Provider Types Affected All Medicare providers who bill Medicare for Part B drugs Provider Action Needed Impact to You CR4160 revises the payment allowance limits in the October 2005 Medicare Part B drug pricing files. What You Need to Know The revised October 2005 payment allowance limits apply to dates of service October 1, 2005, through December 31, 2005. What You Need to Do Make sure that your billing staffs are aware of these changes. Background The Medicare Modernization Act of 2003 (MMA), Section 303(c), revises the methodology for paying for Part B covered drugs and biologicals that are not paid on a cost or prospective payment basis. Effective January 1, 2005, these drugs are paid based on the new Average Sales Price (ASP) drug payment methodology. The ASP file, used in the ASP methodology, is based on data Centers for Medicare & Medicaid Services (CMS) receives quarterly from manufacturers. Each quarter, CMS the will update your carrier and fiscal intermediary (FI) payment allowance limits with the ASP drug pricing files based on these manufacturers’ data. Beginning January 1, 2005, the payment allowance limits for Medicare Part B drugs and biologicals that are not paid on a cost or prospective payment basis are 106 percent of the ASP, and CMS will update the payment allowance limits quarterly. Exceptions to General Rule However, there are exceptions to this general rule as summarized below:
Specifically, the payment allowance limits for blood and blood products are 95 percent of the Average Wholesale Price (AWP) as reflected in the published compendia. The payment allowance limits will be updated on a quarterly basis.
The payment allowance limits for infusion drugs furnished through a covered item of durable medical equipment that were not listed in the published compendia as of October 1, 2003, (i.e., new drugs) are 95 percent of the first published AWP.
In determining the payment limit based on WAC, carriers/FIs will follow the methodology specified in Chapter 17 of the Medicare Claims Processing Manual for calculating the AWP, but substitute WAC for AWP. Chapter 17 (Drugs and Biologicals) is available at http://www.cms.hhs.gov/manuals/ 104_claims/clm104c17.pdf The payment limit is 100 percent of the WAC for the lesser of the lowest brand or median generic. Your carrier or FI may, at their discretion, contact CMS to obtain payment limits for drugs not included in the quarterly ASP or NOC files. If available, CMS will provide the payment limits either directly to the requesting carrier/FI or by posting an MS Excel file on the CMS Web site. If the payment limit is available from CMS, carriers/FIs will substitute CMS-provided payment limits for pricing based on WAC or invoice pricing. For new drugs and biologicals not included in the ASP Medicare Part B Drug Pricing File or NOC Pricing File, payment allowance limits are based on 106 percent of the WAC. This policy applies only to new drugs that were first sold on or after January 1, 2005.
Your carrier/FI will not search and adjust claims that are processed prior to implementation of this change unless you bring such claims to their attention. The payment limits included in the revised ASP and NOC payment files supersede the payment limits for these codes in any publication published prior to this document.
Implementation Additional Information If you have questions, please contact your carrier/intermediary at their toll-free number which may be found at http://www.cms.hhs.gov/MedlearnProducts/downloads/CallCenterTollNumDirectory.pdf Disclaimer For more information, visit the Medlearn Matters Web page at: http://www.cms.hhs.gov/medlear n/matters/. Pub. 100-4, Transmittal# 729, CR# 4160 Posted: 11/11/2005 CPT codes, descriptions, and other data only are copyright 2005 American Medical Association (or such other date of publication of CPT). All Rights Reserved. Applicable FARS/DFARS Apply. ights Reserved. Applicable FARS/DFARS Apply.
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on the CMS Web site: 
on the CMS Web site. On the above page, scroll down while referring to the CR NUM column on the right to find the link for CR4160. Click on the link to open and view the CR.
