Notice: It is not appropriate to bill Medicare for services that are not covered as if they are covered. When billing for non-covered services, use the appropriate modifier.
In reading this document, please note that there is a difference between the section of the statute which defines the overall Medicare benefit for coverage of drugs and biologicals, and the section of the statute which states that no Medicare payment shall be made for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury. This article gives information about the overall Medicare benefit for coverage of drugs and biologicals. This contractor, when necessary, develops Local Coverage Determinations (LCDs), to define medically reasonable and necessary uses of particular drugs and biologicals.
Generally, drugs and biologicals are covered only if all of the following requirements are met:
- They meet the definition of drugs or biologicals;
- They are of the types that are not usually self-administered by the patients who take them;
- They meet all the general requirements for coverage of items as incident to a physician's services;
- They are medically reasonable and necessary for the diagnosis or treatment of the illness or injury for which they are administered according to accepted standards of medical practice;
- They are not excluded as noncovered immunizations; and
- They have not been determined by the United States (U.S.) Food and Drug Administration (FDA) to be less than effective.
Definition of Drug or Biological
Drugs and biologicals must be determined to meet the statutory definition. Under the statute Section 1861(t)(1), payment may be made for a drug or biological only where it is included, or approved for inclusion, in the latest official edition of one of the statutorily named compendia. Due to changes in the pharmaceutical reference industry, some of the statutorily named compendia are no longer published. Examples of compendia that are currently in publication include the United States Pharmacopoeia (USP), the United States Pharmacopoeia National Formulary (USP-NF), or the Homeopathic Pharmacopoeia of the United States (HPUS), or the American Dental Association (ADA) Guide to Dental Therapeutics (except for those drugs and biologicals unfavorably evaluated in the ADA Guide to Dental Therapeutics). Combination drugs are also included in the definition of drugs if the combination itself or all of the therapeutic ingredients of the combination are included, or approved for inclusion, in any of the above drug compendia.
Drugs and biologicals are considered approved for inclusion in a compendium if approved under the established procedure by the professional organization responsible for revision of the compendium.
Self-Administered Drugs
Drugs that can be self-administered by the patient, such as those in pill form or in self-injection form, are generally not covered by Part B. However, there are a limited number of self-administered drugs that are covered because the Medicare statute explicitly provides coverage. Examples of drugs that are usually self-administered by the patient and are covered include: blood clotting factors, drugs used in immunosuppressive therapy, erythropoietin for dialysis patients, osteoporosis drugs for certain homebound patients, and certain oral cancer drugs.
Generally, when a physician gives a patient pills or other oral medication, these drugs are excluded from coverage since the form of the drug is self-administered. Similarly, if a physician gives a patient an injection that is usually self-injected, this drug is excluded from coverage. If a drug is available in both oral and injectable forms, the injectable form of the drug must be medically reasonable and necessary as compared to using the oral form.
In the past, Medicare Administrative Contractors (MACs) may have provided payment for one or perhaps several doses of a drug that would otherwise not be paid for because the drug is usually self-administered. For example, during a brief time when the patient is being trained under the supervision of a physician in the proper technique for self-administration. Medicare will no longer pay for such doses. In addition, Medicare will no longer pay for any drug when it is administered on an outpatient emergency basis if the drug is excluded because it is usually self-administered by the patient.
To determine if a drug or biological cannot be self-administered, please refer to the CMS IOM Publication 100-02, Chapter 15, Section 50.2. For additional information, please refer to Local Coverage Articles A52571, Self-Administered Drug Exclusion List.
Incident To Requirements
In order to meet all the general requirements for coverage under the incident-to provision, an FDA approved drug or biological must be of a form that is not usually self-administered, must be furnished by a physician and must be administered by a physician or by auxiliary personnel employed by him/her under his/her personal supervision. To be covered, drugs and biologicals must be an expense to the physician billing for the service.
If a patient purchases a drug and the physician administers it, the physician cannot bill Medicare for the drug. However, the administration of the drug, regardless of the source, is a service that represents an expense to the physician. Therefore, administration of the drug is payable if the drug would have been covered when purchased by the physician.
Whole blood is a biological that cannot be self-administered and is covered when furnished incident to a physician's service. Payment may also be made for blood fractions if all coverage requirements are satisfied.
Approved Use of Drug
Use of the drug or biological must be safe and effective and otherwise medically reasonable and necessary. Drugs or biologicals approved for marketing by the FDA are considered safe and effective for purposes of this requirement when used for indications specified on the labeling. Therefore, payment may be made for an FDA approved drug or biological if:
- It was injected on or after the date of the FDA's approval;
- It is medically reasonable and necessary for the individual patient; and
- All other applicable coverage requirements are met.
Unlabeled Use of Drug
An unlabeled use of a drug is a use that is not included as an indication on the drug's label as approved by the FDA. The FDA approved drugs used for indications other than what is indicated on the official label may be covered under Medicare if the contractor determines the use to be medically accepted, taking into consideration the major drug compendia, authoritative medical literature and/or accepted standards of medical practice. The following guidelines identify three categories in which medications would not be medically reasonable and necessary according to accepted standards of medical practice.
- Not for a Particular Illness - Medications given for a purpose other than the treatment of a particular condition, illness, or injury are not covered (except for certain immunizations).
- Injection Method Not Indicated - Medication given by injection (parenterally) is not covered if standard medical practice indicates that the administration of the medication by mouth (orally) is effective and is an accepted or preferred method of administration.
- Excessive Medications – Medications administered for treatment of a disease which exceed the frequency or duration of injections indicated by accepted standards of medical practice are not covered.
If a medication is determined not to be medically reasonable and necessary for diagnosis or treatment of an illness or injury according to these guidelines, the entire charge will be excluded (i.e., for both the drug and its administration). Also excluded from payment is any charge for other services (such as office visits) which are primarily for the purpose of administering a non–covered injection (i.e., an injection that is not medically reasonable and necessary for the diagnosis or treatment of an illness or injury).
Payment for Antigens and Immunizations
Antigens - Payment may be made for a reasonable supply of antigens (defined as not more than a 12-month supply) that have been prepared for a particular patient at any one time if:
- the antigens are prepared by a physician who is a doctor of medicine or osteopathy, and
- the physician who prepared the antigens has examined the patient and has determined a plan of treatment and a dosage regimen.
Antigens must be administered in accordance with the plan of treatment and by a doctor of medicine or osteopathy or by a properly instructed person (who could be the patient) under the supervision of the doctor.
Please refer to LCDs L37800, Allergen Immunotherapy for reasonable and necessary requirements.
Immunizations - Vaccinations or inoculations are excluded as immunizations unless they are directly related to the treatment of an injury or direct exposure to a disease or condition, such as antirabies treatment, tetanus antitoxin or booster vaccine, botulin antitoxin, antivenin sera, or immune globulin. In the absence of injury or direct exposure, preventive immunization (vaccination or inoculation against such diseases as smallpox, polio, diphtheria, etc.) is not covered. However, pneumococcal, hepatitis B, and influenza vaccines are exceptions to this rule.
For additional information, please refer to Billing and Coding Articles A58873, Tetanus Immunization.
Less Than Effective Drug
A drug that is less than effective is not eligible for reimbursement (i.e., a drug that the FDA has determined to lack substantial evidence of effectiveness for all labeled indications). Any other drug product that is identical, similar, or related, will also be ineligible.
If a physician is contemplating the off-label use of an FDA approved drug or biological in an anti-cancer chemotherapeutic regimen, the subsequent steps should be followed:
- Initially, one of the CMS approved drug compendia should be consulted to find a list of approved agents and their list of indications.
Note: Refer to the CMS IOM Publication 100-02, Chapter 15, Section 50.4.5.B for recent revisions to the Compendia List. Authoritative lists of Compendia will be adjusted, as needed, according to the process defined in the CMS IOM Publication 100-02, Chapter 15, Section 50.4.5.1.
In review of these compendia, if the use of the chemotherapeutic agent is supported by any one of these compendia AND the use is NOT listed as not indicated, unsupported, not recommended or equivalent terms in any of the other approved compendia, the agent may be approved.
- In those circumstances when the off-label use of the chemotherapeutic agent is not listed in any of the compendia or is listed as having insufficient data or as investigational, the use of the drug may be supported by clinical research that appears in peer-reviewed medical literature. Peer-reviewed medical literature includes scientific, medical, and pharmaceutical publications in which original manuscripts are published, only after having been critically reviewed for scientific accuracy, validity, and reliability by unbiased independent experts prior to publication. In-house publications of pharmaceutical manufacturing, sales, or distribution companies or abstracts (including meeting abstracts) are excluded from consideration.
In determining whether an off-label use is supported, the contractor will consider (among other things) the following:
- Whether the clinical characteristics of the beneficiary and the cancer are adequately represented in the published evidence.
- Whether the administered chemotherapy regimen is adequately represented in the published evidence.
- Whether the reported study outcomes represent clinically meaningful outcomes experienced by patients.
- Whether the study is appropriate to address the clinical question.
The contractor will consider:
- Whether the experimental design, in light of the drugs and conditions under investigation, is appropriate to address the investigative question. (For example, in some clinical studies, it may be unnecessary or not feasible to use randomization, double blind trials, placebos, or crossover);
- that non-randomized clinical trials with a significant number of subjects may be a basis for supportive clinical evidence for determining accepted uses of drugs; and
- that case reports are generally considered uncontrolled and anecdotal information and do not provide adequate supportive clinical evidence for determining accepted uses of drugs.
Coverage will be determined based on the results of peer reviewed medical literature published in the regular editions of the following publications, not to include supplement editions privately funded by parties with a vested interest in the recommendations of the authors:
- American Journal of Medicine
- Annals of Internal Medicine
- Annals of Oncology
- Annals of Surgical Oncology
- Biology of Blood and Marrow Transplantation
- Blood
- Bone Marrow Transplantation
- British Journal of Cancer
- British Journal of Hematology
- British Medical Journal
- Cancer
- Clinical Cancer Research
- Drugs
- European Journal of Cancer (formerly The European Journal of Cancer and Clinical Oncology)
- Gynecologic Oncology
- International Journal of Radiation, Oncology Biology, and Physics
- The Journal of the American Medical Association
- Journal of Clinical Oncology
- Journal of the National Cancer Institute
- Journal of the National Comprehensive Cancer Network (NCCN)
- Journal of Urology
- Lancet
- Lancet Oncology
- Leukemia
- The New England Journal of Medicine
- Radiation Oncology
- When the provider decides to use an FDA approved chemotherapeutic agent off-label, the evidence used to make that decision (information in the compendia, established guidelines [for example, guidelines developed by the NCCN], research studies in approved peer-reviewed medical journals, etc.) must be available upon request. Physicians or suppliers are expected to be able to produce copies of relevant supporting full-text articles, guidelines, and/or supporting literature when an unlabeled use does not appear in at least one of the approved compendia, or the unlabeled use is listed in the compendia as having insufficient data or as investigational. Abstracts, opinions, or book chapters are not acceptable.
- If a use is identified as not indicated by the CMS or the FDA, specifically identified as not indicated in one or more compendia listed, or the contractor determines, based on peer-reviewed medical literature, that a particular use of a drug is not safe and effective, the off-label usage is not supported. Therefore, the drug is not covered.
Hydration Administration (CPT codes 96360 and 96361)
Medicare currently allows separate payment of hydration therapy provided sequentially (but not concurrently) to chemotherapy infusion.
CPT codes 96360 and 96361 are intended to report a hydration intravenous (IV) infusion consisting of a prepackaged fluid and/or electrolyte solutions (e.g., normal saline, D5-1/2 normal saline +30 mEq KC1/liter) but are not used to report infusion of drugs or other substances. Hydration IV infusion typically requires direct physician supervision for purposes of consent, safety oversight or intra-service supervision of staff. Typically, such infusions require little special handling to prepare or dispose of, and staff which administer these do not typically require advanced training. After initial set up, infusion typically entails little patient risk and thus little monitoring. Further instructions regarding hydration and its use may be found in the CPT Manual, particularly with regard to facilities. In addition, certain coding combinations are not permissible by the National Correct Coding Initiative (NCCI) edits.
JW Modifier Requirement
The CMS encourages physicians, hospitals and other providers and suppliers to care for and administer drugs and biologicals to patients in such a way that they can use drugs or biologicals most efficiently, in a clinically appropriate manner. According to the Social Security Act (SSA) Section 1861(v)(1)(A), the reasonable cost of any service is the cost actually incurred, excluding any part of an incurred cost found to be unnecessary in the efficient delivery of needed health services. On this basis, the definition of a reasonable cost for a drug or biological is met when the beneficiary is administered the required dose of the drug or biological in an efficient manner.
Effective January 1, 2017, when billing for drugs and biologicals (except those provided under the Competitive Acquisition Program for Part B drugs and biologicals [CAP]), the use of the JW modifier to identify unused drugs or biologicals from single use vials or single use packages that are appropriately discarded is required. The discarded amount shall be billed on a separate claim line using the JW modifier. Providers are required to document the discarded amounts of drugs or biologicals in the patient’s medical record.
The following elements must be followed in order for the discarded amount to be covered.
- The vial/package must be a single-use vial/package.
- The units billed must correspond with the smallest dose (vial) available for purchase from the manufacturer/supplier that could provide the appropriate dose for the patient.
- The left-over amount must actually be discarded and may not be used for another patient regardless of whether or not that other patient has Medicare.
A situation in which the JW modifier is not permitted is when the actual dose of the drug or biological administered is less than the billing unit. For example, one billing unit for a drug is equal to 10mg of the drug in a single use vial. A 7mg dose is administered to a patient while 3mg of the remaining drug is discarded. The 7mg dose is billed using one billing unit that represents 10mg on a single line item. The single line item of 1 unit would be processed for payment of the total 10mg of drug administered and discarded. Billing another unit on a separate line item with the JW modifier for the discarded 3mg of drug is not permitted because it would result in overpayment. Therefore, when the billing unit is equal to or greater than the total actual dose and the amount discarded, the use of the JW modifier is not permitted.
JZ Modifier Requirement
Effective 07/01/2023, providers must report the JZ modifier (Zero drug amount discarded/not administered to any patient) when there is no wastage to report. This must be reported on all claims that bill for drugs separately payable under Part B when there is no discarded amount from single-dose containers or single-use packages. For the amount administered, the claim line must include the billing and payment code, the JZ modifier showing no discarded amounts, and the number of units administered in the units’ field.
The JW and JZ modifier policy does not apply for drugs that are not separately payable, such as packaged OPPS or ASC drugs, or drugs administered in the FQHC or RHC setting or to drugs assigned status indicator N (Items and Services Packaged into APC Rates) under the OPPS. Similarly, the JW and JZ modifiers do not apply to drugs assigned payment indicator “N1” (ASC).
Coding Guidance
The HCPCS/CPT code(s) may be subject to NCCI edits. This information does not take precedence over NCCI edits. Please refer to the NCCI for correct coding guidelines and specific applicable code combinations prior to billing Medicare.
All injection claims must include the specific name of the drug and dosage. Identification of the drug enables proper payment for the services.
Services related to non-covered services or drugs are also not covered (e.g., administration services).
When the drug is purchased by the beneficiary, or when the drug was supplied without charge by the manufacturer, it should NOT be billed to Medicare by the provider, even with a submitted charge of $0.00.
Reporting the Appropriate Number of Units
If the "J" code descriptor can be multiplied to reflect the dosage being administered, use the J-code, with the appropriate number of units which reflect the dosage given.
It is not appropriate to use the "J" code with a multiplier in the units field when there is another "J" code which more closely describes the amount given.
It is not appropriate to bill for the full amount of a drug when it has been split between two or more patients. Bill only for the amount given to each beneficiary.
Reporting Not Otherwise Classified (NOC) Code(s)
Please refer to Billing and Coding Articles A59074, Complex Drug Administration Coding for information regarding billing NOC codes.
Reporting Evaluation and Management (E/M) Visit on the Same Day as Drug Administration Services
The E/M service for CPT code 99211 cannot be paid if it is billed with a drug administration service. This includes a chemotherapy or nonchemotherapy drug infusion service, as well as a therapeutic or diagnostic injection code.
When a medically necessary, significant and separately identifiable E/M service (which meets a higher complexity level than CPT code 99211) is performed, in addition to drug administration service(s), the appropriate E/M CPT code should be reported with modifier -25. Documentation should support the level of E/M service billed. For an E/M service provided on the same day, a different diagnosis is not required.
Please refer to the CMS IOM Publication 100-04, Chapter 12, Sections 20.3.B, 30.5.C, D, F, 30.6.6 and 30.6.7.D for additional information on E/M services furnished on the same day as drug administration services.
Please refer to Billing and Coding Articles A59074, Complex Drug Administration Coding for information regarding chemotherapy and nonchemotherapy drug administration codes.
Reporting Multiple Infusions or Injections
When administering multiple infusions, injections, or combinations, only one "initial" drug administration service code should be reported per patient per day, unless protocol requires that two separate IV sites must be used. The initial code is the code that best describes the key or the primary reason for the encounter and is reported irrespective of the order in which the infusions or injections occur.
If an injection or infusion is of a subsequent or concurrent nature, even if it is the first such service within that group of services, the subsequent or concurrent code from the appropriate section should be reported (e.g., the first IV push given subsequent to an initial one-hour infusion is reported using a subsequent IV push code).
Report separate codes for each parenteral method of administration employed when therapy is administered by different techniques. Medications (e.g., antibiotics, steroidal agents, antiemetics, narcotic analgesics) administered independently or sequentially as supportive management of chemotherapy or certain monoclonal antibody administration should be separately reported using CPT codes 96360, 96361, 96365 or 96379 as appropriate. Report the specific service as well as the code(s) for the specific substance or drug(s) provided.
There is no code for concurrent administration of chemotherapeutic drugs. Multiple drugs given at the same session are considered to be sequential, rather than concurrent. The services are reported with CPT code 96411 for IV push administration of additional drugs/substances at the same session and CPT code 96417 for IV infusion administration of additional drugs/substances at the same session.
Modifier EJ – Subsequent Dose in a Series
To distinguish between the initial dose of a drug and subsequent doses of that same drug used in a sequential series in the treatment of a condition, the modifier EJ should be used to identify the subsequent doses. Do not report an initial dose of a drug with the –EJ modifier.
Reporting Infusion Time(s) and Fluid
When reporting codes for which infusion time is a factor, use the actual time over which the infusion is administered. Services leading up to the infusion and to conclude the infusion are included in the infusion service and not separately reported. The services include starting the IV and monitoring the patient post-infusion. Standard clinical practice is to document the actual start and stop times in the patient’s medical records. This would ensure that the times are accurate in the event there are interruptions or delays during the infusion process. Flow sheets kept by personnel during infusion services help to identify proper infusion times. Time may be documented with start and stop times or with total time.
The first hour initial codes are defined as "up to one hour". This eliminates the need to report the 52 modifier to inform Medicare of durations of less than one hour.
Report the additional hour of chemotherapy administration with CPT code 96415 for infusion intervals of greater than 30 minutes beyond one hour increments. Report CPT code 96415 in conjunction with the initial chemotherapy administration CPT code 96413.
The fluid used to administer the drug(s) is considered incidental hydration and is not separately reportable. An infusion consisting of three substances in a single bag is not intended to be reported as three separate infusion services.
Do not report the initial hydration CPT code 96360 if performed as a concurrent infusion service. Report the additional hour of hydration with CPT code 96361 to identify hydration furnished as a secondary or subsequent service after a different initial service is administered through the same IV access.
Report the additional hour or additional sequential CPT code 96366, 96367, 96375 or 96376 (as applicable) to identify therapeutic, prophylactic or diagnostic nonchemotherapy drug infusion or injection when provided as a secondary or subsequent service in association with chemotherapy administration CPT code 96413.
Report the additional sequential infusion chemotherapy administration CPT code 96417 in conjunction with the initial chemotherapy administration CPT code 96413. Report CPT code 96417 only once per sequential infusion.
Report irrigation CPT code 96523 if it is the only service provided that day. If there is an E/M visit or other drug administration service provided on the same day, payment for CPT code 96523 is included in the payment for the other service.
Report CPT code 36593 for declotting a catheter or port.
Please refer to Billing and Coding Articles A59074, Complex Drug Administration Coding for additional information regarding chemotherapy and nonchemotherapy drug administration codes.
Services Not Separately Reportable
If performed to facilitate an infusion or injection of a drug or biological, the following are included and are not reported separately:
- Use of local anesthesia
- IV start
- Access to indwelling IV, subcutaneous catheter or port
- Flush at conclusion of infusion
- Standard tubing, syringes and supplies
- Preparation of chemotherapy agent(s)
Biosimilar Modifiers
Effective on April 1, 2018, providers and suppliers will no longer be required to report modifiers with HCPCS codes for biosimilars (reference the CMS Transmittal 3966, CR 10454).
Compounded Drugs
Compounded drugs are drugs not reconstituted as labeled in order to create a combination of drugs or vary the concentration/volume. As such, compounded medications do not have a National Drug Code (NDC) number, an average sales price (ASP) or an average wholesale price (AWP). Compounded drugs are contractor priced on invoice.
Compounded medications created by a pharmacist in accordance with the Federal Food, Drug and Cosmetic Act may be covered under Medicare. A compounded drug is defined as a combination of drugs mixed by a pharmacist. This definition does not include a simple reconstitution of a drug as directed by the package insert. Compounded drugs that are self-administered are not a covered Medicare service.
Coding Guidance:
- Compounded drugs should be reported with HCPCS code J7999 on a single claim line.
- Place quantity = ‘1’ on the line billed for J7999.
- Enter the name, total dose (in mg or mcg) of each drug of the refill, and invoice amount in Box 19 of the CMS 1500 or the appropriate comment loop of electronic claims.
- Covered compounded single or combination drugs should be billed on a single detail line.
- Do not list the drug separately from the dosage, such as morphine bupivacaine baclofen sufentanil 20mg 6mg 4mcg 5mcg. This format will be denied.
- List each drug with the applicable dosing amount, for example morphine 20mg, bupivacaine 6 mg, baclofen 4 mcg, sufentanil 5 mcg.
- The ICD-10-CM code used on each detailed line must represent the condition treated by the drug(s) billed on that detail line.
- Drug doses used in narrative description must be in mgs or mcgs only. Do not report µgs.
Use of Infusion Pumps
Medicare will consider infusion pumps and associated services medically reasonable and necessary for the conditions listed in the Medicare National Coverage Determination Manual Pub.100-03, Chapter 1, Section, 280.14.
The use of compounded drugs has been especially prevalent in the filling of infusion pumps. The following methods are appropriate when billing for drugs used in infusion pumps:
- When submitting a claim for compounded drug(s) for a single agent or a combination of agents, providers must use HCPCS code J7999. Even though the compound is similar to or includes a drug with a specific HCPCS code, providers must use HCPCS code J7999, Compounded drug, not otherwise classified, for reimbursement of the compounded drug. The KD modifier must be appended to indicate the drug will be administered through Durable Medical Equipment (DME ) such as an infusion pump.
- When a non-compounded drug is used (a true ‘off –the –shelf’ product without compounding), the specific HCPCS code for the drug may be used.
Note: Compounded drugs and/or combination drugs used in infusion pumps should be reported with HCPCS code J7999 and appended with modifier KD to indicate the drugs were infused through DME.
Documentation Requirements
- All documentation must be maintained in the patient's medical record and made available to the contractor upon request.
- Every page of the record must be legible and include appropriate patient identification information (e.g., complete name, dates of service[s]). The documentation must include the legible signature of the physician or non-physician practitioner responsible for and providing the care to the patient.
- The submitted medical record must support the use of the selected ICD-10-CM code(s). The submitted CPT/HCPCS code must describe the service performed.
