Fact Sheet

BACKGROUND

• Since 1965, Medicare has provided limited coverage of prescription drugs that cannot be self-administered and are furnished "incident to" a physician’s service.

• In 1997, the Centers for Medicare & Medicaid Services (CMS) (then the Health Care Financing Administration) issued a memorandum to its regional offices reiterating its policy on the Medicare benefit for drugs that cannot be self-administered and are furnished incident to a physician's service.

• Congress believed that this memorandum led some contractors to discontinue payment for some drugs they had paid for previously, creating a perception that CMS had changed its policy. To resolve this confusion and reverse the perceived change, Congress amended the statutory standard for incident-to drugs from those that "cannot be self-administered" to those that "are not usually self-administered by the patient." This provision, a modest expansion of coverage, was included in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA), passed in December 2000.

• The new BIPA standard left several questions to be interpreted by the Secretary. For example, how should the terms "usually" and "by the patient" be defined.

NEW CMS GUIDANCE

• On May 15, 2002, CMS issued a Program Memorandum (PM) to its contractors with guidance for how the new BIPA standard should be implemented. The PM includes criteria that may, in the absence of evidence to the contrary, be used by the contractors in determining whether a drug is usually self-administered by the patient (and therefore not eligible for payment under Medicare). Drugs will be eligible for payment under Medicare if the contractor determines that a drug is not usually self-administered.
• To give the contractors, providers and beneficiaries time to adjust to any coverage changes, the program memorandum will not take effect until August 1, 2002.
• Under the criteria described in the PM:
• • "Usually" is defined as more than 50 percent of the time for all Medicare beneficiaries who use the drug. Thus, if a drug is self-administered by more than 50 percent of Medicare beneficiaries, the drug is excluded from coverage and would not meet the BIPA standard for payment under Medicare.
  • "By the patient" is interpreted to mean Medicare patients in general so that implementation is on a drug-specific basis rather than a patient-by-patient basis.
  • Drugs administered intravenously would be presumed to be not self-administered, absent evidence to the contrary. Intramuscular injections would be presumed to be not usually self-administered by the patient, absent evidence to the contrary. Subcutaneous injections would be presumed to be usually self-administered by the patient, absent evidence to the contrary.
  • Other criteria would consider whether the drug is used on a long versus short-term basis, and how often the drug is administered for a typical course of treatment.
  • Non-injectable drugs, such as oral, suppository, and topical drugs, would be excluded under this Medicare benefit without further review.

NEXT STEPS

• CMS will simultaneously initiate a rulemaking process to provide an opportunity for public comment on these policies. CMS will solicit comments on the criteria for determining whether a drug is not usually self-administered. Until completion of the rulemaking process, the contractors will follow the criteria and the processes outlined in the PM.
• This two-step approach will permit quick implementation of the PM while a regulation is developed. Both the PM and regulation will provide nationally uniform criteria for determining whether a drug qualifies for payment, while still allowing some local flexibility to account for regional differences in practice patterns or other special circumstances.