase. Rebates may be based on the number of several different
products purchased over an extended period of time. Under a charge-back
arrangement, the provider negotiates a price with the manufacturer that
is lower than the price the wholesaler normally charges for the
product, and the provider pays the wholesaler the negotiated price. The
manufacturer then pays the wholesaler the difference between the
wholesale price and the price negotiated between the manufacturer and
the provider.
ASP Is a Practical Payment Approach, Given the Limitations of Other
Data Sources Available for Rate-Setting:
Using an ASP-based method to set prices for Medicare Part B drugs is a
practical approach compared with alternative data sources for several
reasons. First, unlike AWP, ASP is based on actual transactions, making
it a useful proxy for health care providers' acquisition costs. Whereas
AWPs were list prices developed by manufacturers and not required to be
related to market prices that health care providers paid for products,
ASPs are based on actual sales to purchasers. For similar reasons,
payments based on ASPs are preferable to those based on providers'
charges, as charges are made up of costs and mark-ups, and mark-ups
vary widely across providers, making estimates of the average costs of
drugs across all providers wide-ranging and insufficiently precise. In
addition, basing payments on charges does not offer any incentives for
health care providers to minimize their acquisition costs.
Second, ASPs offer relatively timely information for rate-setting
purposes. Manufacturers have 30 days following the completion of each
quarter to report new price data to CMS. Before the end of the quarter
in which manufacturers report prices, CMS posts the updated Part B drug
payment rates, to take effect the first day of the next quarter. Thus,
the rates set are based on data from manufacturers that are, on
average, about 6 months old. In comparison, rates for other Medicare
payment systems are based on data that may be at least 2 years old.
Third, acquiring price data from manufacturers is preferable to
surveying health care providers, as the manufacturers have data systems
in place that track prices, whereas the latter generally do not have
systems designed for that purpose. In our survey of 1,157 hospitals, we
found that providing data on drug acquisition costs made substantial
demands on hospitals' information systems and staff. In some cases,
hospitals had to collect the data manually, provide us with copies of
paper invoices, or develop new data processing to retrieve the detailed
price data needed from their automated information systems.[Footnote
14] Hospital officials 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. Officials told us their data
collection difficulties were particularly pronounced regarding
information on manufacturers' rebates, which affect a drug's net
acquisition cost.[Footnote 15] In addition, we incurred considerable
costs as data collectors, signaling the difficulties that CMS would
face should it implement similar surveys of hospitals in the future.
CMS Lacks Information on ASP Necessary to Monitor Payment Rate Accuracy
and Appropriateness:
Despite its practicality as a data source, ASP remains a "black box."
That is, CMS lacks detailed information about the components of
manufacturers' reported price data--namely, methods manufacturers use
to allocate rebates to individual drugs and the sales prices paid by
type of purchaser. Furthermore, for all but SCODs provided in the HOPD
setting, no empirical support exists for setting rates at 6 percent
above ASP, and questions remain about setting SCOD payment rates at
ASP+6 percent. These information gaps make it difficult to ensure that
manufacturers' reported price data are accurate and that Medicare's ASP
rates developed from this information are appropriate.
Significantly, CMS has little information about the method a
manufacturer uses to allocate rebates when calculating an ASP for a
drug sold with other products. Unlike discounts, which are deducted at
the point of purchase, rebates are price concessions given by
manufacturers subsequent to the purchaser's receipt of the product. In
our survey of hospitals' purchase prices for SCODs, we found that
hospitals received rebate payments following the receipt of some of
their drug purchases but often could not determine rebate amounts.
Calculating a rebate amount is complicated by the fact that, in some
cases, rebates are based on a purchaser's volume of a set, or bundle,
of products defined by the manufacturer. This bundle may include more
than one drug or a mixture of drugs and other products, such as
bandages and surgical gloves. Given the variation in manufacturers'
purchasing and rebate arrangements, the allocation of rebates for a
product is not likely to be the same across all manufacturers. CMS does
not specifically instruct manufacturers to provide information on their
rebate allocation methods when they report ASPs. As a result, CMS lacks
the detail it needs to validate the reasonableness of the data
underlying the reported prices.
In addition, CMS does not require manufacturers to report details on
price data by purchaser type. Because a manufacturer's ASP is a
composite figure representing prices paid by various purchasers,
including both health care providers and wholesalers, CMS cannot
distinguish prices paid by purchaser type--for example, hospitals
compared with other institutional providers, physicians, and
wholesalers. In particular, to the extent that some of the sales are to
wholesalers that may subsequently mark up the manufacturer's price in
their sales to health care providers, the ASP's representation of
providers' acquisition costs is weakened. Thus, distinguishing prices
by purchaser type is important, as a central tenet of Medicare payment
policy is to pay enough to ensure beneficiary access to services while
paying pay no more than the cost of providing a service incurred by an
efficient provider. In our 2005 report on Medicare's proposed 2006 SCOD
payment rates, we recommended that CMS collect information on price
data by purchaser type to validate the reasonableness of ASP as a
measure of hospital acquisition costs.[Footnote 16]
Better information on manufacturers' reported prices--for example, the
extent to which a provider type's acquisition costs vary from the CMS-
calculated ASP--would help CMS set rates as accurately as possible. For
most types of providers of Medicare Part B drugs--physicians, dialysis
facilities, and DME suppliers--no empirical support exists for setting
rates at 6 percent above ASP. In the case of HOPDs, a rationale exists
based on an independent data source--our survey of hospital prices--but
the process of developing rates for SCODs was not simple. In commenting
on CMS's proposed 2006 rates to pay for SCODs, we raised questions
about CMS's rationale for proposing rates that were set at 6 percent
above ASP.[Footnote 17] CMS stated in its notice of proposed rulemaking
that purchase prices reported in our survey for the top 53 hospital
outpatient drugs, ranked by expenditures,[Footnote 18] equaled ASP+3
percent on average, and these purchase prices did not account for
rebates that would have lowered the product's actual cost to the
hospital.[Footnote 19] We noted that, logically, for payment rates to
equal acquisition costs, CMS would need to set rates lower than ASP+3
percent, taking our survey data into account. In effect, ASP+3 percent
was the upper bound of acquisition costs. Consistent with our
reasoning, CMS stated in its notice of proposed rulemaking that
"Inclusion of — rebates and price concessions in the GAO data would
decrease the GAO prices relative to the ASP prices, suggesting that
ASP+6 percent may be an overestimate of hospitals' average acquisition
costs." In its final rule establishing SCOD payment rates, CMS
determined that our survey's purchase prices equaled ASP+4 percent, on
average, based on an analysis of data more recent than CMS had first
used to determine the value of our purchase prices. CMS set the rate in
the final rule at ASP+6 percent, stating that this rate covered both
acquisition costs and handling costs.[Footnote 20] We have not
evaluated the reasonableness of the payment rate established in the
final rule.
Lacking detail on the components of ASP, CMS is not well-positioned to
confirm ASP's accuracy. In addition, CMS has no procedures to validate
the data it obtains from manufacturers by an independent source. In our
2006 report on lessons learned from our hospital survey,[Footnote 21]
we noted several options available to CMS to confirm the
appropriateness of its rates as approximating health care providers'
drug acquisition costs. Specifically, we noted that CMS could, on an
occasional basis, conduct a survey of providers, similar to ours but
streamlined in design; audit manufacturers' price submissions; or
examine proprietary data the agency considers reliable for validation
purposes. HHS agreed to consider our recommendation, stating that it
would continue to analyze the best approach for setting payment rates
for drugs.
Concluding Observations:
Because ASP is based on actual transaction data, is relatively timely,
and is administratively efficient for CMS and health care providers, we
affirm the practicality of the ASP-based method for setting Part B drug
payment rates. However, we remain concerned that CMS does not have
sufficient information about ASP to ensure the accuracy and
appropriateness of the rates. To verify the accuracy of price data that
manufacturers submit to the agency, details are needed--such as how
manufacturers account for rebates and other price concessions and how
they identify the purchase prices of products acquired through
wholesalers. Equally important is the ability to evaluate the
appropriateness of Medicare's ASP-based rate for all providers of Part
B drugs over time. As we recommended in our April 2006 report, CMS
should, on an occasional basis, validate ASP against an independent
source of price data to ensure the appropriateness of ASP-based rates.
Madam Chairman, this concludes my prepared statement. I will be happy
to answer any questions you or the other Subcommittee Members may have.
Contact and Staff Acknowledgments:
For further information regarding this testimony, please contact A.
Bruce Steinwald at (202) 512-7101 or steinwalda@gao.gov. Phyllis
Thorburn, Assistant Director; Hannah Fein; and Jenny Grover contributed
to this statement. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
statement.
FOOTNOTES
[1] Medicare Part A covers inpatient hospital services; Medicare Part
C, known as Medicare Advantage, covers beneficiaries enrolled in
managed care plans.
[2] In this testimony, we will refer to physicians, hospital outpatient
services, dialysis services, and durable medical equipment suppliers
collectively as providers.
[3] A nebulizer is a device driven by a compressed air machine. It
allows the patient to inhale medicine in the form of a mist.
[4] Until 2004, Medicare paid physicians 95 percent of AWP. Legislation
changed Medicare's payment to 85 percent of AWP in 2004.
[5] Manufacturers reported AWPs to organizations that published them in
drug price compendia, and the Medicare claims administration
contractors that pay claims for Part B drugs based physicians' payments
on the published AWPs.
[6] GAO, Medicare: Payments for Covered Outpatient Drugs Exceed
Providers' Costs, GAO-01-1118 (Washington, D.C.: Sept. 21, 2001).
[7] Certain prices were excluded, including prices paid to federal
purchasers and prices for drugs furnished under the Part D program.
[8] The term rebates refers to price concessions given to purchasers by
manufacturers subsequent to receipt of the product.
[9] See the Medicare, Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999, Pub. L. No. 106-113, app. F, § 201 (b), 113 Stat. 1501A-
321, 1501A-337--1501A-339.
[10] We provided information from this survey in two reports--one on
drugs and another on radiopharmaceuticals. See 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). The Secretary of HHS considered the price data we provided
but elected not to use these data as the basis for 2006 rates.
[11] We provided our comments on the proposed rates in 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). We provided information on our data
collection experience in GAO, Medicare Hospital Pharmaceuticals: Survey
Shows Price Variation and Highlights Data Collection Lessons and
Outpatient Rate-Setting Challenges for CMS, GAO-06-372 (Washington,
D.C.: Apr. 28, 2006).
[12] GAO-06-17R.
[13] Manufacturers' reported price data are based on the Food and Drug
Administration's (FDA) system of National Drug Codes, while the ASP
that CMS calculates for each drug is based on the agency's Healthcare
Common Procedure Coding System, which uses categories that are broader
than the FDA's coding system.
[14] The burden was more taxing for some hospitals than for others.
Many hospitals were able to rely on price data downloaded from their
drug wholesalers' information systems.
[15] Typically, hospitals did not systematically track all
manufacturers' rebates on drug purchases, although nearly 60 percent of
hospitals reported receiving one or more rebates.
[16] GAO-06-17R.
[17] GAO-06-17R.
[18] These drugs accounted for 95 percent of Medicare spending on all
SCODs in the first 9 months of 2004.
[19] The purchase prices hospitals reported to us took account of
discounts but not rebates.
[20] Handling costs include providers' expenses associated with
storing, preparing, and disposing of drugs.
[21] GAO-06-372.
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