Part B Drugs and Biologicals

Medicare Part B covers outpatient prescription drugs and biologicals (referred hereafter as drugs) under certain conditions, for example, drugs provided as part of (or incident to) a physicians’ service, and drugs furnished for use with covered durable medical equipment. Many Part B covered drugs are infused or injected by physicians such as oncologists, rheumatologists, and urologists.

Generally, Part B covers only drugs that are not usually self-administered.

Medicare Part B pays for covered drugs and biologicals, including covered preventive vaccines, using several methodologies. Average Sales Price (ASP) is the primary methodology used for Pricing Part B Drugs; however, in the absence of ASP data, CMS may use the wholesale acquisition cost-based prices (WAC). Additionally, in certain circumstances CMS substitutes payment amounts with Office of the Inspector General-derived amounts based on the Widely Available Market Price (WAMP) or the Average Manufacturer’s Price (AMP). Medicare pays for preventive Part B vaccines at a rate of 95 percent of the average wholesale price (AWP).

Average Sales Price (ASP) is defined in 1847A of the Social Security Act. It is a volume-weighted average based on manufacturers’ sales to all purchasers in the United States (with certain statutory exceptions) and includes many price concessions and discounts. It is the primary way drugs and biologicals payable under Part B are priced. CMS receives data from manufacturers quarterly. Medicare pays at ASP+6% for most separately payable Part B drugs and biologicals.

For more information, refer to:

• Medicare Part B Drug Average Sales Price

Manufacturers are encouraged to submit timely information to the drug compendia and submit required pricing information to CMS in order to assure accurate pricing.

In addition to Medicare’s payment for a drug, Medicare makes a separate payment to the physician or hospital for administering the drug (that is, for the act of injecting or infusing the product into the patient). The drug administration payment rates are determined under the physician fee schedule or OPPS, depending on the setting of the service. Medicare Part B also covers certain drugs infused in the home. To be covered by Part B, the drug to be infused in the home must require administration using a Part B-covered infusion pump, and administration of the drug in the home must be reasonable and necessary. A few examples include certain intravenous drugs for heart failure and pulmonary arterial hypertension, and subcutaneous immune globulin. IVIG products not administered through a durable infusion pump can be accessed in the home setting under certain limited circumstances.