How Does Palmetto GBA Use Invoices to Reimburse Drugs and Biologicals?

Published 06/04/2021

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) plus six percent 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; 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 or Invoice Pricing

  • IOM Publication 100-04 Chapter 17 Drugs and Biologicals 20.1.3 Exceptions to Average Sales Price (ASP) Payment Methodology gives MACs discretion to use invoice or WAC pricing when CMS does not provide a payment limit on the ASP file
  • When WAC pricing is used, Palmetto GBA will base the reimbursement on 106 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 plus six percent
    • Information on determining WAC pricing is available in CMS Medicare Claims Processing Manual, chapter 17, section 20.1.3 on the CMS website (PDF, 493 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 it is priced using invoices
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
  • Priced annually, effective January 1, based on the previous November's drug compendia sources
  • This pricing methodology was in place in November 2003 and is currently used to determine reimbursement for radiopharmaceuticals

References — Laws