CMS Should Address Medicare's Flawed Payment System for DME Infusion Drugs

As required by statute, Medicare sets payment amounts for drugs infused through durable medical equipment (DME infusion drugs) at 95 percent of the average wholesale prices (AWPs) in effect on October 1, 2003. AWPs, which represent list prices rather than actual marketplace prices, have been long been recognized as a flawed pricing benchmark. In February 2013, OIG issued a report to CMS regarding Medicare payments for DME infusion drugs. In that report, we made one recommendation and suggested two options for its implementation. Because CMS had not taken steps to address our recommendation, and payments continued to be misaligned with drug costs, OIG revisited this issue in a 2015 report.