CMS Enforcement of Average Sales Price (ASP) Submissions for all Medicare Part B Eligible Pharmaceuticals and Biopharmaceuticals

Recently, CMS has been sending letters to pharma and biopharma manufacturers (with and without MDRP agreements) indicating that they believe some companies are not adhering to the 2021 Medicare Act Amendment requiring ASP submissions for ALL products eligible for Medicare Part B reimbursement. They are further indicating that non-compliance or misrepresentation will result in civil penalties of up to $10,000 for each infraction per day that any misrepresentation was applied.

It is critical that manufacturers carefully assess their entire product catalog to determine if they have any Medicare Part B eligible products and quickly become compliant with the updated Medicare Act ASP submission requirement. We expect that manufacturers who are identified as non-compliant and who do not cooperate with CMS’ requests to become compliant will be subject to the severe penalties.

Pharma manufacturers that participate in the Medicaid Drug Rebate Program (MDRP) and sell physician administered or injectable medications should be quite familiar with the requirement to compute an Average Selling Price (ASP). These products are typically eligible for coverage for Medicare beneficiaries under Part B, the professional services category of Medicare.

Section 1927(b)(3)(A)(iii)(1) of the Social Security Act specifically requires manufacturers with a MDRP agreement to report ASP data as specified in section 1847A — common knowledge to MDRP participants. However, Section 401 of the Consolidated Appropriations Act (CAA), 2021 amended section 1847A to require ALL pharmaceutical manufacturers to compute and report all applicable ASP information to CMS.

Although little guidance or communication has been provided to date, the amendment requires ASP submissions for calendar quarters beginning on January 1, 2022, for drugs or biologicals payable under Medicare Part B. These are fully described in sections of the Act and include items, services, supplies, and products that are payable under Part B as a drug or biological.

The data derived from ASP submissions will not only help with CMS’ stated goal of reducing reimbursement levels for qualifying products and services, but also form the basis for measuring inflation rates of all associated pharma and biologic products. This level of information also provides CMS the toolset required to impose an inflation penalty on manufacturers that they believe are increasing prices at too fast of a pace.

This notion was codified in the 2022 Inflation Reduction Act, which introduced inflation penalties to Medicare Part B and Part D and immediately began to impact manufacturers’ bottom lines. The billing for these rebates may begin in the 2023 calendar year if CMS is able to operationalize the regulatory change, but manufacturers should be accruing now. For additional details regarding new compliance requirements and financial impacts for pharmaceutical manufacturers from the Inflation Reduction Act please read our blog “Inflation Reduction Act Likely to Have a Negative Financial Impact on Many Drug Manufacturers.”

Prescription Analytics is a leading provider of turnkey services for pharmaceutical manufacturers in government pricing, rebate processing, licensing, state transparency reporting and commercial operations support. If you are interested in learning more about how we help companies like yours achieve their growth, compliance, and profitability goals, contact us today.

Sources:
ssa.gov
congress.gov
cms.gov