Q:  Does Medicare reimburse physicians for drugs utilized in the office?
A: Sometimes. The Medicare program covers some outpatient drugs that meet specific criteria. The Medicare Benefit Policy Manual, Chapter 17, §50 states that the program covers drugs that are "furnished 'incident to' a physician's service provided that the drugs are not usually self-administered by the patients who take them."

Generally, drugs and biologicals are covered only if all of the following requirements are met:
 • They meet the definition of drugs or biologicals (see §50.1);
 • They are of the type that are not usually self-administered. (§50.2);
 • They meet all the general requirements for coverage of items as incident to a physician's services (§§50.1 and 50.3);
 • They are 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 (§50.4);
 • They are not excluded as noncovered immunizations (see §; and
 • They have not been determined by the FDA to be less than effective. (§50.4.4).

Q:  What does the "incident to" provision for coverage mean?
A: Ophthalmologists are familiar with the term "incident to" as it applies to professional services provided by staff. These services are integral, although incidental, to the total professional service provided by the physician. However, reimbursable drugs must also meet specific "incident to" criteria.

The Medicare Benefit Policy Manual, Chapter 17, §50.3 states, "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;
 • be furnished by a physician; and
 • be administered by the physician, or by auxiliary personnel employed by the physician and under the physician's personal supervision.

The charge, if any, for the drug or biological must be included in the physician's bill, and the cost of the drug or biological must represent an expense to the physician."

Q: Are injectable drugs coded with CPT codes?
A: No, injectable agents are described by their own codes: designated J codes in the Health Care Procedure Coding System (HCPCS) Level II Coding Manual. Because the amount of reimbursement you receive for the supply may be based on the amount injected, in some cases, a different HCPCS code is used to describe the same drug, depending on the quantity. For example, for injection of methylprednisolone acetate, J1020 denotes a 20-mg injection; J1030, a 40-mg; and J1040, an 80-mg injection.

Q: Is injection always a reimbursed service?
No. An injection performed to treat a related postoperative complication is not reimbursed if performed in-office during the postop period. The injection itself is included in postop care; however, the drug you inject can be billed separately using the appropriate HCPCS code. Reimbursement would be made for both the injection and the supply if the injection were performed outside the postop period. Note as well that some injected substances and the injection itself are reimbursed as part of a larger procedure. For example, injections of anesthetics at the time of surgery, of fluorescein, of indocyanine green, of antibiotics or anti-inflammatory agents at the end of surgery, are not separately reimbursed.

Q: Who processes the claim for a reimbursed drug?
The Medicare Claims Processing Manual states that, if the provider of the reimbursable drug is the physician, the claim is filed to his Medicare carrier. Be sure to incorporate the CPT code for the injection as one line item on the claim form and as a second line item for the injected substance.

Q: How is the amount of the reimbursement determined?
The Medicare Modernization Act (MMA) dramatically changed the payment methodology for drugs furnished incident to physician's services. As of January 1, 2005, the calculation shifted from 85 percent of average wholesale price (AWP) to 106 percent of average sales price (ASP). A complex formula considers revenues divided by units sold to arrive at the ASP. The ASP is reviewed quarterly and a new table of payment allowance limits is published. The payment allowance limits subject to this methodology are based on the ASP data from two quarters prior to the effective quarter. For example, on March 19, 2005, CMS published allowance limits for April 1, 2005 through June 30, 2005. These allowances are based on the ASP data from the fourth quarter of 2004.

Q: What if I don't use the entire vial of medication and discard the remainder?
Medicare will reimburse for the discarded amount in a single-use vial, but not for multi-use vials. The claim submission should list the amount utilized on one line of the CMS-1500 form and the amount discarded on a second line to tally total units in the vial. Physicians who opt to utilize a single-use vial on more than one patient should file only for the units injected in the patient treated.

Q: How should I handle the small amount of wasted Botox if I use the vial on more than one patient?
Carriers are willing to reimburse for the unused portion of Botox because of its short shelf life. To avoid waste, you are encouraged to schedule several patients at the same time; if three patients are scheduled for Botox injections on the same day, you can use the same 100-unit vial for all three patients. If excess supply remains after performing injections on all three patients, the wasted amount can be billed on the last claim form. The number of units injected should be included on each procedure's claim form. HCPCS code J0585 is used to designate both units injected and units wasted. Carriers have different policies about how to identify the unused portion on your claim form. Review your carrier's LMRP for unique instructions. 

Ms. McCune is vice president at Corcoran Consulting Group. Contact her at 1 (800) 399-6565 or dmccune@corcoranccg.com.