Calculation of potential inflation-indexed rebates for Medicare Part B drugs
- Collection:
- Health Policy and Services Research
- Series Title(s):
- Report in brief
- Contributor(s):
- United States. Department of Health and Human Services. Office of Inspector General. Office of Evaluation and Inspections, issuing body.
- Publication:
- [Washington, D.C.] : U.S. Department of Health and Human Services, Office of Inspector General, August 2017
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Drug Costs Insurance, Pharmaceutical Services -- economics Medicare Part B -- economics Cost Control Cost Savings Medicaid -- economics Humans United States United States. Department of Health and Human Services.
- Genre(s):
- Technical Report
- Abstract:
- Why OIG Did This Review. OIG conducted this review to respond to a congressional request asking us to update our earlier rebate calculations using only the inflation-indexed portion of the Medicaid rebate methodology. This report is part of OIG efforts to provide relevant data for policymakers in their discussions related to Medicare Part B drug spending. Statutorily mandated rebates, which include both basic rebates and inflation-indexed rebates (additional rebates owed when drug prices rise faster than inflation), amount to a substantial percentage of spending on Medicaid prescription drugs. Medicare does not have the authority to collect rebates for Part B drugs and biologicals (i.e., "Part B drugs"). In an earlier report, OIG found that a rebate program for Part B drugs could have resulted in at least $2.7 billion in rebates (both basic rebate and inflation-indexed rebate segments) in 2011. How OIG Did This Review. Applying the same formula that Medicaid uses to determine inflation-indexed rebates, we calculated how much in inflation-indexed rebates could have been associated with 64 high-expenditure Part B drugs in 2015. We performed separate calculations using both average sales prices (ASPs) and average manufacturer prices (AMPs). We also identified claims issues and coding-related issues that would need to be addressed before establishing a rebate program under Part B, should Congress choose to do so. What OIG Found. An ASP-based rebate program for Medicare Part B drugs could have resulted in $1.4 billion in inflation-indexed rebates in 2015 for 64 high-expenditure drugs. An AMP-based rebate program for the same 64 drugs could have resulted in $1.8 billion in inflation-indexed rebates that same year. Several implementation issues related to claims and data would need to be addressed should Congress decide to establish a rebate program under Part B. What OIG Concludes. Inflation-indexed rebates are intended to help protect State Medicaid programs and the Federal Government from significant drug price increases. Medicare Part B does not have similar rebate authority. The results of this current study build upon our original 2011 analysis. This analysis did not take into account how implementation of a Part B rebate requirement could affect beneficiary coinsurance obligations, beneficiary access to prescription drugs, and the overall pharmaceutical marketplace. Furthermore, we did not address the operational burden of implementing such a requirement. Any consideration of a rebate program should address the following administrative issues that may hinder rebate collections: the use of Healthcare Common Procedure Coding System codes, incorrect coding conversions, unavailable drug pricing data, and difficulties in identifying 340B-purchased drugs.
- Copyright:
- The National Library of Medicine believes this item to be in the public domain. (More information)
- Extent:
- 1 online resource (1 PDF file (26 pages))
- Illustrations:
- Illustrations
- NLM Unique ID:
- 101737914 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/101737914