US · guidance
CMS Pub. 100-16, ch. mc86c17b, § 270
Allowable Cost for Drugs in Provider Setting
The allowable cost to the cost-based HMO/CMP for any multiple source drug may not
exceed the lesser of:
• The actual cost;
• The amount which would be paid by a prudent and cost conscious buyer for the
drug if obtained from the lowest priced source that is widely and consistently
available; or
• The maximum allowable cost limit.
The Department of Health and Human Services (DHHS) publishes in the Federal
Register a list of specific multiple source drugs and their maximum allowable costs
limitations. For these drugs, the allowable cost to the Medicare program may not exceed
the drug ingredient cost incurred in purchasing the drugs that would be paid by a prudent
and cost conscious buyer if obtained from the lowest priced source that is widely and
consistently available (whether sold by generic or trade name). Moreover, the drug
ingredient cost cannot exceed the maximum allowable costs published in the Federal
Register. For a more detailed discussion of this provision, see the “Provider
Reimbursement Manual” Part I.
History
(Rev. 4, 10-01-01)
Provenance
- Source
- cms.gov
- Retrieved
- 2026-08-25
- Edition
- iom-2026-08-25
- Content hash
1f1d27fd8c3730b0fe3f724c91c8775b8539d60be61298c8f99994969ddcbd78
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