Press release



Physicians who administer certain drugs – including oncology drugs ‑ in their offices to Medicare beneficiaries will have the option of obtaining many of these drugs under a new competitive acquisition program (CAP) starting on July 1, 2006.  In the refinements CMS is announcing today, certain aspects of the CAP are being revised to improve the bidding process, increase the number of drugs that can be furnished under the CAP, improve access to newly approved drugs, clarify how unused drugs should be treated under CAP, and establish a framework by which vendors may enter into arrangements with CAP physicians for the collection of coinsurance and related information.


Most revisions to the CAP have been included in the final Medicare Physician Fee Schedule rule.  In a separate rulemaking to be released in the future, CMS will address the implications of the negotiated sales prices of drugs furnished by vendors under the CAP for calculating the Average Sales Price (ASP) used to determine the payment rates for drugs furnished by physicians who choose not to participate in the CAP.


The CAP, which was mandated by the Medicare Modernization Act of 2003 (MMA) is a voluntary program that offers physicians an option to acquire drugs from vendors who are selected in a competitive bidding process.  The vendors would then be responsible for billing the program and collecting any applicable deductible and coinsurance from beneficiaries for drugs included in the CAP.  Physicians who choose to participate in the CAP will continue to be paid for the costs of administering the drugs.  This program could save physicians time and paperwork and, in the long term, could lower drug costs for beneficiaries and the Medicare program.


The CAP applies only to certain drugs covered under Medicare Part B which are administered to a Medicare beneficiary in the physician’s office. This rule does not apply to drugs included in the Medicare prescription drug benefit (Medicare Part D) which goes into effect January 1, 2006.


The specific actions CMS is announcing today include the following:


  • Establishing processes for approved vendors to furnish additional drugs under the CAP.


  • Establishing processes for approved vendors to furnish newly approved drugs under the CAP.


  • Improving consistency between how the CAP policy and Medicare Part B drug policy on unused drugs.


  • Updating the list of CAP drugs to incorporate the latest changes in the drug marketplace.


  • Establishing a framework for vendors to enter into arrangements with CAP physicians for the collection of coinsurance, issuing advance beneficiary notices, and other appropriate activities, provided such agreements comply with Stark and all applicable anti-fraud provisions.


CMS will begin accepting bids for the first CAP cycle upon publication of these rules in the Federal Register.  In order to become approved CAP vendors, applicants must demonstrate that they meet rigorous standards set out in the regulation for quality, program integrity, financial stability, and service and must be enrolled by CMS as a Medicare supplier.  Upon meeting these criteria, successful applicants will be chosen on the basis of the bid which cannot exceed a weighted average of ASP+6%, and will then be offered a contract to furnish drugs under the CAP.


The CAP  will not change how Medicare beneficiaries receive Part B drug treatments from a physician, nor is it anticipated that any significant change in beneficiary out of pocket cost will result from the implementation of the CAP in 2006.  Long term, costs could decrease somewhat.


Physician participation in the program is voluntary.  Physicians have complete freedom to choose to obtain their drugs in the marketplace and Medicare will continue to pay them for such drugs under the ASP system or other applicable payment methodology.  For physicians choosing to participate in the CAP program for Part B drugs, obtaining drugs from a vendor under the CAP is intended to be simple and efficient.  Physicians would simply enroll with one of the approved vendors.  The physician would order drugs needed for specific beneficiaries from the vendor, and administer them to the beneficiaries.  The physician would not bill Medicare for the drugs but would bill Medicare only for administering the drugs.  The vendor, rather than the physician, would bill Medicare for the drugs, and would be responsible for collecting any deductibles and coinsurance from the beneficiary.

The CAP does not seek to change physicians’ prescribing habits.  Physicians who choose to participate in the CAP can acquire medically necessary drugs that are not included in the CAP program directly in the marketplace, as they do now.


Physicians will elect to participate in this program on annual basis. During the election process, physicians will choose a vendor to be the physician’s source of Part B drugs in the particular category.  The initial physician election process is scheduled to begin April 3, 2006.


Note:  Additional information about the CAP, including links to the interim final rule and previous CAP rules, information for vendors, and bidding documents may be found on the following website: