Drugs, Immunizations/Vaccines, Radiopharmaceuticals, and Skin Substitutes Reimbursed Under Medical Coverage

Policy No: 104
Date of Origin: 01/01/2022
Section: Medicine
Last Reviewed: 12/01/2023
Last Revised: 12/01/2023
Approved: 12/14/2023
Effective: 01/01/2024
Policy Applies To: Group and Individual

This policy applies to physicians, other professionals, and facility providers reimbursed for drugs using a fee schedule and contracted outpatient facilities that utilize AWP based pricing for codes with no fee.

Average Sales Price (ASP)
The average sales price of a drug as determined by the Center for Medicare & Medicaid Services (CMS). The CMS Part B ASP fee schedule released by CMS quarterly is sometimes referred to as (also known as) ASP +6%.

Average Wholesale Price (AWP)
A prescription drug term referring to the average listed or published price of a drug. AWP pricing is based on data obtained from manufacturers, distributors, and other suppliers. Our health plan uses Medi-Span as its primary source for AWP.

Best Contracted Rate
Our health plan may contract with specialty pharmacies or other related provider types to facilitate cost effective procurement and dispensing of specialty pharmaceuticals (i.e., Synagis, hemophilia factor products, limited distribution items, etc.). The rates negotiated with these providers are known as Best Contracted Rates and will be used for all provider types as standard reimbursement. Best Contracted Rates are included in the published Drug Fee Schedule.

National Drug Code (NDC)
A unique 11-digit, 3-segment number assigned to each medication listed under Section 510 of the U.S. Federal Food, Drug and Cosmetic Act. The number identifies the labeler or vendor, product, and trade package size.

Compounded Drugs
The Food and Drug Administration (FDA) defines drug compounding as the process by which a pharmacist or doctor combines, mixes, or alters ingredients to create a medication tailored to an individual patient's needs. In order to be covered, a compounded prescription medication must contain at least one federal legend drug in therapeutic amounts. A federal legend drug is defined as a medication product that by Federal law bears the statement "Caution – Federal (U.S.A.) law prohibits dispensing without a prescription" or words of similar meaning (such as "Rx only"). Bulk chemicals, medical food supplements and nutritional additives not approved for dispensing by prescription are not considered federal legend drugs.

Our health plan requires the NDC number, NDC units, and units of measurement to be placed on the claim to determine the standard reimbursement amounts for therapeutic and diagnostic drugs and biological products reimbursed under medical coverage. The order of the methodologies employed in determining the proper reimbursement amount are:

• Best Contracted Rate (i.e., Synagis, hemophilia factor products, etc.)
• Noridian Medicare Fee Schedules (for radiopharmaceuticals)
  • Noridian Medicare Jurisdiction F Radiopharmaceuticals Fee Schedule (1st) or
  • Noridian Medicare Contractor Status Codes (C-Status) current year fees for either Oregon - Locality 01 or Washington - Locality 02 (whichever is higher) (2nd)
• CMS Part B ASP fee schedule
• AWP pricing - For codes with no CMS Part B ASP fees, we set a fee reviewing all NDC's assigned to a code using the below methodology to determine AWP allowances.
  • For single-source products, our health plan uses a percentage of the AWP of the largest package with the lowest price.
  • For multiple-source products, our health plan uses a percentage of the AWP where AWP is equal to the lesser of the Medi-Span median AWP (largest package size) of all generic forms of the drug/biological or the lowest price brand name product.
• Invoice pricing - any invoice pricing is at 100% of the supplier invoice for the cost of the drug only. Fees such as shipping and handling will not be reimbursed unless specified in the provider's contract.

• Allowance based on the historical invoice cost.

NOTE: The below categories include but are not limited to active Current Procedural Terminology (CPT®) and Healthcare Common Procedure Coding System (HCPCS) codes; therefore, quarterly code updates are included, when applicable.

Compounded Drugs
Compound drugs even with multiple ingredients are considered a single product and should be billed on a single line with the compound billing code J7999 or an appropriate unlisted code such as but not limited to J3490.

Compounded drugs and medications are priced at 100% of the cost of the drug(s)/ingredients only, as stated on the supplier or manufacturer invoice. The invoice must be submitted, when requested and include name and quantity dispensed of all active ingredients used to make the compounded product(s), where appropriate.

• Exception: Bevacizumab (Avastin) eye injection compounded syringes (including bevacizumab biosimilar products)

  • If manufacturers/compounding pharmacy invoice is provided, including the date of the invoice and pricing, our health plan will price at 100% of the supplier invoice for the cost of the compounded drug only. Fees such as shipping, and handling will not be reimbursed.
  • If no invoice is provided, our health plan will price each syringe at $40.00 which is based on historical invoice cost.
  • This will include any claim(s) billing the intravitreal injection code 67028 on the same date of service with any bevacizumab product (including biosimilar products) billed with J7999 as requested or any other assigned code including, but not limited to, active and reimbursable HCPCS codes in the "J" and "Q" sections.

Please refer to reimbursement policy Discarded Drugs and Biologicals.

Noridian Medicare Fee Schedule for Contractor Status Codes (C-Status)

Noridian Medicare Fee Schedule for Radiopharmaceuticals

Center for Medicare & Medicaid Services (CMS), Medicare Part B Drug Average Sales Price

Medi-Span Prescription Drug Pricing Data

Pricing Codes Without RVUs

Medicare-Based Fee Effective Dates

Discarded Drugs and Biologicals