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MACs Continue to Use Different Methods to Determine Drug Coverage


Medicare Administrative Contractors (MACs) are responsible for reviewing Part B outpatient drug claims to ensure that Medicare pays for drugs that meet the criteria for coverage. Each MAC determines whether a particular use for a given drug, such as a use not approved by the Food and Drug Administration, is "medically accepted" and therefore, covered in its jurisdiction. If MACs do not have appropriate methods to determine drug coverage, Medicare and its beneficiaries may pay for drug uses that are not medically accepted. Further, beneficiaries' access to drugs may vary based on the coverage criteria set in their jurisdictions. This study reviewed the methods MACs used to make coverage determinations for Part B drugs, as well as their methods for ensuring that claims were paid according to these coverage determinations.


We sent surveys to the Part B MACs operating in 13 jurisdictions (as of December 2012) to obtain information about their policies and procedures for determining appropriate coverage of Part B drugs in 2012. We asked MACs to describe the methods and sources they used to remain up to date about covered uses, and how often they updated their coverage determinations. We also asked MACs to describe any challenges they encountered in determining coverage for Part B drugs. Finally, we asked MACs to provide information about any payment controls they implemented to help ensure that drug claims met the coverage requirements in their jurisdictions.


In keeping with the flexibility MACs have to make coverage decisions, MACs reported using a variety of information sources on drug uses to assist in making coverage determinations. MACs also used different methods to obtain notifications when these sources were updated. These differences may contribute to inconsistencies in drug coverage across States. Further, most MACs reported challenges in determining coverage for Part B drugs, including difficulties interpreting CMS policy manuals and remaining up to date with sources for covered uses. To help ensure that drug claims were paid in accordance with their coverage policies, MACs implemented payment controls, but to varying degrees. However, some MACs were unable to provide us with the results of their payment control efforts. Without tracking these results, it is difficult to accurately evaluate the effectiveness of these payment controls.


We recommend that CMS (1) assign a single entity to assist MACs with making coverage determinations, and (2) evaluate the cost-effectiveness of edits and medical reviews that are designed to ensure appropriate payments for covered uses on Part B drug claims. CMS concurred with our second recommendation but did not concur with our first recommendation.