(Medicare Claims Processing Manual)

If a code has a description change, A/B MACs (B)  adjust formulas to account for any changes in the strength or dosage of the drug.  For example, if a code is listed as 50 mg, and changed to100 mg. the drug payment allowance limit is adjusted to compensate for the difference in the dosage.   20.5.3 - Use of Generics  (Rev. 397, Issued:  12- 16-04, Effective:  01 -01-05, Implementation:  01- 03-05)  A/B MACs (B)  identify the generic name of the drug from the code description.  They always  rely on the CMS HCPCS tape file or an official HCPCS publication.   A/B MACs (B)  locate generic sources in the Drug Topics Redbook or other source based on the HCPCS description of the drug.  They use entries that match the strength of the drug described by the HCPCS code, e.g., 50 mg, 100 mg, etc.   To determine if a drug is generic or brand, A/B MACs (B)  compare the name of the drug in the HCPCS code (generic) with the name of the drug being identified.  If they are the same, the drug is generic.  If they are different, the drug is a brand.  For example, the description for J3360 is injection, diazepam, up to 5 mg.  Diazepam is the generic name.  The HCPCS code for Valium is listed as J3360.  Valium is a brand name.   If there is a question as to whether a drug is brand or generic, A/B MACs (B)  consult the PDR Generics, or telephone the drug company.   20.5.4 - Find the Strength and Dosage  (Rev. 397, Issued:  12- 16-04, Effective:  01 -01-05, Implementation:  01- 03-05)  A/B MACs (B)  use ampules, single dose and multiple dose vials and repacks to compare the strength and dosage.  If multiple dose vials are used, A/B MACs (B)  must determine how they are used, based on the strength indicator compared with the HCPCS code description (i.e., if the strength on the vial matches the HCPCS description, multi -dose vials should be used).  A/B MACs (B) must determine which of the following conditions are true before pricing the drug:    1. The strength and dosage of the drugs in the price source match the HCPCS code and description.   A/B MACs (B) calculate allowable reimbursements for drugs using all the NDCs for a given active drug ingredient and calculate a unit price that is associated with the HCPCS descriptor.  If, for example, the HCPCS code descriptor specifies 50 ml and there  is a 50 ml size shown in the Redbook or other source material, they may use only the 50 ml size (and not use 10- 5 ml vials) or may use all products that meet the strength based on strength and volume of the drug.  In the latter case price per unit is calculated and then converted to the HCPCS units definition.   2. The strength and dosage from the HCPCS code description are not found in the price source.   A/B MACs (B)  use the closest dosage to the HCPCS definition without exceeding the dosage.    3. The strength and dosage in the price source do not include a generic form but do include a brand form.   A/B MACs (B)  use the lowest brand price.   20.5.5 - Restrictions  (Rev. 397, Issued:  12- 16-04, Effective:  01 -01-05, Implementation:  01- 03-05)  To determine AWPs and Payment Allowance Limits, A/B MACs (B) :   Exclude special sized packaging, e.g., Institutional Use.   Do not  use flip top vial, carpu -ject, tubes, cartridge, rapi -ject, lure lock syringe, blunt point abu-ject, rapi -ject, leurlock, advantage, min -i-jet, unless it is the only source available.  These items are considered convenience and tend to inflate the price.   Do not use drugs marked preservative free, sulfite free, piggy back, or sterile unless the HCPCS description specifies otherwise.    Do not  use drugs with an Orange Book Code (OBC) other than A if more than one source exists.  This restriction applies to SADMERC only (reference CMS Memorandum PUB 60 AB.94- 2, 60 dated March 1994).   20.5.6 - Inherent Reasonableness for Drugs and Biologicals  (Rev. 11140, Issued: 12- 02-21, Effective :01 -04-22, Implementation: 01- 04-22)  Section 4316 of the Balanced Budget Act of 1997 permits A/B MACs (B) to establish realistic and equitable payment amounts for drugs when the existing payment amounts are inherently unreasonable because they are either grossly excessive or deficient.  Refer  to chapter 23, for a complete description of Inherent Reasonableness rules.  Examples of the factors that may result in grossly deficient or excessive payment amounts include, but are not limited to the following:  1. Payment amounts for drugs or biologicals are grossly higher or lower than acquisition or production costs for the category of items or services.  2. There have been increases in payment amounts that cannot be explained by inflation or technology.  In some instances, the calculation of the AWP may lead to a payment limit that is not reasonable for the purpose of paying for drugs and biologicals.  A/B MACs (B) can apply the principal of inherent reasonableness in selecting the drugs to be included in the calculation.  For instance in situations where there are some drugs in a HCPCS grouping that are significantly more expensive due to having preservatives added, there is no effect on the quality of the drug whether or not there are preservatives.  Ther efore, leave the drugs with preservatives out of the calculation.   While A/B MACs (A) and (B) may determine under their inherent reasonableness authority that a greater than 15 percent increase or decrease in payment amounts is warranted, they may not increase or decrease the payment amounts for any item by greater than 15 percent in any given year.  However, a contractor may determine that a 25 percent reduction is warranted, and accomplish the adjustment over 2 years, e.g., 15 percent applied the first year, and 10 percent applied the following year.   In addition, a contractor must inform CMS of any inherent reasonableness determinations.  The CMS will then acknowledge receipt of the notification.  The payment adjustment may not take effect until the contractor has notified CMS and received CMSs acknow ledgment of the notification.   20.5.7 - Injection Services  (Rev. 397, Issued:  12- 16-04, Effective:  01 -01-05, Implementation:  01- 03-05)  Where the sole purpose of an office visit was for the patient to receive an injection, payment may be made only for the injection service (if it is covered).  Conversely, injection services (codes 90782, 90783, 90784, 90788, and 90799) included in the Medicare Physician Fee Schedule (MPFS) are not paid for separately, if the physician is paid for any other physician fee schedule service furnished at the same time.  Pay separately for those injection services only if no other physician fee schedule service is being paid.  However, pay separately for cancer chemotherapy injections (CPT codes 96400- 96549) in addition to the visit furnished on the same day.  In either case, the drug is separately payable.  All injection claims must include the specific name of the drug and dosage.  Identification of the drug enables you to pay for the services.  20.5.8 - Injections Furnished to ESRD Beneficiaries  (Rev. 397, Issued:  12- 16-04, Effective:  01 -01-05, Implementation:  01- 03-05)  When an ESRD beneficiary is given a renal related injection outside the ESRD facility or provider -setting, it should be administered by the beneficiarys monthly capitation payment (MCP) physician or his/her staff as incident to such physicians services .  There is no additional allowance for the physician or his staff, e.g., an office nurse.  This is because payment for the administration of a renal -related injection to a dialysis patient is included in the physicians monthly capitation payment (MCP).  The regulations governing Medicare payment for physicians ESRD services ( 42 CFR 405.542) require that all physicians outpatient ESRD -related services except declotting shunts be paid under the MCP.  If a physician, other than the patients MCP physician, administers a renal -related injection, the other physician must look to the MCP physici an for compensation for the services.  Although an additional allowance for the administration of a renal -related injection to a dialysis patient may not be made, the patients MCP physician or a physician other than the MCP physician may submit claims and be paid for the drug itself as well as supplies, e.g., needles and syringes, used to administer the drug.   EXAMPLE:   Dr. Jones is Mr. Whites MCP physician.  Dr. Jones is unable to furnish the regular EPO injections his patient needs three times a week.  It is Dr. Jones responsibility to compensate the physician who administers the injections.  The administering physi cian submits claims for the injectable and necessary supplies.  In this case, the A/B MAC (B) makes a reasonable monthly allowance, e.g., $3 for the cost of supplies (i.e., syringes and needles).   20.5.9 - Annual Update of AWP Payment Allowance Limit for Vaccines (Rev. 1357, Issued: 10- 26-07, Effective: 09 -01-07, Implementation: 11- 26-07)  The payment allowance limits for influenza, Pneumococcal and Hepatitis B vaccines are 95 percent of the AWP as reflected in the published compendia except where the vaccine is furnished in a hospital outpatient department.  Where the vaccine is administered in the hospital outpatient department, the vaccine is paid at reasonable cost.  Medicare contractors will be receiving subsequent annual updates of the vaccine payment allowance limits for influenza and pneumococcal vaccines communicated by a Recurring U pdate Notification.   30 - A/B MAC (B)  Distribution of Limit Amounts  (Rev. 1, 10- 01-03)  The A/B MACs (A) get drug prices from the A/B MAC (B) for drugs not listed on the SDP.  A/B MACs (B) prepare a list of the drug payment allowance limits updates (or new file depending upon local requirements) to the claims system.   A/B MACs (B) distribute, free of charge, the updated limits in an agreed upon format directly to the A/B MACs (A) in their jurisdiction.   A/B MACs (B) should contact each A/B MAC (A) to determine the preferred method of transmission.  A/B MACs (B) are to send this information to all A/B MACs (A) they routinely deal with.  If this method of obtaining payment allowance updates does not work for any A/B MAC (A), the A/B MAC (B) must contact the appropriate RO office.   40 - Discarded Drugs and Biologicals  (Rev: 12067;  Issued: 06 -02-23; Effective: 01 -01-23; Implementation: 07 -03-23)  The CMS encourages physicians, hospitals and other providers and suppliers to care for and administer drugs and biologicals to patients in such a way that they can use drugs or biologicals most efficiently, in a clinically appropriate manner.   When a billing provider or supplier must discard the remainder of a single -dose container or single -use package after administering a dose to a Medicare patient, the program provides payment for the amount of drug or biological discarded as well as the dos e administered, up to the amount of the drug or biological as indicated on the vial or package label.   Effective January 1, 2017 when processing claims for drugs and biologicals local contractors shall require the use of the JW modifier to identify unused and discarded amounts (hereafter, discarded amounts) of drugs or biologicals from single -dose containers or single -use packages.   The discarded amount is any amount that is not part of the prescribed dose and not intended to have a therapeutic effect in the patient. Even if certain amounts are extracted from the vial or are required to be in the vial to administer the prescribed dose , we do not consider them to be used if they are not intended for therapeutic effect as part of the prescribed dose.  Generally, the discarded amount is the labeled amount on the single -dose container (or containers if more than one is required) minus the dose (the dose being the prescribed amount of drug administered to the patient).