Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

 

Daniel R. Levinson 

Inspector General 

June 2009 

OEI-09-08-00190 

 

MEDICARE PART B 

CHEMOTHERAPY ADMINISTRATION: 

 PAYMENT AND POLICY 
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 

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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 

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reports also present practical recommendations for improving program operations. 

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guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities. 
 

Δ EXECUTIVE SUMMARY 

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 physician’s 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 

company’s 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. 

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EXECUTIVE SUMMARY 

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, CMS’s 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, 

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E X E C U T I V E S U M M A R Y 

• instruct carriers that have not done so to consider a probe 

review of unmatched chemotherapy administration claims, 

and 

• 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 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 CMS’s judgment on the specific actions best suited to 

accomplish this goal.
 

Δ TABLE OF CONTENTS 

EXECUTIVE SUMMARY .................................... i

INTRODUCTION ...........................................1 

FINDINGS .................................................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 

RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 

ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

 
 

Δ INTRODUCTION 

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 

physician’s 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 Association’s (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 

infusion—one 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. 

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INTRODUCTION 

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

Type of Drug Administered 

Route of Administration 

Hydration Solution 

Nonchemotherapy 

Drug 

Chemotherapy 

Drug 

Initial intravenous infusion, 

up to 1 hour $ 60.56 $ 73.89 $ 161.49 

Initial intravenous infusion, 

each additional hour $ 18.28 $ 23.61 $ 36.18 

Sequential intravenous 

infusion - $ 38.09 $ 79.60 

Initial intravenous push - $ 57.89 $ 119.21 

TABLE 1 

Medicare Pays More 

for Administering 

Chemotherapy Than 

for Other Drugs 

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 

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. 

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INTRODUCTION 

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 B—if 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 

3 

4 Physicians who participate in CMS’s 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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INTRODUCTION 

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 

CMS’s 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. 

4 

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. 

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INTRODUCTION 

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 CMS’s 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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INTRODUCTION 

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. 

6 

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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INTRODUCTION 

Standards 

This study was conducted in accordance with the “Quality Standards for 

Inspections” issued by the President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency (now 

Council of the Inspectors General on Integrity and Efficiency).

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Based on our analysis, Medicare 

allowed $60.6 million for unmatched 

chemotherapy administration claims 

from 2005 to 2007. 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. 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 

was billed, and $43.5 million was 

allowed on days on which only 

nonqualifying drugs were billed. 

Table 2 shows the drugs that 

providers most commonly billed with 

unmatched administration claims of 

the latter category. 

Although unmatched claims exceeded $60 million 

from 2005 to 2007, Medicare data are insufficient to 

determine consistently whether chemotherapy 

administration payments are appropriate 

Δ FINDINGS 

Payments for unmatched 

chemotherapy administration claims 

were widespread, but their incidence 

varied significantly by provider. 

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. 

Table 2: Nonqualifying Drugs Frequently 

Appearing With Unmatched Chemotherapy 

Administration Claims 

Drug 

Percentage of Unmatched 

Administration Claims 

Hydration Solutions 27 percent 

Heparin Sodium 8 percent 

Epoetin Alfa 8 percent 

Dexamethasone 7 percent 

Zoledronic Acid 7 percent 

Darbepoetin Alfa 5 percent 

Source: OIG analysis of Medicare Part B data for 2005-2007, 2008.

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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FINDINGS 

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. 

Some carriers used the flexibility 

granted in CR 3631 to develop 

individual policies for chemotherapy 

administration coding. All 

15 carriers implemented CMS’s 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 have implemented inconsistent 

chemotherapy administration coding 

policies and review procedures 

Carriers that made qualifying determinations 

sometimes disagreed on particular drugs. We 

identified 33 drugs that at least one carrier 

defined as qualifying and at least one other 

carrier defined as nonqualifying. Table 3 

shows the six most commonly billed drugs that 

have conflicting definitions; the full list can be 

found in Appendix B. 

Some carriers have implemented claims 

processing edits or conducted reviews to 

ensure correct billing of chemotherapy 

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 

Table 3: Top Drugs With Conflicting Carrier 

Qualifying Determinations 

Drug (Generic Name) 

Qualifying 

Determinations 

(No. of carriers) 

Nonqualifying 

Determinations 

(No. of carriers) 

Leucovorin Calcium 1 5

Filgrastim 2 4

Pegfilgrastim 2 5

Sargramostim 1 5

Triptorelin Pamoate 2 2

Interferon Beta 1-a 3 1

Source: OIG analysis of Medicare carrier policies, 2008.

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FINDINGS 

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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Δ RECOMMENDATIONS 

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, CMS’s 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 drug’s 

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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RECOMMENDATIONS 

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 CMS’s 

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 

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RECOMMENDATIONS 

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 CMS’s judgment on the specific actions 

best suited to accomplish this goal.

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Δ APPENDIX ~ 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 

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APPENDIX ~ 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.
Δ APPENDIX ~ B

Complete List of Drugs With Conflicting Qualifying Determinations Drug (Generic Name) 

Qualifying 

Determinations 

(No. of carriers) 

Nonqualifying 

Determinations 

(No. of carriers) 

Number of 

Line Items 

(2005–2007) Drug (Generic Name) 

Qualifying 

Determinations 

(No. of carriers) 

Abatacept 2 3 50,307 Filgrastim (300 mcg/ 480mcg) 2 Abciximab 2 3 1,303 Interferon Beta 1-a 3 Alefacept 2 3 14,640 Leucovorin Calcium 1 Antithymocyte Globulin, Rabbit 1 4 80 Leuprolide Acetate 4 Basiliximab 2 3 4 Mesna 5 Cyclosporine, parenteral 1 3 1 Natalizumab 5 Daclizumab 2 3 211 Octreotide 1 Decitabine 4 3 36,211 Omalizumab 3 Depo-Estradiol Cypionate 1 3 151,412 Oprelvekin 2 Digoxin Immune Fab (Ovine) 1 3 0 Palifermin 1 Eculizumab 3 3 0 Pegaptanib Sodium 1 Elliott’s B Solution 3 1 9 Pegfilgrastim 2 Estradiol Valerate (10 mg/20 mg) 2 2 39,193 Pentastarch 10 % Solution 1 Estradiol Valerate (40 mg) 1 3 48,515 Sargramostim 1 Estrogen Conjugate 2 2 0 Tacrolimus 1 Estrone 2 2 6,119 Trimetrexate Glucoronate 1 Etanercept 1 4 35 Triptorelin Pamoate 7 Source: Office of Inspector General analysis of Medicare carrier policies, 2008. 

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Δ APPENDIX ~ C 

 AGENCY COMMENTS

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Cl DEPARTMENT OF HEALTH & I-IUMAN SERVICES

or.rr".' "

TO:

FROM:

Daniel R. Levinson

Inspector Genera! _

CA,~...dY'i " ...... Charlene Frizzera

ACling Administrator

SUBJECf: Office of Inspector General's Draft Report: "Medicare Part B Chemotherapy

Administration: Payment and Policy" (OEl-09-0g·00 190)

Thank you for the opportunity to review and comment on the Office of Inspector General's

(DIG) draft report entitled. "Medicare Part B Chemotherapy Administration: Payment and

Policy." The DIG report addresses the appropriateness of Medicare payments for Part B services

billed as chemotherapy administmtion from 2005 to 2007.

10c Centers for Medicare & Medicaid Services (eMS) closely follows lhe CtJITent Procedural

Tenninology (eP'l) guidelines set forth by the American Medical Associlltion (AMA) in

determining whether the adminislration of a drug is billed using the chemotherapy codes or

billed using thc therapeutic, prophylactiC; or diagnostic injection or infusion codes. Under CPT

guidelines and as stated in the Internet Only Manual Claims I'rocessing Manual, Chaptcr 12.

Section 30.5, the chemotherapy administration codes apply to parenteral administration of nonradionuclide anti-nl.:oplastic drugs; and also to anti-neoplastic agents provided for treatnlcnt of

noncanccr diagnoses (e.g., cyclophosphamide for auto-immune conditions) or to substances such

as monoclonal antibody agents, and other biologic response modifiers.

The following drugs arc commonly considered to f311 under the category of monoclonal

nntibodies: infiiximab. rituximab, alemtuzumb. gemtuzumab. and tTllStuzumab. Drugs

commonly considered to fall under the category of honnonal antj-ncoplastics include leuprolide

acctate and goscrelin acetate. 1be drogs cited an: not intended to be a complete list but an:

intended as examples to be used as guidance for determining the types of drugs that should be

administered using the chemo1hcrapy administralion codes.

DIG R«ommendalion

The CMS should clearly defillC the criteria for qualifying drugs. Specifically. the DIG states that

a panicular drug should OOt be considered qualified to be reponed with chemotherapy

administration CI'T codes in one jurisdiction bUI not in another.
 

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APPENDIX ~ C 

Page 2 - Daniel R. Levinson

eMS RC!loonse

Although we appreciate the efforts ofthe OIG and the information it has collected and analyzed,

we do not concur with this recommcllClation. The CPT guidelines that address this issue were

developed by a special workgroup established by the AMA, which had CMS participation and

input, and as requested by CMS pursuant to Section 303(a) ofthe Medicare Prescription Drug,

Improvement, and Modernization Aet of2oo3. The workgroup's recommendations were

carefully reviewed and revised by the CPT Editorial Panel. At this time, CPT guidance

represents the best consensus from the medical community and CMS regarding the appropriate

CPT codes for reporting the administration of different types of drugs.

lbis variation noted by the OIG may result from certain charncteristics of oncology practices that

differ acrossjurisdictions. Large specialty cancer centers are unevenly distributed across the

United States and the use of certain cancer drugs for certain clinical conditions or patienl

populations may be unique to these center.;.

This variation may decrease as we reduce the number ofMedicare contractors processing

chemotherapy administration claims by moving to fully implement Medicare contracting reform.

which will result in 15 Medicare Administrative Contractors (MAGs) in operation. We will

encourage Medicare contractor medical officers to continue to communicate with one another as

they develop policies regarding drugs whose administration should be reported with

chemcllherapy admi.niscration CPT codes SO thal this variation may be minimized in the future as

appropriate.

DIG Recommendation

The CMS should instruct camers that have not done so to consider a probe review ofurunatched

chemotherapy administration claims.

eMS RC!lllonse

We concur with the recommendation. CMS will instruct contractors that have not conducted

probe reviews of unmatched chemotherapy administration claims that they should evaluate

whether doing so is the most appropriate action consistent with their individual prioritized

strategy. Recovery Audit Contractors may also be interested in conducting reviews in this area.

DIG RecommtrtdUion

The CMS should use existing claims infrastructure to capture information about drugs not billed

to Part B.
 

APPENDIX ~ C 

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Page 3 - Daniel R. Levinson

eMS Response

We do not concur with this recommendation. A special system was developed to allow the

submission of "no pay" claims for the Competitive Acquisition Program (CAP) for

Part B Drugs and Biologicals that cannot be used for other purposes without significanl

modification. At this time we believe the expense ofdeveloping a similar system for Ihis

purpose would outweigh any benefit.

OIG Recommendation

The eMS should direct Carriers to implement claims processing edits that verify that drug

administrntion codes are appropriate for the drugs delivered.

CMS Response

We do not concur with this recommendation. As ....'C stated above., we believe the CPT guidance

represents the best consensus from the medical community and CMS regarding the appropriate

CPT codes for reponing the administmtion of different types ofdrugs. For the reasons described

elsewhere in this response letter, we do not believe it is appropriate at this time to develop edits

to ensure that specific drugs are billed with specific drug administration codes.

We thank the OIG for your effons regarding this stUdy. We look forward to working with you as

we proceed to address payment policies for chemotherapy administration, and are commilled to

ensuring high quality care for those Medicare beneficiaries affected by these policies.
 

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Δ ACKNOWLEDGMENTS 

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.