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CMS overpaid for infusion drugs by $334 million, OIG says

NEWS IN BRIEF — Posted March 4, 2013

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The Medicare program has overpaid for durable medical equipment infusion drugs by as much as 122% since 2005 because Congress directs it to use an outdated pricing structure, federal auditors stated in a report.

The majority of the DME drugs paid for between 2005-11 by Medicare exceeded what the program would have paid under the program’s average sales price system, which pays market rate estimates plus 6% for drugs billed to Medicare’s outpatient side of the program. DME drugs are paid under an average wholesale price system, which generally means higher pay rates. Medicare and its beneficiaries would have saved $334 million if pay for infusion drugs were based on the average sales price, the Health and Human Services Office of Inspector General stated in a February report.

Most years, the entitlement program spent more on milrinone lactate than on any other infusion drug — accounting for 24% to 62% of the yearly spending total for the category.

However, the analysis also found instances in which physicians were being underpaid for administering some drugs. For instance, the average sales price for the antiviral drug ganciclovir sodium was $65.03 in 2011, but the Medicare payment was $35.25, the same price it paid in 2005.

The OIG recommended that the Centers for Medicare & Medicaid Services seek a legislative change to authorize paying for DME infusion drugs using the average sales price methodology. Such a change could have saved the program $72 million in 2011.

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