CMS Pub. 100-04, ch. 17, § 20.4

See Business Requirements and Excel Spreadsheets at:

http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R54CP.pdf

and

http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R55CP.pdf

A/B MACs (B) must ensure that if any NDCs are added or deleted, the formulae are applied

appropriately.

A separate AWP is calculated for each drug as defined by a HCPCS code. Within each HCPCS code

there may be a single source or there may be many sources, or there may be no source.

• For a single-source drug or biological, the AWP equals the AWP of the single product.

• For a multi-source drug or biological, the AWP is equal to the lesser of;

° The median AWP of all generic forms of the drug or biological; or

° The lowest brand name product AWP.

A “brand name” product is defined as a product that is marketed under a labeled name that is

other than the generic chemical name for the drug or biological.

NOTE: Repackagers make the status of the drug a multi-source.

After determining the AWP, A/B MACs (B) multiply it by 0.85 or 0.95, or other percentage, as

applicable, and round to the nearest penny. This is the drug payment allowance limit. A/B MACs (B)

round it in accordance with standard rounding procedure. Part B coinsurance and deductible

requirements apply.

In applying this procedure, A/B MACs (B) use the package sizes that are most commonly used for the

most frequently administered dosage of the drug.

A/B MACs (A) get drug prices from the A/B MAC (B) for drugs not listed on the Single Drug Pricer.