CMS Pub. 100-18, ch. 6, App. C

This document is not a statement or promise of coverage, but rather a high level summary

of when something may be covered under Parts A, B or D, if all other coverage

requirements are met. Appropriate coverage policies and guidance must be consulted for

final coverage determinations.

Introduction

This document provides an overview of outpatient prescription drug coverage policies under

Medicare. Beneficiaries who are inpatients of hospitals or skilled nursing facilities (SNF) during

covered stays may receive drugs as part of their treatment. Typically, the payment for drugs is

bundled into the Medicare Part A payments made to these types of facilities.5 Under the hospice

benefit, beneficiaries receive drugs that are medically necessary for symptom control or for pain

relief. In general, references are seen to five major categories of Medicare Part B drug spending:

1. drugs billed by physicians and typically provided in physicians’ offices (such as chemotherapy

drugs); 2. drugs billed by pharmacy suppliers and administered through durable medical

equipment (DME), such as respiratory drugs given through a nebulizer; 3. drugs billed by

pharmacy suppliers and self-administered by the patient (such as immunosuppressive drugs and

some oral anti-cancer drugs); 4. separately billable drugs provided in hospital outpatient

departments; and 5. separately billable End Stage Renal Disease (ESRD) drugs such as

erythropoietin (EPO). Regional differences in Part B coverage policies for drugs can occur in

the absence of a national coverage decision. A drug for which coverage is available under Part A

or Part B, as it is being “prescribed and dispensed or administered” with respect to the individual,

is excluded from the definition of a Part D drug and, therefore, cannot be included in Part D

basic coverage.

Medicare Part A and Part B Covered Drugs

Part A/B Covered Drugs Set by Statute

Traditional Medicare (Part A/B) does not cover most outpatient prescription drugs. Medicare

bundled payments made to hospitals and skilled nursing facilities generally cover all drugs

provided during a stay. Medicare also makes payments to physicians for drug or biological

products that are not usually self-administered. This means that coverage is usually limited to

5 If these drugs are provided as part of a Medicare Part A covered inpatient hospital or skilled nursing facility stay,

they are generally bundled in the Medicare Part A payment to the facility. The exception with regard to inpatient

hospital services is clotting factor which is paid separately. For covered SNF stays certain high cost chemotherapy

drugs are billed separately along with preventive injections (e.g. flu shots). If a beneficiary does not have Part A

coverage, if Part A coverage for the stay has run out or if a stay is non-covered, hospitals and SNFs can be paid for

most categories of Part B covered drugs.

drugs or biological products administered by infusion or injection. However, if the injection is

generally self-administered (e.g., Imitrex), it is not covered.

Despite the general limitation on coverage for outpatient drugs under Part B, the law specifically

authorizes coverage for the following:

• Durable Medical Equipment (DME) Supply Drugs. These are drugs that require

administration by the use of a piece of covered DME (e.g., a nebulizer, external or

implantable pump). The statute does not explicitly cover DME drugs; they are covered

as a supply necessary for the DME to perform its function. The largest Medicare

expenditures for drugs furnished as a DME supply are for inhalation drugs, which are

administered in the home through the use of a nebulizer (e.g., albuterol sulfate,

ipratropium bromide). The other category of drugs Medicare covers as a DME supply

are drugs for which administration with an infusion pump in the home is medically

necessary (e.g. some chemotherapeutic agents).

• Immunosuppressive Drugs. Drugs used in immunosuppressive therapy (such as

cyclosporine) for a beneficiary who has received a Medicare covered organ transplant.

• Hemophilia clotting factors. Hemophilia clotting factors for hemophilia patients

competent to use such factors to control bleeding without medical supervision, and items

related to the administration of such factors.

• Oral Anti-Cancer Drugs. Drugs taken orally during cancer chemotherapy provided they

have the same active ingredients and are used for the same indications as chemotherapy

drugs that would be covered if they were not self-administered and were administered as

incident to a physician’s professional service.

• Oral Anti-emetic Drugs. Oral anti-nausea drugs used as part of an anti-cancer

chemotherapeutic regimen as a full therapeutic replacement for an intravenous anti-emetic drug within 48 hours of chemotherapy administration.

• Pneumococcal vaccine. The vaccine and its administration to a beneficiary if ordered by

a physician.

• Hepatitis B vaccine. The vaccine and its administration to a beneficiary who is at high or

intermediate risk of contracting hepatitis B.6

6 High risk groups currently identified include: individuals with ESRD; individuals with hemophilia who received

Factor VIII or IX concentrates; clients of institutions for individuals for the mentally handicapped; persons who live

in the same household as a hepatitis B Virus (HBV) carrier; homosexual men; illicit injectable drug abusers.

Intermediate risk groups include: staff in institutions for the mentally handicapped and workers in health care

professions who have frequent contact with blood or blood-derived body fluids during routine work.

• Influenza vaccine. The vaccine and its administration when furnished in compliance with

any applicable state law. The beneficiary may receive the vaccine upon request without a

physician’s order and without physician supervision.

• Antigens. These are prepared by a physician (usually an allergist) for a specific patient.

The physician or physician’s nurse generally administers them in the physician’s office.

In some cases the physician prepares antigens and furnishes them to a patient who has

been taught to self-administer them at home.

• Erythropoietin (EPO). EPO for the treatment of anemia for persons with chronic renal

failure who are on dialysis.

• Parenteral Nutrition. Parenteral nutrients are covered under the prosthetic benefit. They

are available to beneficiaries who cannot absorb nutrition through their intestinal tract.

Parenteral nutrition is administered intravenously and is regulated as a drug by the FDA.

• Intravenous Immune Globulin Provide in the Home. The Medicare Modernization Act

created a benefit for the provision of intravenous immune globulin (IVIG) for

beneficiaries with a diagnosis of primary immune deficiency disease. Coverage is

provided if a physician determines that the administration of IVIG in the patient’s home

is medically appropriate. Payment is limited to that for the IVIG itself and does not cover

items and services related to administration of the product.

Part B Covered Drugs in the Context of a Professional Service

Drugs furnished “Incident To” a Physician’s Service. These are injectable or intravenous drugs

that are administered predominantly by a physician or under a physician’s direct supervision as

“incident to” a physician’s professional service. The statute limits coverage to drugs that are not

usually self-administered.7 In order to meet all the general requirements for coverage under the

“incident-to” provision, an FDA approved drug or biological product must:

• Be of a form that is not usually self-administered (as determined by the A/B MAC

contractor);

• Must be furnished by a physician; and

• Must be administered by the physician, or by auxiliary personnel employed by the

physician and under the physician’s personal supervision.

The charge, if any, for the drug or biological product must be included in the physician’s bill and

the cost of the drug or biological product must represent an expense to the physician. Drug and

biological products furnished by other health professionals may also meet these requirements.

7 If a drug is not self-administered by more than 50 percent of Medicare beneficiaries, it is considered “not usually

self-administered”.

Drugs furnished by a Medicare Advantage Organization “Incident To” a Physician’s Service. If

a drug could be covered under Part B when furnished by a physician who incurred an expense in

procuring the drug, it could also be covered under Part B in the case of a Medicare Advantage

(MA) plan physician when the MA organization has incurred the expense of procuring the drug,

and the drug is administered to an enrollee in the MA plan. Under Pub. 100-02, Medicare

Benefit Policy Manual, chapter 15, section 60.1, drugs can be covered as “incident to”

physicians’ services if they “represent an expense to the physician or legal entity billing for the

services or supplies.” Applying this principle to the case of a not-usually self administered drug

administered by an MA plan physician to an MA plan enrollee, if the MA organization supplies

the drug to the plan physician, it is the “legal entity billing” for the drug, since it is the entity that

receives payment from Medicare that includes the cost of such a drug. Consequently, if the MA

organization supplies the drug to the network provider, the MA organization should account for

the drug under its A/B benefits. If a network pharmacy supplies the drug directly to the

beneficiary, the drug must be accounted for under its Part D benefits.

Separately Billable ESRD Drugs. Most drugs furnished by dialysis facilities are separately

billable. The largest Medicare expenditures for such drugs are for erythropoietin (EPO) which is

covered for dialysis beneficiaries when it is furnished by independent and hospital-based ESRD

facilities, as well as when it is furnished by physicians.

Separately billable drugs provided in Hospital Outpatient Departments. Medicare continues to

pay separately for drug and biological products, and radiopharmaceuticals whose median cost

per administration exceeds an amount (or threshold amount) determined by CMS, while

packaging the cost of drugs, biological products, and radiopharmaceuticals whose median cost

per administration is less than an amount (or threshold amount) determined by CMS into the

procedures with which they are billed.

Drugs covered as Supplies or - “Integral to a Procedure.” Some drugs are covered as supplies

that are an integral part of a procedure which is a diagnostic or therapeutic service, including

radiopharmaceuticals (both diagnostic and therapeutic) and low osmolar contrast media. Other

examples of drugs covered under the “integral to a procedure” provision include eye drops

administered before cataract surgery.

Blood. Medicare does make separate payment for blood and components. The Center for

Biologics Evaluation and Research under the FDA regulates the collection of blood and blood

components used for transfusion or for the manufacture of pharmaceuticals derived from blood

and blood components.

Drugs furnished as a part of a service in these provider settings. 1. Drugs packaged under the

Hospital Outpatient Prospective Payment System (OPPS); 2. Drugs furnished by ESRD facilities

and included in Medicare’s ESRD composite rate; 3. Osteoporosis drugs provided by home

health agencies under certain conditions; 4. Drugs furnished by critical access hospitals’ (CAH)

outpatient departments; 5. Drugs furnished by a rural health clinic (RHC); 6. Drugs furnished by

federally qualified health centers (FQHC); 7. Drugs furnished by community mental health

centers (CMHC); 8. Drugs furnished by ambulances; 9. Separately billable drugs provided in

comprehensive outpatient rehabilitation facilities (CORF).

Part D Covered Drugs

Definition of a Part D Covered Drug

A Part D covered drug is available only by prescription, approved by the FDA (or is a drug

described under section 1927(k)(2)(A)(ii) or (iii) of the Act), used and sold in the United States,

and used for a medically accepted indication (as defined in section 1927(k)(6) of the Act). A

covered Part D drug includes prescription drugs, biological products, insulin as described in

specified paragraphs of section 1927(k) of the Act, vaccines licensed under section 351 of the

Public Health Service Act and for vaccine administration on or after January 1, 2008, its

administration. The definition also includes medical supplies directly associated with delivering

insulin to the body, including syringes, needles, alcohol swabs, gauze, and insulin injection

delivery devices not otherwise covered under Medicare Part B, such as insulin pens, pen

supplies, and needle-free syringes, can satisfy the definition of a Part D drug. CMS defines those

medical supplies to include syringes, needles, alcohol swabs, gauze, and those supplies directly

associated with delivering insulin into the body.

Part D Supplementary (Excluded) Drugs

The definition of a covered Part D drug excludes any drug for which as prescribed and dispensed

or administered to an individual, payments would be available under Parts A or B of Medicare

for that individual, even though a deductible may apply.

In addition, the definition of a covered Part D drug specifically excludes drugs or classes of

drugs, or their medical uses, which may be excluded from coverage or otherwise restricted under

Medicaid under section 1927(d)(2) of the Act, with the exception of smoking cessation agents.

The drugs or classes of drugs that may currently be otherwise restricted under Medicaid include:

• Agents when used for anorexia, weight loss, or weight gain (even if used for a non-cosmetic purpose (i.e., morbid obesity)).

• Agents when used to promote fertility.

• Agents when used for cosmetic purposes or hair growth.

• Agents when used for the symptomatic relief of cough and colds.

• Prescription vitamins and mineral products, except prenatal vitamins and fluoride

preparations.

• Nonprescription drugs.

• Covered outpatient drugs which the manufacturer seeks to require as a condition of sale

that associated tests or monitoring services be purchased exclusively from the

manufacturer or its designee.

• Agents when used for the treatment of sexual or erectile dysfunction (ED). ED drugs will

meet the definition of a Part D drug when prescribed for medically-accepted indications

approved by the FDA other than sexual or erectile dysfunction such as pulmonary

hypertension. However, ED drugs will not meet the definition of a Part D drug when

used off-label, even when the off label use is listed in one of the compendia found in

section 1927(g)(1)(B)(i) of the Act: American Hospital Formulary Service Drug

Information, and DRUGDEX® Information System. ED drugs meet the definition

of a Part D drug only when used for FDA-approved indications.

While these drugs or uses are excluded from basic Part D coverage, Part D sponsors can

generally include them as part of supplemental benefits, provided they otherwise meet the

definition of a Part D drug. Because over-the-counter (OTC) drugs do not otherwise meet the

definition of a Part D drug, they may not be included as part of supplemental benefits; however,

under certain conditions as part of a plan utilization management program, OTC drugs can be

provided at no cost to enrollees. The cost of these drugs to the Part D sponsor would be treated

as administrative costs under such programs.

Other Resources

1. Pub. 100-02, Medicare Benefit Policy Manual, Chapter 15. “Covered Medical and Other

Health Services”. Section 110

2. Pub. 100-02, Medicare Benefit Policy Manual Chapter 15. “Covered Medical and Other

Health Services” Section 50.2.

3. Reference Guide for Medicare Physician & Supplier Billers, Helping Front Office

Personnel Navigate Medicare Rules for Part B Claims Processing. MedLearn Matters,

Second Edition, October 2006.

Chapter 6 – Appendix C - Summary of Coverage Policy

ATTACHMENT I

Part B Drugs and Part D Coverage Chart

Drugs are covered under Part B in a variety of settings and under a variety of payment

methodologies.

• Some drugs are paid on a cost basis or are part of a prospective payment, including: drugs

packaged under the outpatient prospective payment system (OPPS); drugs furnished by

End-Stage Renal Disease (ESRD) facilities and included in Medicare’s ESRD composite

rate; osteoporosis drugs provided by home health agencies under certain conditions; and

drugs furnished by: critical access hospitals’ outpatient departments (CAHs); rural health

clinics (RHCs); federally qualified health centers (FQHCs); community mental health

centers (CMHCs); and ambulances.

• In addition, there are 13 categories of drugs for which separate payment is made under

Part B8, including: drugs furnished “incident to” a physician’s service; separately billable

ESRD drugs; separately billable drugs provided in hospital outpatient departments;

durable medical equipment (DME) supply drugs; drugs covered as supplies; drugs used

in immunosuppressive therapy; blood clotting factors; certain vaccines; antigens;

parenteral nutrition; certain oral drugs used in cancer treatment; separately billable drugs

provided in comprehensive outpatient rehabilitation facilities (CORFs); and intravenous

immune globulin provide in the home.9

The following chart groups the various categories of Part B coverage according to the extent

to which they present some ambiguity for billing entities and/or Part D sponsors with regard

to whether coverage should be under Part B or Part D. This ambiguity has different

implications for stand alone Part D sponsors and for Medicare Advantage-Prescription Drug

(MA-PD) Plans (including PACE plans and Section 1876 Cost plans which are treated

similarly to MA-PDs). For stand alone Part D sponsors, the sponsor needs to determine

whether it should make any payment. For MA-PDs, the MA organization needs to determine

whether a payment should be assigned to its Part D spending or to its spending for Part B

services.

8 If these drugs are provided as part of a Medicare Part A covered inpatient hospital or skilled nursing facility stay,

they are generally bundled into the Medicare Part A payment to the facility. The exception with regard to inpatient

hospital services is clotting factor which is paid separately. For covered SNF stays certain high cost chemotherapy

drugs are billed separately along with preventive injections (e.g., flu shots). If a beneficiary does not have Part A

coverage, if Part A coverage for the stay has run out or if a stay is non-covered, hospitals and SNFs can be paid for

most categories of Part B covered drugs.

9 Medicare does make separate payment for blood and blood products under Part A and Part B. Although the

collection of blood and blood components used for transfusion or for the manufacture of pharmaceuticals derived

from blood and blood components are regulated by the FDA, they are not administered in a context that would not

be covered under Part A or Part B. Therefore, generally these products are not Part D drugs. As a result, they are

not included in this discussion.

A. Situations in which a billing entity would have to decide whether for a given drug to bill Part B or Part D

based on characteristics of beneficiary or medical use of the drug.

Relationship between Part B and

Part D Coverage

Categories of Separately

Billable Part B Drugs

Comments

1. The same drug dispensed by a

pharmacy may be covered under Part

B or Part D depending on the

characteristics of the beneficiary.

Drugs used in

immunosuppressive

therapy for a transplant

covered under Medicare.

Pharmacists would bill Part B or the individual’s Part D plan

based on information received from the individual or the Part D

plan. Part B would be billed if the individual had a Medicare-covered transplant; otherwise, the Part D plan would be billed.

(Part D plan eligibility systems could contain a marker for

members who had a Medicare covered transplant. This

information could come from a question included on the Part D

sponsor’s enrollment or coordination of benefit (COB) survey

form.)

In determining whether to pay for an immunosuppressive drug

under Part D, it would not be appropriate for a Part D sponsor to

institute a general policy of requiring a Part B claim rejection, as

a substitute for maintaining information on transplant status and

paying claims based on that information. Such a policy would

be disruptive to beneficiaries and pharmacies and would

unnecessarily increase Part B contractor costs. Instead a prior

authorization requirement would be appropriate.

2. The same drug provided by an

infusion/DME supplier may be

covered under Part B or Part D

depending on the characteristics of the

beneficiary or method of

administration.

a. Parenteral nutrition or

intradialytic parenteral

nutrition (IDPN) (for

individuals with a non-functioning digestive tract).

The supplier would need to know whether the therapy was being

provided because of a non-functioning digestive tract. If so, Part

B would be billed. Otherwise this would be a Part D drug.

It would not be appropriate for Part D sponsors to routinely

require a rejection of a claim under Part B before processing a

Part D claim. Such a policy would be disruptive to beneficiaries

and pharmacies and would unnecessarily increase Part B

contractor costs. However, if a Part D sponsor had evidence

indicating that a particular claim for parenteral nutrition should

be covered under Part B, it would be reasonable to require a

rejection by Part B before processing in this case.

b. Infusible DME supply

drugs

In general, the supplier would bill Part B if the drug was

administered using an infusion pump and bill the Part D plan for

infusion using other methods (e.g., IV push). While professional

services and supplies related to the administration of the infused

drug are not payable under Part D, some coverage may be

available under Part A or B home health benefits, under

Medicaid, or from secondary commercial health benefits.

As a rule, drugs infused using an implantable pump would be

covered under Part B. Drugs infused in the home using an

external pump are covered under Part B if they are included

under the local coverage policy of the applicable Medicare DME

MAC. In the case of a beneficiary in a hospital, or a SNF bed,

(1) who does not have Part A coverage, (2) whose Part A

coverage for the stay has run out or (3) whose stay is non-covered -- infusible DME supply drugs are not covered under

Part B because the law limits coverage under Part B’s DME

benefit to those items that are furnished for use in a patient’s

home, and specifies that a hospital or SNF cannot be considered

the beneficiary’s “home” for this purpose. In this case, coverage

for the drugs would be available under Part D. (see Attachment

II, INFUSION DRUGS, Question 3 for other facilities which

cannot be considered a beneficiary’s “home” for DME

purposes.)

The fact that coverage is available for a particular drug under

Part B with the use of an infusion pump does not mean that

coverage under Part D using some other method of

administration automatically can be denied. There is no Part B

coverage in the home for infusion drugs administered without an

infusion pump (e.g., IV push). There is also no Part B coverage

in the home for infusion drugs administered with an infusion

pump unless the drug is specifically covered under the local

coverage policy of the applicable Medicare DME MAC.

Therefore, determinations about Part D sponsor payment for

these other methods of administration and for drugs

administered with an infusion pump but not covered by the local

DME MAC policy should be based on the question of whether

the drug is on the sponsor’s formulary.

c. Intravenous immune

globulin (IVIG) provided

in the home for individual

with diagnosis of primary

immune deficiency disease

The supplier would bill Part B if the diagnosis is primary

immune deficiency disease. IVIG provided in the home for

other diagnoses would be a Part D benefit.

As discussed above, it would not be appropriate, as a general

rule, for Part D sponsors to require a rejection of a claim under

Part B before processing a Part D claim. Prior authorization

programs could be used to ensure medical necessity in

accordance with the Part D sponsor’s policy.

3. The same drug dispensed by a

pharmacy may be covered under Part

B or Part D depending on how the drug

is used in treatment and the medical

condition for which the drug is being

prescribed.

a. Certain oral

chemotherapy agents used

in cancer treatment for

which there is an infusible

version of the drug.

Pharmacists would need to determine the reason for treatment.

If related to cancer treatment, Part B would be billed; otherwise,

the Part D plan should be billed.

To the extent that a Part B-covered oral anti-cancer drug has no

other medically accepted indication besides cancer treatment,

Part D sponsors should not include these drugs on their

formularies because of Part B coverage. For the drugs that have

other medically accepted indications, prior authorization

programs or other mechanisms to obtain diagnostic information

could be used to ensure appropriate payment.

b. Oral anti-emetics used in

cancer treatment as a full

replacement for

intravenous treatment.

2. Pharmacists would need to determine the reason for treatment.

If both related to cancer treatment and a full replacement for

intravenous administration within 48 hours of cancer treatment,

Part B would be billed; otherwise, the Part D plan should be

billed. NOTE: In order to receive Part B payment, CMS

currently requires that the prescribing physician indicate on the

prescription that the oral anti-emetic is being used “as a full

therapeutic replacement for an intravenous anti-emetic drug as

part of a cancer chemotherapeutic regimen.”

If based on a prior authorization program or other mechanism to

obtain diagnostic information, a Part D sponsor determined that

a) a Part B-covered oral anti-emetic was being billed, and b) the

drug was being furnished in the context of cancer treatment for

use within 48 hours of cancer treatment, the Part D sponsor

should deny payment. Such drugs dispensed for use after the

48-hour period, or any oral anti-emetic prescribed for conditions

other than the effects of cancer treatment, would be Part D

drugs.

4) The same vaccine may be covered

under Part B or Part D depending on

the characteristics of the beneficiary.

Hepatitis B vaccine for

individuals at high or

intermediate risk.

Physicians would need to determine the level of risk of the

individual. If the individual is at high or intermediate risk, Part

B would be billed. For all other individuals, prior authorization

programs could be used to ensure appropriate level of risk.

B. Situation where the form of the drug determines where it is covered.

Relationship between Part B and

Part D Coverage

Categories of Separately

Billable Part B Drugs

Comments

The same drug provided by a DME

supplier or a pharmacy may be

covered under Part B or Part D

depending on its form (i.e., for use in

nebulizer or in metered dose inhaler)

Inhalation DME supply

drugs

Certain inhalation drugs are generally covered under Part B

when used with a nebulizer in the home. These drugs would not

be covered under Part D for use with a nebulizer. However, if

these drugs were delivered with a metered dose inhaler or other

non-nebulized administration, they would be Part D drugs.

In the case of a beneficiary in a hospital, or a SNF bed, (1) who

does not have Part A coverage, (2) whose Part A coverage for

the stay has run out or (3) whose stay is non-covered --

inhalation DME supply drugs are not covered under Part B

because the law limits coverage under Part B’s DME benefit to

those items that are furnished for use in a patient’s home, and

specifies that a hospital or SNF cannot be considered the

beneficiary’s “home” for this purpose. In this case, coverage for

the drugs would be available under Part D. (See Attachment II,

INFUSION DRUGS, Question 3 for other facilities which

cannot be considered a beneficiary’s “home” for DME

purposes.)

C. Situations where Part B coverage is in the context of another service.

Relationship between Part B and

Part D Coverage

Categories of Separately

Billable Part B Drugs

Comments

The same drug dispensed by a

pharmacy is covered under Part B if

provided as part of a service in a

provider setting, physician’s office or

home.

1. Drugs furnished

“incident to” a

physician service

2. Separately billable

ESRD drugs

3. Separately billable

drugs in HOPDs

4. Separately billable

drugs in CORFs

5. Drugs packaged under

the OPPS

6. Drugs furnished by

ESRD facilities and

included in Medicare’s

ESRD composite rate

7. Osteoporosis drugs

provided by home

health agencies under

certain conditions

Generally, if a beneficiary presents at a pharmacy with a script it

would be a Part D drug. The availability of Part B coverage in a

provider setting or physician’s office should not result in a

refusal of coverage under Part D for drugs dispensed by a

pharmacy. This is the case because coverage is not available

under Part B as the drug is being “prescribed and dispensed or

administered” with respect to the individual. Thus, for example,

while Part B covers certain injectables provided “incident to” a

physician services, injectables dispensed by a pharmacy are not

being “furnished” by a physician and would be Part D drugs.

Part D sponsors should deny claims submitted by members for

Part B-covered injectables if they are administered in a physician

office from a physician’s supply.

Part D sponsors can subject injectables and infusables that would

be covered under Part B as “incident to” a physician service, to a

prior authorization program. To the extent that the sponsor

determines based on medical literature that there exist serious

8. Drugs furnished by

CAHs outpatient

departments

9. Drugs furnished by

RHCs

10. Drugs furnished by

FQHCs

11. Drugs furnished by

CMHCs

12. Drugs furnished by

ambulances.

safety concerns such that it would go against accepted medical

practice for a particular injectable or infusable to be dispensed

directly to an enrollee, the claim can be denied as not

"reasonable."

Safety-based reasonableness determinations will need to be

made on a case-by-case basis, since circumstances will vary. In

general, however, there are very few instances when an

injectable or infusable drug could not be reasonably dispensed

directly to the patient.

D. Completely unambiguous situations.

Relationship between Part B and

Part D Coverage

Categories of Separately

Billable Part B Drugs

Comments

1) Unique drugs never dispensed by a

pharmacy.

Non-DME drugs covered

as supplies (including

radiopharmaceuticals (both

diagnostic and therapeutic)

and low osmolar contrast

media.)

This category of drugs is those used for diagnostic or therapeutic

purposes in a provider or physician office setting. CMS would

assume that these drugs are not dispensed by pharmacies.

2) Drugs that would not be covered

under Part D because of Part B

coverage.

1. Blood clotting factors

2. Antigens

Pneumococcal and

influenza vaccines

These categories would not be a Part D benefit and should not be

included on a Part D sponsor’s formulary.

Chapter 6 – Appendix C - Summary of Coverage Policy

ATTACHMENT II

Part B v. Part D Drug Q’s and A’s

EXCLUSIONS RELATED TO MEDICARE COVERAGE UNDER PART A

OR PART B

Question 1 – Should Part D sponsors deny claims for drugs covered under Part A or Part B

of Medicare?

Answer 1 – Drugs, or uses of drugs, for which coverage is available under Part A or Part B are

excluded from the definition of a Part D drug and, therefore, cannot be included in Part D basic

coverage. Unlike the list of supplementary drugs, these drugs, or uses of drugs, cannot be

included in supplemental coverage.

There are two important considerations in determining whether a claim to Part D can be denied

based on the availability of coverage under Part A or Part B of Medicare.

• First, the exclusion from the definition of a Part D drug for drugs covered under Parts A or B

is based on whether coverage is available under Part A or Part B for the drug as it is being

“prescribed and dispensed or administered” with respect to the individual. Thus, the same

drug may be covered under different circumstances under both programs and coverage

generally cannot be determined based solely on the drug itself. Since most Part B drug

coverage is available in a provider setting or physician’s office rather than as drugs dispensed

by pharmacists, there are very limited situations when a drug claim submitted by a pharmacy

should be denied based on the availability of coverage under Part A or Part B.

• Second, to the extent a drug could be covered under part B as prescribed and dispensed or

administered, Part D sponsors should view coverage as “available” under Part B regardless of

whether or not an individual is actually enrolled in Part B.

Question 2 – Can a Part D sponsor require that coverage be denied under Part A or Part B

before making payment under Part D?

Answer 2 – Generally, no. In limited instances, prior authorization programs may be necessary

to determine whether the diagnosis of the individual or the particular use of a drug is consistent

with Part D coverage, but it would not be appropriate to routinely require a denial from Part A or

Part B before making payment in lieu of prior authorization. Such a policy would be disruptive

to beneficiaries and pharmacies and would unnecessarily increase Part B contractor costs.

Question 3 - What happens if a Part D sponsor makes payment for a drug and later

determines that the drug was covered under Part B as prescribed and dispensed or

administered?

Answer 3 - If the drug as prescribed and dispensed or administered was covered under Part B on

that day, the payment by the Part D sponsor would have been in error and it should seek recovery

from the billing entity, which should bill Part B instead.

Question 4 - In the case of a newly approved drug that may be covered under one of the

Part B benefit categories, can a Part D sponsor defer a coverage decision until Part B

makes a decision?

Answer 4 - No. Once a drug is approved by the FDA it is a Part D drug. While it is not

automatically a covered Part D drug, that is, it may not be included on a Part D sponsor’s

formulary, a member could request coverage on an exception basis.

For Medicare Part B coverage, a determination has to be made as to whether the approved drug

fits in a benefit category (e.g., a drug covered as a supply of an external infusion pump used at

home). In the vast majority of cases these determinations are delegated to the individual

contractors. If a drug has a Medicare Part B benefit category and the drug is being “prescribed

and dispensed or administered” as covered under Part B, the drug is no longer a Part D drug.

Question 5 - How will Part D sponsors determine whether a drug is covered under Part B?

Answer 5 - First, it is important to keep in mind that in most cases Part B drug coverage should

not impact payment decisions by Part D sponsors since Part B coverage is generally in a provider

setting or physician's office rather than for drugs dispensed at a pharmacy.

Payment for a particular drug can be denied only if there is Part B coverage as the drug is

prescribed and dispensed or administered. The fact that a claim is received for a drug that is

sometimes covered by Part B is not a basis for denial since the Part D sponsor would have to

determine whether the drug is being prescribed and dispensed or administered on the basis under

which Part B coverage is available. This will generally involve interaction between the Part D

sponsor and the Medicare Part B contractor with jurisdiction in that geographic area for that

drug.

With regard to new drugs, as decisions are made nationally or by individual A/B MAC

contractors, this information will be available on the CMS and contractor Web sites.

INFUSION DRUGS

Question 1 - Since Part B covers infusion drugs in the home, can a Part D sponsor reject

any claim for home infusion?

Answer 1 – No. Part B coverage is generally limited to a number of drugs that require the use of

an infusion pump in the home. Any agents administered in the home via IV drip or push

injection would be covered under Part D. This could include the same drugs that are covered

under Part B when furnished through the use of an infusion pump.

Question 2 – Does Part B cover drugs that require an external infusion pump in the case of

a beneficiary in a hospital or SNF bed who does not have Part A coverage, whose Part A

coverage for the stay has run out or whose stay is non-covered?

Answer 2 – No, drugs that require an external infusion pump are not covered under Part B under

those circumstances because the law limits coverage under Part B’s DME benefit to those items

that are furnished for use in a patient’s home, and specifies that a hospital or SNF cannot be

considered the beneficiary’s “home” for this purpose.

Question 3 - What other facilities cannot be considered the beneficiary’s “home” under the

law for purposes of receiving the Medicare DME benefit?

Answer 3 – In addition to a hospital, a SNF or a distinct part SNF, the following facilities cannot

be considered a home for purposes of receiving the Medicare DME benefit:

• a nursing home that is dually-certified as both a Medicare SNF and a Medicaid nursing

facility (NF);

• a Medicaid-only NF that primarily furnishes skilled care;

• a non-participating nursing home (i.e., neither Medicare or Medicaid) that provides primarily

skilled care; and

• an institution which has a distinct part SNF and which also primarily furnishes skilled care.

Question 4 - If the infusion services are furnished in an outpatient provider setting, can a

Part D sponsor deny a claim?

Answer 4 – Yes. If a physician office or hospital outpatient department bill for infusion

administered in those settings, the claim should always be denied because of coverage in those

settings under Part B.

Question 5 – Since Part B covers intravenous immune globulin (IVIG) provided in the

home, should a Part D sponsor deny claims for this drug?

Answer 5 – It depends. Part B coverage for IVIG in the home is for individuals whose diagnosis

is primary immune deficiency disease. Part D would provide coverage for IVIG in the home for

all other medically accepted indications. Prior authorization requirements could be used to

ensure appropriate payment in accordance with the Part D sponsor’s medical necessity criteria.

It would not be appropriate to routinely require a rejection of a claim under Part B before

processing a Part D claim. Such a policy would be disruptive to beneficiaries and pharmacies

and would unnecessarily increase Part B contractor costs.

Question 6 – Since Part B covers parenteral nutrition under certain circumstances, should

Part D sponsors deny these claims?

Answer 6 – It depends. Part B coverage for parenteral nutrition is limited to individuals with a

non-functioning digestive tract. So if parenteral nutrition is being provided based on this

condition, the claim should be denied. For all other medically accepted indications, coverage

would be under Part D. Prior authorization programs could be used to ensure appropriate

payment. As a general policy, it would not be appropriate to require a rejection of a claim under

Part B before processing a Part D claim. However, if a Part D sponsor had a reasonable basis for

assuming that a particular claim would be covered under Part B, it could require a rejection by

Part B before processing.

ORAL ANTI-CANCER DRUGS

Question 1 - With regard to oral anti-neoplastics, we understand that if they have an IV

form, they are covered under Part B. It is our thinking then, that we could exclude those

that are used solely for cancer under this premise since they would be covered under Part

B.

Answer 1 – Yes. Part D sponsors should not include on their formularies the oral anti-cancer

agents covered by Part B whose only medically accepted indication is as an anti-cancer agent.

They should always deny claims for these drugs. For the drugs that have other medically

accepted indications, Part D sponsors should deny claims for these drugs when used for cancer

treatment but when these drugs are used for other indications they would be Part D drugs. The

use of the drug could be determined through a prior authorization program.

ORAL ANTI-EMETICS

Question 1 - Do pharmacies bill oral anti-emetics under Part B or Part D?

Answer 1 - It depends. Before billing either Part B or Part D, pharmacists would need to

determine the reason for treatment. If it is related to cancer treatment and is a full replacement

for intravenous administration within 48 hours of cancer treatment, Part B would be billed;

otherwise, Part D should be billed.10 In order to receive Part B payment, CMS currently requires

that the prescribing physician indicate on the prescription that the oral anti-emetic is being used

“as a full therapeutic replacement for an intravenous anti-emetic drug as part of a cancer

chemotherapeutic regimen.”

If (based on a prior authorization program) a Part D sponsor determines that a Part B-covered

oral anti-emetic drug is being billed, and that the drug is being furnished in the context of cancer

treatment for use within 48 hours of such treatment, the Part D sponsor should deny payment

since coverage is available under Part B. Such drugs dispensed for use after the 48-hour period,

or any oral anti-emetic prescribed for conditions other than treatment of the effects of cancer

treatment, would be Part D drugs.

IMMUNOSUPPRESSANTS

Question 1 - Do pharmacies bill oral immunosuppressants under Part B or Part D?

10 There may be some local A/B MAC contractor variance regarding the 48 hour interval for the oral anti-emetics

granisetron and dolasetron. Part D sponsors should contact their local A/B MAC contractor for more information

regarding these drugs.

Answer 1 - It depends. Pharmacists would bill Part B or the individual’s Part D plan based on

information received from the individual or sources substantiating the patient’s transplant. Part

B would be billed if the individual had a Medicare covered transplant; otherwise, the Part D plan

would be billed.

INJECTABLES

Question 1 - Can claims submitted by pharmacies for injectable drugs be denied based on

Part B coverage in a physician office “incident to” a physician service?

Answer 1 – No. The exclusion from the definition of a Part D drug of drugs covered under Parts

A or B is based on whether coverage is available under Part A or Part B for the drug as it is being

“prescribed and dispensed or administered” with respect to the individual. Thus, the same drug

may be covered under different circumstances under both programs. As a result, coverage

cannot generally be determined based solely on the drug itself.

The fact that an injectable is covered under Part B in a physician’s office or hospital outpatient

department or other provider setting does not mean that these drugs should be excluded from the

Part D sponsor’s formularies, or that a Part D sponsor can deny a claim from a pharmacy based

on availability of Part B coverage in a physician’s office. If, however, a member submits an out-of-network claim for an injectable drug administered in-office from a physician’s supply, and

this drug is covered in that setting by the Part B contractor for that area, such a claim should be

denied by the Part D sponsor based on Part B coverage. (Of course, an MA-PD plan would not

deny such a claim, but rather pay it under the A/B benefit.)

Question 2 - An injectable drug that a Medicare contractor considers to be usually not self-administrable (e.g., injectable chemotherapy drugs) can only be covered under Part B as

“incident to” a physician service if it is obtained by a physician and administered as part of

a physician service. Can Part D sponsors require prior authorization for these medications

when dispensed by a pharmacy? If the sponsor determines that the drug will be

administered in a physician office, can the sponsor deny the claim because the practice of

the patient taking the drug to the physician’s office for administration is unsafe and

because coverage is available under Part B if the physician obtained and administered the

drug?

Answer 2 - Part D sponsors determine the scope of their own prior authorization programs

subject to CMS review to ensure that such programs have a sound medical basis and do not

discriminate against beneficiaries with certain medical conditions.

To the extent that a sponsor’s prior authorization program applies to injectables and infusables

that would be covered under Part B as “incident to” a physician’s service, and the sponsor

determines based on medical literature that there exist serious safety concerns such that it would

go against accepted medical practice for a particular injectable or infusable to be dispensed

directly to a member, the claim can be denied as not "reasonable." Thus, the dispensing of that

particular drug to that member may be excluded by the Part D sponsor under Section

1862(a)(1)(A) of the Social Security Act as applied to Part D under 1860D-2(e)(3)(A) of the Act.

This same safety concern would not exist, however, if the claim for the drug was being submitted

by an infusion supplier.

Safety-based reasonableness determinations will need to be made on a case-by-case basis, since

circumstances will vary. In general, there are very few instances when an injectable or infusable

drug could not be reasonably dispensed directly to the patient. All drugs are in some sense

hazardous. This is not a unique characteristic of injectables and infusables.

Some situations that would present safety concerns in dispensing directly to a patient who is

transporting the drug to a physician’s office for administration include:

• The drug itself presents a bona fide public safety hazard (e.g., highly radioactive substance or

an environmentally hazardous chemotherapeutic agent) that requires chain of custody

handling to ensure use of appropriate equipment (i.e., safety hood) or persons of special

qualifications.

• The drug requires special handling to preserve biologic activity and the patient is incapable

or unwilling to do so. (For instance, a vaccine that must be kept frozen could be a problem if

the patient had to transport it a long distance in summer heat.)

• The patient presents a high risk of diversion or inappropriate use. (For instance, giving a

heroin addict a vial of morphine.)

• The patient has demonstrated unreliability, aversion, or unwillingness in transporting drugs

to his doctor’s office. (For instance, with respect to dispensing injectable psychiatric meds.)

In the absence of a serious safety concern based on the individual situation, however, there is no

basis for denying a prescription presented at a pharmacy based on the availability of Part B

coverage in another setting (e.g., physician office).

Finally, it is CMS’ understanding that the practice of “brown-bagging” drugs is opposed by

medical societies. CMS continues to urge them to reinforce this message with their members.

Question 3 – Most Medicare Advantage plans treat most non-self-injectables as a medical

benefit. Do they have to treat them as a Part D benefit?

Answer 3 - If an injectable drug is covered under Part B in a provider or physician office setting,

it will continue to be covered under Part B in those settings. If an injectable drug is not covered

in a provider setting (e.g., determined by the contractor to be usually self-administered), then it

will need to be covered under Part D. In addition, claims for non-Part-B-covered injectables

whether usually self-administered or not, when dispensed and submitted by pharmacists could be

covered under Part D. However, Part D plans could establish medical necessity criteria for

limiting coverage of injectable drugs in physician offices.

Question 4 - What are Part D sponsors to do if their region includes multiple A/B MAC

contractor areas and these contractors have differing policies with regard to injectable

drugs?

Answer 4 – A Part D sponsor will have to modify its coverage based on the variation in Part B

coverage across contractor areas within its region. That is, assume that there are two contractor

areas within a Part D sponsor’s region, Contractor A and Contractor B. Further assume that

Contractor A covers injectable X when furnished in a physician office but Contractor B does not.

As a result of this difference in Part B coverage, injectable X is a Part D drug when furnished in

a physician office for members residing in Contractor B’s area, but not in Contractor A’s area.

In either area, injectable X would be covered under Part D if dispensed by a pharmacy.

For MA-PD plans, rules for selecting local coverage determinations apply. That is, if a local MA

plan’s service area includes more than one contractor area, the plan may seek approval from

CMS to apply uniformly to all of the plan’s enrollees local coverage policies that are the most

beneficial to enrollees. Regional MA plans can select a set of local coverage policies to apply

uniformly to their enrollees without CMS pre-approval. In either case, if the selected contractor

covers injectable X, the MA-PD would treat injectable X as a basic A/B benefit. If the selected

contractor does not cover injectable X, the MA-PD would treat it as a Part D drug.

Question 5 –What about new injectable drugs?

Answer 5 - As new injectables are approved by the FDA, Part B contractors or CMS would

continue to make coverage decisions regarding drugs provided incident to a physician’s service

based on whether the drug is “not usually self-administered.” Injectables not covered under Part

B as incident to a physician’s service would become Part D drugs. However, there is no

requirement for Part D sponsors to provide coverage of non-Part-B-covered drugs in the

physician office setting if the drugs can be safely self-administered and there is no medical

necessity for administration in that setting.

INHALATION DRUGS

Question 1 - Can claims submitted by a pharmacy for inhalation drugs delivered through

metered-dose inhalers be denied based on Part B coverage of inhalation drugs used with a

nebulizer?

Answer 1 – No. Since there currently is no coverage under Part B for inhalation drugs delivered

through metered-dose inhalers and dispensed by a pharmacy, these drugs would be covered

under Part D.

Question 2 – Does Part B cover inhalation drugs used with a nebulizer in the case of a

beneficiary in a hospital or SNF bed who does not have Part A coverage, whose Part A

coverage for the stay has run out or whose stay is non-covered?

Answer 2 – No, inhalation drugs used with a nebulizer are not covered under Part B under those

circumstances because the law limits coverage under Part B’s DME benefit to those items that

are furnished for use in a patient’s home, and specifies that a hospital or SNF cannot be

considered the beneficiary’s “home” for this purpose. (See list above (INFUSION DRUGS,

Question 3) for other facilities which cannot be considered a beneficiary’s “home” for DME

purposes.

VACCINES

Question 1 – Are all vaccines covered under Part D?

Answer 1 – No. There are a number of vaccines that remain covered under Part B. For instance,

pneumococcal and influenza vaccines are not covered under Part D because of Part B coverage.

Hepatitis B vaccine is covered under Part B for individuals at high or intermediate risk; for all

other individuals, it would be covered under a Part D benefit. Part B also covers certain vaccines

reasonable and necessary for the treatment of an illness or injury. All other currently available

vaccines and all future preventative vaccines could be covered under Part D.

Question 2 - If a Part D sponsor determines through a prior authorization program that a

hepatitis B vaccine is going to be administered by a physician can the Part D sponsor deny

the claim based on Part B coverage in the setting?

Answer 2 – No. Since the Part B benefit for hepatitis B vaccine is separate from the “incident

to” benefit, the determination about whether it is a Part D drug depends solely on characteristics

of the beneficiary. However, if the Part D sponsor determines based on Medicare Part B

guidelines that the individual is at high or medium risk for hepatitis B, the claim should be

denied. For all other individuals, the vaccine would be a “Part D drug”.

Question 3 - Medicare Part B covers hepatitis B vaccine for high and intermediate risk

groups if ordered by a doctor of medicine or osteopathy, how are these groups defined?

Answer 3 – The high risk groups for whom vaccination is covered include:

• Individuals with End stage renal disease (ESRD);

• Individuals with hemophilia who received Factor VIII or IX concentrates;

• Clients of institutions for individuals for the mentally handicapped;

• Persons who live in the same household as a hepatitis B Virus (HBV) carrier;

• Homosexual men;

• Illicit injectable drug abusers

Intermediate risk groups include:

• Staff in institutions for the mentally handicapped; and

• Workers in health care professions who have frequent contact with blood or blood-derived body fluids during routine work.

ANTIGENS

Question 1 – If a pharmacy submits a claim for antigens should a Part D sponsor make

payment?

Answer 1 – No. Antigens are covered only under Part B.

BLOOD CLOTTING FACTORS

Question 1 – If a pharmacy submits a claim for blood clotting factors should a Part D

sponsor make payment?

Answer 1 – No. Blood clotting factors are covered under Part A and Part B.

Chapter 6 – Appendix C - Summary of Coverage Policy

ATTACHMENT III

Web sites for Part B Coverage Information

Pub. 100-04, Medicare Claims

Processing Manual

http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS018912.html?DLPage=1&DLSort=0&DLSortDir=ascending

Pub. 100-02, Medicare Benefit

Policy Manual

http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS012673.html?DLPage=1&DLSort=0&DLSortDir=ascending

Medicare Coverage Database http://www.cms.hhs.gov/mcd/search.asp

A/B MAC and DME MAC contact

information

http://www.cms.hhs.gov/apps/contacts/