The 2002 Medicare, Medicaid, and State Children’s Health Insurance Program Benefits Improvement and Protection Act ("BIPA") changed the definition for Medicare Part B covered drugs from those types that cannot be self administered to those types that usually are not self administered. "Usually" in this context has been defined to mean those drugs that 50% or fewer Medicare beneficiaries self administer. If more than 50% of beneficiaries self administer, the drug is excluded from coverage. Individual contractors must develop a process for the determination on each drug as to whether it is self administered. The drug must still be medically reasonable, and the administration route must also be medically reasonable and necessary for coverage to be allowed. Also on the drug front, CMS plans to release a single, national price for all Medicare covered drugs whose payment allowance is based on 95% of the average wholesale praice ("AWP") (excepting durable medical equipment carriers ("DMERCs") and hospital outpatient drugs billed to fiscal intermediaries ("FIs")), to go into effect by Jan. 1, 2003. Although the Balanced Budget Act of 1997 intended to establish a uniform payment allowance as a reflection of the AWP, when pricing function was delegated to local carriers, divergent drug pricing occurred. Starting January 1, 2003, CMS will furnish quarterly three single drug pricer ("SDP") files to all FIs, carriers, and regional offices ("ROs"): (1) HCPCS Drug Pricing File, containing drugs identified by a code established by the HCPCS; (2) NOC Drug Pricing file, containing drug pricing information for "not otherwise classified" drugs; and (3) a Pricing Documentation file. These files will be released 60 days before the first day of the next calendar quarter. Once these files are released, FIs and carriers will be required to update their processes using this information. Drug claims are then to be paid on the basis of the prices shown on the SDP files. ROs will advise carriers and respond to drug price change questions, SDP questions, and implementation questions.

This material is not intended to create, and does not create, an attorney-client relationship between you and Vinson & Elkins L.L.P., and you should not act or rely on any of this information. As legal advice must be tailored to the specific circumstances of each case, nothing provided herein should be used as a substitute for advice of competent counsel. These materials do not constitute legal advice, do not necessarily reflect the opinions of Vinson & Elkins L.L.P. or any of its attorneys or clients, and are not guaranteed to be correct, complete, or up-to-date. Vinson & Elkins L.L.P. assumes no liability for the use or interpretation of information contained herein. This publication is provided "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. Unless otherwise indicated, V&E attorneys listed are: not Certified by the Texas Board of Legal Specialization. None of the attorneys listed on this website is certified as an "expert" or "specialist" pursuant to any authority governing the practice of law in New York.

Vinson & Elkins is a registered limited liability partnership. Principal office-Houston.