Medicare Payment for Drugs and Biologicals "Furnished Incident To" a Physician

The Medicare Program provides limited benefits for outpatient prescription drugs. 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. Section 112 of the Benefits Improvement and Protection Act (BIPA) amended Sections 1861 (s)(2)(A) and 1861(s)(S2)(B) of the Social Security Act to redefine this exclusion. The prior statutory language referred to those drugs "which cannot be self-administered." Implementation of the BIPA provision changes the phrase to "not usually self-administered by the patient."

The term "administered" refers to the physical process by which the drug enters the patient's body. It does not refer to whether the process is supervised by a medical professional (for example, to observe proper technique or side effects of the drug). Only injectable (including intravenous) drugs are eligible for payment under the "incident to" benefit. Other routes of administration including, but not limited to, oral drugs, suppositories, and topical medications are all considered to be usually self-administered by the patient.

The term "by the patient" means Medicare beneficiaries as a collective whole.

The term "usually" means more than 50 percent of the time for all Medicare beneficiaries who use the drug. Therefore, if a drug is self-administered by more than 50 percent of Medicare beneficiaries, the drug is excluded from coverage and Medicare payment will not be made. This determination will be made on a drug-by-drug basis, not on a beneficiary-by-beneficiary basis. For example, it has been determined that Avonex is not usually self-administered by the patient. Therefore, Avonex is eligible for coverage when it is given for a medically reasonable and necessary condition.

The fiscal intermediary will continue to apply the policy that not only the drug is medically reasonable and necessary, but also that the route of administration is medically reasonable and necessary. 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.

Effective August 1, 2002, Medicare payment will not be made for the following circumstances:

• when the patient is being trained under the supervision of a physician in the proper technique for self-administration;
• when the drug is administered on an outpatient emergency basis, if it is usually self-administered by more than 50 percent of Medicare beneficiaries; and,
• when a drug is self-administered by more than 50 percent of Medicare beneficiaries.

The status of all drugs currently covered by Medicare are being reviewed and a final decision will be made with regard to self-administration on each drug over the next quarter. Drugs considered not covered by Medicare because they are usually self-administered will be posted on the CareFirst of Maryland, Inc., Medicare Part A website.

Program Memorandum No. AB-02-072

Change Request No. 2200