Drugs and biologicals are reimbursed using one of several methodologies:
- Average Sales Price (ASP)
- CMS Not Otherwise Classified (NOC) Pricing File
- Wholesale Acquisition Cost (WAC) or invoice pricing
- Other pricing methodology (employed for radiopharmaceuticals)
For drugs and biologicals reimbursed using ASP methodology:
- Payment is based on 106 percent of the ASP
- There are several exceptions to the ASP payment methodology, including: blood and blood products; drugs infused through a covered item of Durable Medical Equipment and certain vaccines
- ASP and NOC pricing files are available at www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/
For drugs or biologicals reimbursed using WAC or invoice pricing:
- WAC pricing applies to drugs that are not reimbursed based on ASP or the NOC Pricing File
- When WAC pricing is available, Palmetto GBA will base the reimbursement on the WAC amount from the Redbook
- No invoice is needed when a WAC amount is available
- The payment limit is based on the lesser of the lowest brand or median generic WAC
- The payment allowance for new drugs that were first sold on or after January 1, 2005, is based on 106 percent of the WAC
- Information on determining WAC pricing is available in CMS Medicare Claims Processing Manual, chapter 17, section 20.1.3: www.cms.hhs.gov/manuals/downloads/clm104c17.pdf (PDF, 484 KB)
- When invoice pricing is used, each Medicare contractor determines how many invoices are necessary to determine the reimbursement amount
- Palmetto GBA requires that invoices be submitted with each claim, when the drug or biological is not priced based on ASP and there is no WAC available
For radiopharmaceuticals:
- Reimbursement for radiopharmaceuticals is based on 95 percent of the Average Wholesale Price (AWP)
- This pricing methodology was in place in November 2003 and is currently used to determine reimbursement for radiopharmaceuticals
References:
Laws
CMS