How Does Palmetto GBA Price Drugs and Biologicals?

Drugs and biologicals are reimbursed using one of several methodologies:

• CMS Average Sales Price (ASP) Pricing File
• CMS Not Otherwise Classified (NOC) Pricing File
• Wholesale Acquisition Cost (WAC) 
• Invoices
• 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, some drugs infused through a covered item of Durable Medical Equipment, and certain vaccines
• ASP and NOC pricing files are available on the CMS website

For Drugs or Biologicals Reimbursed Using WAC
Medicare Claims Processing Manual, Publication 100-04 Chapter 17 Drugs and Biologicals § 20.1.3 Exceptions to Average Sales Price (ASP) Payment Methodology (PDF) gives Medicare Administrative Contractors (MACs) discretion to use invoice or WAC based pricing when CMS does not provide a payment limit on the ASP file or the CMS NOC Pricing file.

• When WAC pricing is used, Palmetto GBA will calculate the reimbursement at 100 percent plus up to three percent of the published WAC amount available in our drug compendia resources
  • The payment limit is based on the lesser of the lowest brand or median generic WAC
  • Information on determining WAC pricing is available in the Medicare Claims Processing Manual, Chapter 17, § 20.1.3 (PDF)
• For dates of service prior to January 1, 2019, the WAC based payment amount was calculated at WAC +6 percent. Please see MM12854 — Exceptions to Average Sales Price (ASP) Payment Methodology – Claims Processing Manual Changes (PDF) for more background on this change.

For Drugs or Biologicals Reimbursed by Invoice
Medicare Claims Processing Manual, 100-04 Chapter 17, Drugs and Biologicals § 20.1.3 Exceptions to Average Sales Price (ASP) Payment Methodology (PDF) gives MACs discretion to use invoice or WAC based pricing when CMS does not provide a payment limit on the ASP file or the CMS NOC Pricing file.

Palmetto GBA requires invoices be submitted with each claim when the drug or biological is priced using invoices. The total invoice price will be used to determine payment for the claim.

The total invoice price is the net amount a provider pays for the drug or biological after discounts, rebates, refunds and/or additional adjustments. Please review the CMS Medicare Fraud & Abuse: Prevent, Detect, Report (PDF). 

A quarterly list of drugs or biologicals that require an invoice is posted in an article on the Palmetto GBA Drugs and Biologicals web pages. 

• Jurisdiction J Part B — Drugs and Biologicals 
• Jurisdiction M Part B — Drugs and Biologicals 

For Radiopharmaceuticals
Reimbursement for radiopharmaceuticals is based on 95 percent of the Average Wholesale Price (AWP), invoices, or other reasonable payment methods/data made available when the product is contractor priced. This pricing methodology, in place since November 2003, is currently used to determine reimbursement for radiopharmaceuticals.

• When priced off AWP, the radiopharmaceutical will be priced annually, and pricing is effective January 1. Pricing will be based on the previous November's drug compendia sources
• When priced off invoice, the invoices submitted must clearly identify the radiopharmaceutical

References

• Social Security Act, section 1847A(c)(4)
• Medicare Modernization Act of 2003, section 303(c). Find out more about how CMS is implementing this legislation on the CMS website, Medicare Part B Drug Average Sales Price 
• Medicare Claims Processing Manual Publication 100-04, Chapter 17, Drugs and Biologicals § 20.1.3 Exceptions to Average Sales Price (ASP) Payment Methodology (PDF)
• MM12854 — Exceptions to Average Sales Price (ASP) Payment Methodology – Claims Processing Manual Changes (PDF)