Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
M P B 
  EDICARE  ART 
 
C A : 
HEMOTHERAPY  DMINISTRATION
 
 
P P  
  AYMENT AND  OLICY
 
 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
June 2009 
OEI-09-08-00190   
Office of Inspector General 
 
http://oig.hhs.gov 
 
 
The mission of the Office  of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory  mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
 
Office of Audit Ser vices 
The Office of Audit Servi ces (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.     
 E X E C U T I V E   S U M M A R Y  
OBJECTIVE 
To determine whether Medicare paid appropriately for Part B services 
billed as chemotherapy administration from 2005 to 2007. 
BACKGROUND 
Medicare Part B covers a limited number of outpatient prescription 
drugs and pays separately for their administration.  Among the drugs 
covered by Part B are chemotherapy agents administered by injection or 
infusion in a physicians office.  Physicians who administer drugs to 
Medicare beneficiaries usually also purchase them and, therefore, bill 
Medicare Part B for both the drug and its administration.  Sometimes, 
though, the drug the physician administers comes from another source, 
such as free samples given to the physician or a pharmaceutical 
companys patient assistance program, and is not billed to Part B. 
Medicare pays physicians about twice as much to administer 
chemotherapy drugs as it does to administer nonchemotherapy drugs.  
Medicare also pays the chemotherapy rate for administering certain 
types of nonchemotherapy drugs with particularly complex preparation 
and delivery issues.  The Centers for Medicare & Medicaid Services 
(CMS) does not specify which particular nonchemotherapy drugs qualify 
for the chemotherapy rate (qualifying drugs), leaving that 
determination to the carriers with which CMS contracts to process 
Medicare Part B physician claims.  Medicare paid $1.9 billion for 
chemotherapy administration services between 2005 and 2007. 
We used two main data sources in this evaluation.  First, we conducted 
structured interviews with and collected documents from appropriate 
carrier staff about their policies.  We also analyzed Medicare Part B 
physician claims for services rendered and claimed between 2005 and 
2007.  To ensure a conservative estimate of inappropriate payments, we 
defined a qualifying drug for our Part B analysis as any drug that any 
carrier determined qualified for the chemotherapy administration rate. 
We classified any chemotherapy administration claim that fell on a 
service date on which no qualifying drug was billed as an unmatched 
chemotherapy administration claim.  We summarized unmatched 
chemotherapy administration claims data to the physician level to 
determine whether billing practices differed by specialty or claims 
volume. 
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    i     
E X E C U T I V E   S U M M A R Y  
FINDINGS 
Although unmatched claims exceeded $60 million from 2005 to 
2007, Medicare data are insufficient to determine consistently 
whether chemotherapy administration payments are appropriate.  
We found that Medicare allowed $17.1 million for chemotherapy 
administration claims on days on which no drug was billed and       
$43.5 million for chemotherapy administration claims on days on which 
only nonqualifying drugs were billed.  We cannot determine definitively 
whether these unmatched claims are truly inappropriate because we 
cannot eliminate the possibility that providers administered qualifying 
drugs but did not bill them to Medicare.  Providers who submitted many 
chemotherapy administration claims overall tended to submit fewer 
unmatched claims as a percentage of their total. 
Carriers have implemented inconsistent chemotherapy 
administration coding policies and review procedures.  Lacking a 
national definition of qualifying drug, carriers have implemented their 
own policies and sometimes disagree on whether a particular drug 
qualifies for the higher administration rate.  Two carriers have 
implemented claims processing edits to ensure that they pay the 
chemotherapy administration rate only for qualifying drugs; others say 
such edits would trigger inappropriate denials of legitimate claims.  Six 
carriers have instead performed postpayment medical reviews that 
included chemotherapy administration claims. 
RECOMMENDATIONS 
Although the $60.6 million that we identified in unmatched 
chemotherapy administration claims is small compared to the           
$1.9 billion Medicare paid for Part B chemotherapy administration from 
2005 to 2007, potential program savings may nevertheless exist if CMS 
can limit the use of chemotherapy administration codes to qualifying 
drugs.  Furthermore, CMSs policy of letting carriers determine which 
drugs qualify for billing with the chemotherapy administration codes 
has led to inconsistencies in how much carriers pay for the 
administration of certain drugs. 
Therefore we recommend that CMS take the following actions: 
  establish a process to determine which specific drugs qualify 
for the chemotherapy administration payment rate, 
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    ii     
E   X E C U T I V E   S U M M A R Y   
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RESPONSE 
CMS concurred with our recommendation to instruct carriers to 
consider probe reviews of chemotherapy administration claims, but did 
not concur with the other three recommendations in our draft report. 
CMS did not concur with our recommendation to clarify the criteria for 
qualifying drugs, stating that the current CPT guidance represents the 
best consensus from the medical community and CMS.  CMS also 
stated that it believes the current variation in carrier definitions of 
qualifying drugs may be because of practice variations in the conditions 
for which a drug is used and that this variation may decrease as a 
consequence of contracting reform.  We stand by our recommendation 
that CMS clarify its policy, but have revised the recommendation in a 
way that addresses practice variations. 
CMS did not concur with our recommendation to use the current claims 
infrastructure to capture information about drugs not billed to Part B or 
our recommendation to develop edits to ensure that drug administration 
codes are billed correctly because it believes the implementation costs 
would exceed any benefit.  Because our findings show that program 
savings may be achieved if CMS can ensure that chemotherapy 
administration codes are used appropriately, we stand by the intent of 
our original recommendations.  However, we have amended them to 
defer to CMSs judgment on the specific actions best suited to 
accomplish this goal.
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    iii     
 T A B L E   O F   C O N T E N T S  
   
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
 
 
I N T RO DUC T IO N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1  
 
 
F I N D IN G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8  
Although unmatched claims exceeded $60 million from 
2005 to 2007, Medicare data are insufficient to determine 
  consistently whether chemotherapy administration payments 
  are appropriate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8  
 
  Carriers have implemented inconsistent chemotherapy 
  administration coding policies and review procedures . . . . . . . . . . 9  
 
 
R E C O MMEN D A T ION S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 
  Agency Comments and Office of Inspector General Response . . . 12 
 
APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 
  A:  Methodology Notes and Limitations. . . . . . . . . . . . . . . . . . . . . 14 
 
  B:  Complete List of Drugs With Conflicting  
        Qualifying Determinations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 
   
  C:  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 
 
A C K NO WL E D G M E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 
     
 I N T R O D U C T I O N  
 
OBJECTIVE 
To determine whether Medicare paid appropriately for Part B services 
billed as chemotherapy administration from 2005 to 2007. 
BACKGROUND 
Medicare Part B Drugs and Drug Administration Coverage 
Medicare Part B covers a limited number of outpatient prescription 
drugs, including those that are furnished as an integral part of a 
physicians service and are not usually self-administered.  Examples of 
Part B drugs include the cancer chemotherapy drug doxorubicin (brand 
name Adriamycin), the anemia drug darbepoetin alfa (Aranesp), and the 
estrogen replacement estradiol valerate (Delestrogen).  According to the 
Centers for Medicare & Medicaid Services (CMS) statistics, Medicare 
allowed about $2.4 billion for chemotherapy drugs and $7.4 billion for 
nonchemotherapy drugs in 2006.1 
In addition to covering certain drugs, Medicare Part B pays for the 
administration of covered drugs as a separate service.  The American 
Medical Associations (AMA) Current Procedural Terminology (CPT) 
contains the billing codes that physicians use to identify drug 
administration services when submitting claims to Medicare.  Each 
drug administration CPT code identifies both the type of the drug 
delivered and the route of administration used.  The CPT divides 
administration codes into three broad categories by drug type:             
(1) hydration; (2) therapeutic, prophylactic, and diagnostic injections 
and infusions; and (3) chemotherapy administration.  Each drug type 
category lists several codes that describe different routes of 
administration, and some routes appear in multiple categories.  For 
example, three codes describe the first hour of intravenous       
infusionone for infusing a hydration solution, one for infusing a 
nonchemotherapy drug, and one for infusing a chemotherapy drug.  
Office of Inspector General (OIG) analysis of billing data shows that 
from 2005 to 2007, Medicare allowed about $1.9 billion for drug 
 
1 Drug type as defined by Berenson-Eggers Type of Service.  Source:  CMS, Medicare 
Part B Physician/Supplier Data by BETOS:  Calendar Year 2006. Available online at 
http://www.cms.hhs.gov/MedicareFeeforSvcPartsAB/Downloads/BETOS06.pdf.  Accessed on 
September 17, 2008. 
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    1     
I N T R O D U C T I O N  
administration codes from the chemotherapy category (chemotherapy 
administration codes) and $1.4 billion for drug administration codes 
from the other categories (nonchemotherapy administration codes). 
Regardless of the route of administration, Medicare reimbursement is 
consistently higher for chemotherapy administration codes than for 
nonchemotherapy administration codes (see Table 1).  For example, in 
2008 Medicare allowed, on average, $161.49 for the first hour of 
intravenous chemotherapy infusion (plus payment for the drug itself).  
By contrast, Medicare would allow $73.89 for the same service if it 
involved a nonchemotherapy drug and $60.56 if it involved a hydration 
solution.  According to the 2008 CPT Manual,  . . . chemotherapy 
services require advanced practice training and competency for staff . . . 
special considerations for preparation, dosage, or disposal; and . . . 
entail significant patient risk and frequent monitoring.2 
TABLE 1  Type of Drug Administered 
Medicare Pays More 
Nonchemotherapy  Chemotherapy 
Route of Administration 
for Administering 
Hydration Solution  Drug  Drug 
Chemotherapy Than 
Initial intravenous infusion, 
for Other Drugs  $ 60.56  $ 73.89  $ 161.49 
up to 1 hour 
 
Initial intravenous infusion, 
$ 18.28  $ 23.61  $ 36.18 
each additional hour 
Sequential intravenous 
-  $ 38.09  $ 79.60 
infusion 
Initial intravenous push  -  $ 57.89  $ 119.21 
Sequential intravenous push  -  $ 25.52  $ 68.18 
Source:  Fee schedule lookup function on www.cms.hhs.gov.  National payment amounts for 2008. 
Medicare Part B Drug Administration Billing 
Physicians submit claims for drugs and drug administration to entities 
called carriers with which CMS contracts to process Medicare Part B 
physician claims.3  To request reimbursement for a Medicare service, 
 
2 AMA, Current Procedural Terminology 2008 Professional Edition, 2007, p. 424. 
3 Starting in March 2007, CMS began shifting Part B claims processing responsibility to 
Part A/Part B Medicare Administrative Contractors as part of major contracting reform 
mandated by the Medicare Prescription Drug, Improvement, and Modernization Act of 
2003, P.L. No. 108-173  911, Social Security Act,  1874A, 42 U.S.C.  1395kk-1.  Because 
carriers were the primary contractor type throughout our study period from 2005 to 2007, 
we will use the term carrier to refer to both types of Part B contractor throughout this 
report. 
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    2     
I N T R O D U C T I O N  
the physician submits to the carrier a standard paper or electronic claim 
form that contains information about the services performed.  The 
carrier then passes the claim through a series of automated edits that 
verify that the claim is complete and meets Medicare coverage 
guidelines.  Then the carrier calculates the correct reimbursement for 
the services claimed and issues payment to the physician.  Most claims 
pass through this system rapidly, but edits sometimes trigger claim 
denials or flag claims for manual review by carrier staff.   
Physicians who administer drugs to Medicare beneficiaries usually also 
purchase them and, therefore, bill Medicare Part B for both the drug 
and its administration.  Several situations exist, however, in which  
Part B would receive a bill for the administration service but not the 
drug itself.  For example, some Medicare Part D plans cover drugs also 
payable under Part Bif the beneficiary gets a drug through Part D, 
the plan submits data to the Part D contractor, not to the carrier.  
Alternatively, a pharmaceutical company may provide drugs at no cost 
as free samples, as part of a clinical trial, or under a patient assistance 
program.  In this case, the physician would bill Part B for the 
administration service, but no claim for the drug would go to any 
segment of Medicare.  Although the physician attaches a modifier to the 
administration claim to indicate that the service is part of a clinical 
trial, no such modifier exists to indicate if a drug comes from another 
source not billed to Medicare.4 
Medicare Chemotherapy Administration Policy 
Prior to January 1, 2005, Medicare allowed physicians to use the 
chemotherapy administration codes only to report the delivery of 
antineoplastic agents for cancer treatment.5  In December 2004, CMS 
issued Change Request (CR) 3631, which instructed carriers to allow 
the chemotherapy codes for  . . . parenteral administration of 
nonradionuclide anti-neoplastic drugs; and also to anti-neoplastic 
agents provided for treatment of noncancer diagnoses (e.g., 
cyclophosphamide for auto-immune conditions) or to substances such as 
monoclonal antibody agents, and other biologic response modifiers.  
The new policy reflected changes to the CPT drug administration 
 
4 Physicians who participate in CMSs Competitive Acquisition Program (CAP) obtain 
drugs from CAP vendors, in which case the vendor submits the Part B drug claim to the 
carrier for payment.  The physician also identifies the drugs on the administration claim 
but attaches a modifier that indicates that payment for them should go to the CAP vendor. 
5 Antineoplastic drugs inhibit the growth of cancer cells. 
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I N T R O D U C T I O N  
categories that the AMA adopted in late 2004 but did not publish until 
the 2006 edition of the CPT manual.  Hereinafter, we will refer to any 
drug that meets the CR 3631 criteria as a qualifying drug. 
CMS did not identify specific qualifying drugs in CR 3631, stating, [a]t 
this time, CMS is not developing a national list of approved 
chemotherapy drugs.  CMS will allow each Medicare carrier to develop 
such a list.  As of September 2008, the Medicare Claims Processing 
Manual lists several examples of qualifying drugs but states, [t]he 
drugs cited are not intended to be a complete list of drugs that may be 
administered using the chemotherapy administration codes.  Local 
carriers may provide additional guidance as to which drugs may be 
considered to be chemotherapy drugs under Medicare.6  CMS does not 
require, however, that carriers develop such guidance, nor does it 
require that carriers develop systems to ensure that chemotherapy 
administration codes are used only with qualifying drugs.  According to 
the 2008 CPT Manual, chemotherapy administration codes should be 
reserved for drugs that  . . . [require] physician work and/or clinical 
staff monitoring well beyond that of therapeutic drug agents [i.e., those 
billed with the nonchemotherapy administration codes]. . . .7 
Previous Work 
Previous analyses suggest that physicians sometimes misuse the 
chemotherapy administration codes.  The Medicare Payment Advisory 
Commission (MedPAC) noted in a January 2006 report to Congress that 
many of the Medicare claims for chemotherapy administration that it 
reviewed did not have an accompanying drug claim.  MedPAC also 
found that although Medicare payments for drug administration 
increased 217 percent from 2003 to 2004, payments for drugs increased 
only 10 percent.8 
During preinspection for this study, we analyzed a 1-percent sample of 
CMSs Part B Carrier 100 Percent National Claims History Line Item 
file for 2005.  We found that Medicare allowed approximately             
$33 million that year for chemotherapy administration claims without a 
corresponding claim for a qualifying drug for the same day of service. 
 
 
6 CMS, Medicare Claims Processing Manual, Pub. No. 100-04, ch. 12,  30.5. 
7 AMA, Current Procedural Terminology 2008 Professional Edition, 2007, p. 424. 
8 MedPAC, Report to the Congress:  Effects of Medicare Payment Changes on Oncology 
Services, January 2006. 
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    4     
II NN TT RR OO DD UU CC TT II OO NN   
METHODOLOGY 
We used two main data sources to develop the findings for this 
evaluation.  To determine how Medicare carriers implemented CR 3631, 
we conducted structured interviews with appropriate staff from each 
carrier about its policies on the use of chemotherapy administration 
codes.  We also collected and reviewed relevant documents from each 
carrier.  We then applied the carrier policies to Medicare Part B claims 
data to determine whether providers used the codes appropriately. 
Carrier Policy Analysis 
We used publicly available CMS data sources to identify the 15 carriers 
that processed Medicare Part B claims between 2005 and 2007.  We 
asked each carrier, by telephone and/or e-mail, about its 
implementation of CR 3631, its list (if any) of qualifying drugs, what 
guidance it had offered Medicare providers, and the results of any 
reviews of chemotherapy administration.  We obtained documentation 
of these policies and reviews from the carriers and from CMSs Medicare 
Coverage Database, an online compendium of contractor policies.  Ten 
carriers that were in operation between 2005 and 2007 no longer hold 
Medicare contracts or have changed jurisdictions; in these cases, we 
obtained information about the prior carriers policies from the current 
contractor and from the Medicare Coverage Database. 
We reviewed the carrier information to determine which drugs each 
carrier considered as qualifying.9  We then combined the carriers 
individual determinations to create an overall list of qualifying drugs for 
use in our claims analysis.  To ensure a conservative estimate of 
inappropriate payments, we included a drug on this list if any carrier 
had determined that it qualified for the chemotherapy administration 
codes.  We did not evaluate the appropriateness of the carriers 
determinations. 
Medicare Claims Analysis 
We systematically analyzed the Part B Carrier 100 Percent National 
Claims History Line Item files for services rendered and claimed 
between 2005 and 2007 to determine the incidence of chemotherapy 
administration coding errors.  We first identified all drug claims and 
 
9 One carrier had a policy that defined certain categories of drugs as qualifying or 
nonqualifying rather than identifying specific drugs by name.  We used the national drug 
code listing and manufacturer and various medical resource Web sites to identify specific 
drugs in the categories defined by this carrier. 
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I N T R O D U C T I O N  
drug administration claims in the Part B files.10  We then counted the 
number of qualifying drug claims, nonqualifying drug claims, 
chemotherapy administration claims, and nonchemotherapy 
administration claims per beneficiary and service date.  We then 
matched this summary service date information back to the drug and 
drug administration claims data.  We classified any chemotherapy 
administration claim that fell on a service date on which no qualifying 
drug was billed as an unmatched chemotherapy administration claim.   
To refine our analysis, we then sought to identify and eliminate 
unmatched claims that most likely appropriately described the 
administration of qualifying drugs that were not themselves billed to 
Part B.  First, we eliminated claims that fell on service dates on which 
billed modifiers indicated that the beneficiary was enrolled in a clinical 
trial.  We found 36,054 unmatched claims that occurred while the 
beneficiary was part of a clinical trial (see notes on clinical trials in 
Appendix A).  Although Medicare data do not identify what drugs were 
provided to the beneficiary in the clinical trial, we assumed they were 
qualifying drugs and that the chemotherapy administration service was 
therefore billed appropriately.  We then cross-referenced the remaining 
unmatched claims to Medicare Part D prescription drug event data to 
determine whether the claim could represent the administration of a 
Part D drug.  Only one unmatched claim fell on a date on which the 
beneficiary had a supply of drugs paid for by Part D11 (see notes on the  
Part D match in Appendix A).  We could not further refine our analysis 
because we found no data source that indicated whether beneficiaries 
obtained drugs from sources not billed to Medicare (see Findings).  
Nevertheless, we summarized unmatched chemotherapy administration 
claims data at the physician level to determine whether billing practices 
differed by specialty or claims volume. 
 
10 We limited our analysis to drug administration codes describing injections and 
intravenous infusions because they appear in both the chemotherapy and nonchemotherapy 
CPT drug administration code categories.  These services account for 99 percent of the 
chemotherapy administration services billed from 2005 to 2007. 
11 We analyzed Part D prescription drug event data for January through June 2006.  
Because we found only one matching qualifying drug, we did not pursue the Part D analysis 
for other time periods. 
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I N T R O D U C T I O N  
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency (now 
Council of the Inspectors General on Integrity and Efficiency).
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    7     
 F I N D I N G S  
 
Although unmatched claims exceeded $60 million  Based on our analysis, Medicare 
from 2005 to 2007, Medicare data are insufficient to  allowed $60.6 million for unmatched 
determine consistently whether chemotherapy  chemotherapy administration claims 
from 2005 to 2007.  We classified any 
administration payments are appropriate 
chemotherapy administration claim 
that fell on a service date on which no qualifying drug was billed as an 
unmatched chemotherapy administration claim.  Approximately 
$700,000 of this amount derives from situations in which the provider 
billed a qualifying drug claim either the day before or day after the 
unmatched administration claim.  Of the remainder, $17.1 million was 
allowed on days on which no drug 
Table 2:  Nonqualifying Drugs Frequently 
was billed, and $43.5 million was 
Appearing With Unmatched Chemotherapy 
allowed on days on which only 
Administration Claims 
nonqualifying drugs were billed.  
Table 2 shows the drugs that 
Percentage of Unmatched 
providers most commonly billed with 
Drug  Administration Claims 
Hydration Solutions  27 percent  unmatched administration claims of 
Heparin Sodium  8 percent  the latter category. 
Epoetin Alfa    8 percent  Payments for unmatched 
Dexamethasone  7 percent  chemotherapy administration claims 
Zoledronic Acid  7 percent  were widespread, but their incidence 
Darbepoetin Alfa  5 percent  varied significantly by provider.  
Source:  OIG analysis of Medicare Part B data for 2005-2007, 2008.  Many chemotherapy providers, 
about 44 percent, submitted at least 
one unmatched chemotherapy administration claim, but such claims 
generally accounted for a small portion of their total chemotherapy 
administration billings.  Providers with many chemotherapy 
administration claims tended to bill fewer unmatched claims as a 
percentage of their total than those who submitted fewer chemotherapy 
administration claims.  Oncologists and urologists also tended to bill 
fewer unmatched claims as a percentage of their total than providers of 
other specialties. 
Because claims data do not capture sufficient information, we cannot 
determine whether these unmatched claims are truly inappropriate.  
Specifically, Part B data do not identify drugs that are not billed to the 
program even when their administration is billed to Part B.  Therefore, 
we cannot definitively conclude that unmatched chemotherapy 
administration claims do not represent the appropriately billed delivery 
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F I N D I N G S  
of qualifying drugs themselves not billed to Part B.  Without record 
review, which was not part of our methodology, we also cannot 
determine if an unmatched claim represents a billing error or omission.  
CMS and its carriers are bound by these same limitations. 
 
Carriers have implemented inconsistent  Some carriers used the flexibility 
chemotherapy administration coding  granted in CR 3631 to develop 
individual policies for chemotherapy 
policies and review procedures 
administration coding.  All               
15 carriers implemented CMSs policy expanding the application of the 
chemotherapy administration codes, and all communicated their policy 
to the provider community through bulletins, newsletters, provider 
meetings, and other vehicles or posted information on their Web sites.  
However, only four carriers developed comprehensive lists of all drugs 
and corresponding billing codes considered appropriate for use with the 
chemotherapy administration codes.  Nine more created partial lists or 
classified particular drugs on a case-by-case basis, most often 
luteinizing hormone-releasing hormone analogs, which are used to treat 
prostate cancer.  The remaining two have not specified any drugs that 
should be billed with particular administration codes.  In one case, 
carrier officials elected not to create a list because they could not 
determine what drugs should be considered biological response 
modifiers, one category of qualifying drug identified in CR 3631. 
Carriers that made qualifying determinations 
Table 3:  Top Drugs With Conflicting Carrier 
sometimes disagreed on particular drugs.  We 
Qualifying Determinations 
identified 33 drugs that at least one carrier 
defined as qualifying and at least one other 
Qualifying  Nonqualifying 
Drug (Generic Name)  Determinations  Determinations  carrier defined as nonqualifying.  Table 3 
(No. of carriers)  (No. of carriers) 
shows the six most commonly billed drugs that 
Leucovorin Calcium  1  5 have conflicting definitions; the full list can be 
Filgrastim  2  4 found in Appendix B. 
Pegfilgrastim  2  5
Some carriers have implemented claims 
Sargramostim  1  5
processing edits or conducted reviews to 
Triptorelin Pamoate  2  2
ensure correct billing of chemotherapy 
Interferon Beta 1-a  3  1
Source:  OIG analysis of Medicare carrier policies, 2008.  administration codes, but others have 
encountered difficulties or have focused on 
other priorities.  Two carriers use claims processing edits that check for 
the presence of a qualifying drug claim before paying a chemotherapy 
administration claim.  Several other carriers considered implementing 
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F I N D I N G S  
edits but ultimately did not because they believed that the edits would 
result in inappropriate denials when qualifying drugs were delivered 
but not billed to Medicare.  Instead of edits, six carriers conducted 
postpayment medical reviews that included chemotherapy 
administration claims.  Four of these carriers found instances in which 
providers used chemotherapy administration codes for nonqualifying 
drugs.  Two other carriers have reviewed their administrative data and 
determined that chemotherapy administration coding does not appear 
to be problematic. 
 
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 R E C O M M E N D A T I O N S  
 
 
Compared to the overall $1.9 billion Medicare paid for Part B 
chemotherapy administration from 2005 to 2007, the $60.6 million in 
unmatched claims is relatively small.  Nevertheless, potential program 
savings may exist if CMS can limit the use of chemotherapy 
administration codes to qualifying drugs.  Furthermore, CMSs policy of 
letting carriers determine which drugs qualify for billing with the 
chemotherapy administration codes has led to inconsistencies in how 
much carriers pay for the administration of certain drugs. 
Therefore, we recommend that CMS take the following actions: 
Establish a Process to Determine Which Specific Drugs Qualify for the 
Chemotherapy Administration Payment Rate 
Some carriers have found the language in CR 3631 defining qualifying 
drugs to be overly broad, especially the term biologic response 
modifiers.  As a result, carriers disagree on the drugs for which they 
allow the chemotherapy administration codes to be billed.  While CMS 
believes that this variation may be an appropriate result of unique 
practices of large cancer centers, we note that no carrier defined 
qualifying drugs in terms of the clinical conditions or patient population 
for which the drug is used.  Nevertheless, we recognize that a drugs 
risk for adverse reaction may depend on such factors.  Therefore, CMS 
should establish a process to determine if a given drug, under any 
reasonable circumstance, meets the CR 3631 definition of a qualifying 
drug.  CMS should consult with the carriers and appropriate medical 
experts in developing this process.  Once finalized, the process should be 
used to classify existing drugs as well as new drugs when they come to 
market.  If a drug meets the qualifying criteria only under unique 
circumstances, CMS should instruct providers to bill, and carriers to 
allow, the chemotherapy administration rate only when those conditions 
are met. 
Instruct Carriers That Have Not Done So To Consider a Probe Review of 
Unmatched Chemotherapy Administration Claims  
The carriers that have reviewed chemotherapy administration coding 
have found numerous billing errors.  CMS should instruct those carriers 
that have not conducted such a review to evaluate whether doing so 
would provide a favorable return on investment. 
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R E C O M M E N D A T I O N S  
Ensure That Drug Administration Claims Are Coded Correctly and Paid 
Appropriately 
Medicare Part B claims currently lack information needed to determine 
whether the correct administration code is used to bill for delivering a 
drug covered by Part B.  However, our review suggests that ensuring 
that chemotherapy administration claims are appropriately coded could 
result in program savings.  Therefore, we recommend that CMS take 
steps to ensure that drug administration claims are coded correctly and 
paid appropriately. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with our recommendation to instruct carriers to 
consider probe reviews of unmatched chemotherapy administration 
claims, but did not concur with the other three recommendations in our 
draft report.  The full text of our original recommendations and CMSs 
comments is provided in Appendix C. 
In our draft report, we recommended that CMS clearly define the 
criteria for qualifying drugs.  CMS did not concur with our 
recommendation, stating that the current CPT guidance represents the 
best consensus from the medical community and CMS.  CMS also 
stated that it believes the current variation in carrier definitions of 
qualifying drugs may be because of regional practice variations in the 
conditions for which a drug is used and that this variation may decrease 
as a consequence of contracting reform.  We stand by our 
recommendation that CMS clarify its policy, but have revised the 
recommendation in a way that addresses practice variations. 
CMS concurred with our recommendation that carriers should consider 
probe reviews of chemotherapy administration claims if they have not 
already done so.  CMS stated that it will instruct carriers that have not 
conducted probe reviews to evaluate whether doing so is appropriate.  
CMS further stated the Recovery Audit Contractors may be interested 
in this area. 
In our draft report, we recommended that CMS ensure that the 
chemotherapy administration rate is paid only for appropriate drugs by 
using existing claims infrastructure to capture information about drugs 
not billed to Part B and instructing carriers to implement related 
system edits.  CMS did not concur with these recommendations, stating 
that establishing a system to capture the required information would be 
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    12     
R E C O M M E N D A T I O N S  
cost prohibitive and that edits were not appropriate because of provider 
practice variations.  Nevertheless, our findings show that program 
savings may be achieved if CMS can ensure that chemotherapy 
administration codes are used appropriately.  Therefore, we stand by 
the intent of our original recommendations, to ensure that drug 
administration claims are coded correctly and paid appropriately, but 
have replaced the two specific recommendations with a broader 
recommendation that defers to CMSs judgment on the specific actions 
best suited to accomplish this goal.
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    13     
 A P P E N D I X   ~   A  
METHODOLOGY NOTES AND LIMITATIONS 
Note on Clinical Trials 
We considered a beneficiary to be in a clinical trial at the time of an 
unmatched chemotherapy administration claim as follows.  We first 
identified all beneficiaries who had at least one drug or drug 
administration claim that carried a clinical trial billing modifier.  For 
each such beneficiary, we then determined the earliest and latest 
service dates on which a clinical modifier appeared.  Next, we defined 
the clinical trial date range as the span between the earliest and latest 
dates or, if that span was less than 60 days, between the earliest date 
and a date 60 days hence.  If an unmatched chemotherapy 
administration claim fell into the clinical trial date range, we considered 
the beneficiary to be in a clinical trial on that date. 
Note on Part D Match 
Part D prescription drug event data include a start date for the 
 
prescription and the number of days supply covered by the claim.  If the 
service date of an unmatched chemotherapy administration claim fell 
inside the window between the start date and the end of the supply, we 
considered the beneficiary on the claim to be receiving the Part D drug 
on the date of the unmatched claim.  In total, 64 unmatched claims fell 
into a Part D window.  Of the Part D drugs paid for at the time of these 
unmatched claims, 1 was an injectable antineoplastic, 1 was an 
injectable antiemetic, 2 were other injectable drugs, 1 was a topical 
anti-inflammatory, 7 were oral anticancer medications, and 52 were 
other oral medications. 
Note on Limitations 
Providers bill Medicare Part B separately for drugs and their 
administration and do not identify which administration line item 
pertains to which drug line item on a claim.  Therefore, unless a 
provider bills on only one drug and one administration for a particular 
beneficiary and service date, no one can definitively determine which 
administration code is intended to go with which drug code.  Because of 
this uncertainty and to ensure a conservative estimate, we defined 
unmatched chemotherapy administration claims as only those where no 
claim for a qualifying drug appeared for the same service date.  In 
reality, there almost certainly exist additional unmatched 
chemotherapy administration claims on service dates where a provider 
billed only chemotherapy administration but also billed both qualifying 
and nonqualifying drugs on a particular date of service.  Without 
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    14     
A P P E N D I X   ~   A  
attempting to determine what portion is for unmatched chemotherapy 
administration claims, we note that Medicare Part B allowed             
$219 million for chemotherapy administration on service dates on which 
only chemotherapy administration codes, but both qualifying and 
nonqualifying drugs, were billed.
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY    15     
   A P P E N D I X   ~   B  
Complete List of Drugs With Conflicting Qualifying Determinations 
Qualifying  Nonqualifying  Number of  Qualifying  Nonqualifying  Number of 
Determinations  Determinations  Line Items  Determinations  Determinations  Line Items 
Drug (Generic Name)  (No. of carriers)  (No. of carriers)  (20052007)  Drug (Generic Name)  (No. of carriers)  (No. of carriers)  (20052007) 
Abatacept  2  3  50,307  Filgrastim (300 mcg/ 480mcg)  2  4  1,474,819 
Abciximab  2  3  1,303  Interferon Beta 1-a  3  1  187,173 
Alefacept  2  3  14,640  Leucovorin Calcium  1  5  945,803 
Antithymocyte Globulin, Rabbit  1  4  80  Leuprolide Acetate  4  4  3,902 
Basiliximab  2  3  4  Mesna  5  1  27,453 
Cyclosporine, parenteral  1  3  1  Natalizumab  5  1  14,610 
Daclizumab  2  3  211  Octreotide  1  5  112,912 
Decitabine  4  3  36,211  Omalizumab  3  3  77,066 
Depo-Estradiol Cypionate  1  3  151,412  Oprelvekin  2  4  69,198 
Digoxin Immune Fab (Ovine)  1  3  0  Palifermin  1  3  170 
Eculizumab  3  3  0  Pegaptanib Sodium  1  3  112,102 
Elliotts B Solution  3  1  9  Pegfilgrastim  2  5  736,271 
Estradiol Valerate (10 mg/20 mg)  2  2  39,193  Pentastarch 10 % Solution  1  3  0 
Estradiol Valerate (40 mg)  1  3  48,515  Sargramostim  1  5  278,325 
Estrogen Conjugate  2  2  0  Tacrolimus  1  3  65 
Estrone  2  2  6,119  Trimetrexate Glucoronate  1  3  457 
Etanercept  1  4  35  Triptorelin Pamoate  7  1  189,159 
Source:  Office of Inspector General analysis of Medicare carrier policies, 2008. 
 
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY            16     
 A P P E N D I X   ~   C  
       AGENCY COMMENTS
Cl
DEPARTMENTOFHEALTH& I-IUMANSERVICES
or.rr".' "
TO: Daniel R. Levinson
InspectorGenera! _
CA,~...dY'i" ......~
FROM: CharleneFrizzera
AClingAdministrator
SUBJECf: OfficeofInspectorGeneral'sDraft Report: "Medicare PartBChemotherapy
Administration: PaymentandPolicy"(OEl-09-0g00190)
Thank you fortheopportunitytoreviewandcommentontheOfficeofInspectorGeneral's
(DIG)draftreportentitled."MedicarePart BChemotherapyAdministration: Paymentand
Policy." TheDIG reportaddressestheappropriatenessofMedicarepaymentsforPartBservices
billedaschemotherapyadministmtionfrom2005to2007.
10cCentersforMedicare& Medicaid Services(eMS)closelyfollowslheCtJITent Procedural
Tenninology(eP'l)guidelinessetforthbytheAmericanMedicalAssocilltion(AMA)in
determiningwhethertheadminislrationofadrugisbilledusingthechemotherapycodesor
billedusingthctherapeutic,prophylactiC;ordiagnosticinjectionorinfusioncodes. UnderCPT
guidelinesandasstated inthe InternetOnlyManualClaimsI'rocessingManual,Chaptcr12.
Section30.5,thechemotherapyadministrationcodesapplytoparenteraladministrationofnon 
radionuclideanti-nl.:oplasticdrugs;andalsotoanti-neoplasticagentsprovided fortreatnlcntof
noncanccrdiagnoses(e.g.,cyclophosphamideforauto-immuneconditions)ortosubstancessuch
asmonoclonalantibodyagents,andotherbiologicresponsemodifiers.
The followingdrugsarccommonlyconsideredto f311 underthecategoryofmonoclonal
nntibodies: infiiximab.rituximab,alemtuzumb.gemtuzumab.andtTllStuzumab. Drugs
commonlyconsideredtofall underthecategoryofhonnonalantj-ncoplasticsincludeleuprolide
acctateandgoscrelinacetate. 1bedrogscitedan:notintendedtobeacompletelistbutan:
intendedasexamplestobeusedasguidance fordeterminingthetypesofdrugsthatshouldbe
administeredusingthechemo1hcrapyadministralioncodes.
DIG Rommendalion
TheCMSshouldclearlydefillCthecriteria forqualifyingdrugs. Specifically.theDIGstatesthat
apaniculardrugshouldOOtbeconsideredqualifiedtobereponedwithchemotherapy
administrationCI'TcodesinonejurisdictionbUInotinanother.
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A P P E N D I X   ~   C  
Page2- DanielR. Levinson
eMSRC!loonse
AlthoughweappreciatetheeffortsoftheOIGandtheinformationithascollectedandanalyzed,
wedonotconcurwiththisrecommcllClation. TheCPTguidelinesthataddressthisissuewere
developed byaspecial workgroupestablishedbytheAMA,whichhadCMSparticipationand
input,andasrequestedbyCMSpursuanttoSection303(a)oftheMedicarePrescriptionDrug,
Improvement,andModernizationAetof2oo3. The workgroup'srecommendationswere
carefullyreviewedandrevisedbytheCPTEditorial Panel. Atthistime,CPTguidance
representsthebestconsensusfrom themedicalcommunityandCMS regardingtheappropriate
CPTcodesforreportingtheadministrationofdifferenttypesofdrugs.
lbisvariationnoted bytheOIGmayresultfromcertaincharncteristicsofoncologypracticesthat
differacrossjurisdictions. Largespecialtycancercentersareunevenlydistributedacrossthe
UnitedStatesandtheuseofcertaincancerdrugsforcertainclinicalconditionsorpatienl
populationsmaybeuniquetothesecenter.;.
ThisvariationmaydecreaseaswereducethenumberofMedicarecontractorsprocessing
chemotherapyadministrationclaimsbymovingtofully implementMedicarecontractingreform.
whichwill resultin 15 MedicareAdministrativeContractors(MAGs)inoperation. Wewill
encourageMedicarecontractormedicalofficerstocontinuetocommunicatewithoneanotheras
theydeveloppoliciesregardingdrugswhoseadministrationshouldbereportedwith
chemcllherapyadmi.niscrationCPTcodesSOthalthisvariationmaybeminimizedinthe futureas
appropriate.
DIG Recommendation
TheCMSshould instructcamersthathavenotdonesotoconsideraprobereviewofurunatched
chemotherapyadministrationclaims.
eMS RC!lllonse
Weconcurwiththe recommendation. CMS will instructcontractorsthathavenotconducted
probereviewsofunmatchedchemotherapyadministrationclaimsthattheyshouldevaluate
whetherdoingsois themostappropriateactionconsistentwiththeirindividual prioritized
strategy. RecoveryAuditContractorsmayalsobeinterestedinconductingreviewsinthisarea.
DIG RecommtrtdUion
TheCMSshoulduseexistingclaimsinfrastructuretocaptureinformationaboutdrugsnotbilled
toPartB.
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY  18     
A P P E N D I X   ~   C  
 
 
Page3- Daniel R.  Levinson
 
eMSResponse
 
Wedonotconcurwiththisrecommendation. Aspecial systemwasdevelopedtoallowthe
submissionof"nop ay"claimsfor theCompetitiveAcquisition Program(CAP)for
PartBDrugsandBiologicalsthatcannotbeused forotherpurposeswithoutsignificanl
modification. Atth istimewebelievetheexpenseofdevelopingasimilarsystem forIhis
purposewouldoutweighanybenefit.
 
OIG Recommendation
 
TheeMSshoulddirectCarrierstoimplementclaimsprocessingeditsthatverifythatdrug
administrntioncode sareappropriateforthedrugsdelivered.
CMSResponse  
Wedonotconcurw iththisrecommendation. As....'Cstatedabove.,webelievetheCPTguidance
representsthebestconsensusfrom themedicalcommunityandCMSregardingtheappropriate
CPTcodesforrepo ningtheadministmtionofdifferenttypesofdrugs. Forthereasonsdescribed
elsewhereinthisresponseletter,wedonotbelieveitisappropriateatthistimetodevelopedits
toensurethatspecif icdrugsarebilledwithspecificdrugadministrationcodes.
WethanktheOIGforyoureffonsregardingthisstUdy. Welookforward toworkingwithyouas
weproceedtoaddresspaymentpoliciesforchemotherapyadministration,andarecommilledto
ensuringhighqualitycareforthoseMedicarebeneficiariesaffectedbythesepolicies.
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY  19     
 A C K N O W L E D G M E N T S  
This report was prepared under the direction of Timothy S. Brady, 
Regional Inspector General for Evaluation and Inspections in the      
San Francisco regional office, and Deborah W. Harvey, Deputy Regional 
Inspector General. 
Scott Hutchison served as the team leader for this study.  Other 
principal Office of Evaluation and Inspections staff from the               
San Francisco regional office who contributed to the report include 
Veronica Gonzalez, Christina Lester, and China Tantameng; central 
office staff who contributed include Kevin Manley. 
 
  OEI-09-08-00190  MEDICARE PART B CHEMOTHERAPY ADMINISTRATION:  PAYMENT AND POLICY  20