Core Assumptions for Drug Coverage and Payment Under Medicare Part B and Part D
The following core coverage and payment assumptions support CMS’ positions on
coverage and payment for drugs under Medicare Part B or Part D:
1. In 2005, if a drug was covered by Medicare Part B, it remains covered by Part B today.
Physicians and pharmacists should bill Medicare Part B for those drugs. The patient
co-payment responsibility remains 20 percent of the total billed amount.
2. The point of sale of a drug as of January 1, 2006 usually determines whether a drug
will be covered and can be billed under Part B or Part D. In general, if the physician
is providing the drug out of his/her pharmacy stock, it should be billed under Part B.
There are a number of exceptions to this general statement, and these are listed in the
additional bullet points below.
a. CMS maintains a list of oral anti-cancer drugs covered under Part B based
on certain statutory criteria. The list includes: Capecitabine (Xeloda®);
Cyclophosphamide (Cytoxan®); Methotrexate; Temozolomide (Temodar®);
Busulfan (Myleran®); Etoposide; Melphalan. For these seven oral anti-
cancer agents, the drug type and approved uses determine their coverage
under Part B. This information is available on DMERC websites under
medical policies. All other approved, oral anti-cancer agents will be covered
under Part D.
b. Oral anti-nausea drugs will be covered under Part B if they are to be
administered (including self-administered) within 48 hours of the patient’s
chemotherapy.
c. Immunosuppressant drugs provided for a Medicare covered transplant are
covered by Medicare Part B. Immunosuppressant drugs for a non-Medicare
approved transplant are Part D drugs.
Core Part D Operational Rules
The following core operational rules guide coverage and payment at the plan level.
1. Part D plans cannot require rejection of a claim for Part B coverage before allowing
coverage of a drug. Plans must take further steps to explore potential coverage and
may need additional evidence for coverage.
2. Part D plans pay for drugs when covered by the Part D plan and purchased by the
Medicare beneficiary.
3. Patients, providers, and pharmacists may need to provide specific medical history,
medication history, and recent prescription utilization information so that the plan
has sufficient information to make a reasonable coverage determination. Each case
depends on specific patient-level, drug-specific, condition-specific, and plan-specific
information.
4. Drug formularies vary by plan, as do patient premiums and copayments.
5. State Medicaid coverage of drugs excluded from Medicare coverage varies, as do the
medical necessity criteria.
Part D Coverage Considerations for Physician-Administered Drugs
CMS has acknowledged that the same drug may be covered under different circumstances
under both the Part B and Part D programs. In the July 27, 2005 draft guidance
document, CMS stated that:
• The availability of Part B coverage in a provider setting should not result in a
refusal of coverage under Part D for drugs dispensed by a pharmacy.
• PDPs should deny claims submitted by members for Part B-covered injectables if
they are administered in a physician office from a physician’s supply.
• PDPs can subject injectables and infusables that would be covered under Part B as
“incident to” a physician service, to a prior authorization requirement.
Plan sponsors can use medical literature and society guidelines to determine on a case-
by-case basis if dispensing of a physician-administered drug directly to a beneficiary
presents a safety danger and deny such claims as “unreasonable.” However, in general,
CMS believes that that there are very few instances when an injectable drug could not be
reasonably dispensed directly to the patient or when a drug claim submitted by a
pharmacy should be denied on the availability of coverage under Part A or Part B.
It is also significant to note that, generally speaking, CMS has not looked favorably upon
the practice of “brown-bagging”, a term used to describe the practice of the direct ship or
direct supply of medications to patients instead of directly to physician offices. For
example in the previously mentioned draft guidance document CMS stated: “...it is our
understanding that the practice of “brown-bagging” drugs is opposed by medical societies.
We will urge them to reinforce this message with the start of the Part D program.”
