Drugs, Immunizations/Vaccines, and Radiopharmaceuticals Reimbursed Under Medical Coverage

Policy ID: Med 104

Effective Date: January 01, 2027

Last Reviewed: June 29, 2026

Applies To: Migrated Commercial

This policy applies to physicians, other professionals, outpatient facility providers reimbursed for drugs using a fee schedule.

Definitions

Code/Term

Code Description/Term Definition

Average Manufacturer Price (AMP)

The average unit price paid to manufacturers for drugs by wholesalers or retail pharmacies, as defined by the Social Security Act.

Average Sales Price (ASP)

The average sales price of a drug as determined by the Center for Medicare & Medicaid Services (CMS). The CMS Part B ASP fee schedule released by CMS quarterly is sometimes referred to as (also known as) ASP + 6%.

Average Wholesale Price (AWP)

A prescription drug term referring to the average listed or published price of a drug. AWP pricing is based on data obtained from manufacturers, distributors, and other suppliers. Our health plan uses Medi-Span as its primary source for AWP.

Compounded Drugs

The Food and Drug Administration (FDA) defines drug compounding as the process by which a pharmacist or doctor combines, mixes, or alters ingredients to create a medication tailored to an individual patient's needs. To be covered, a compounded prescription medication must contain at least one federal legend drug in therapeutic amounts. A federal legend drug is defined as a medication product that by Federal law bears the statement “Caution – Federal (U.S.A.) law prohibits dispensing without a prescription” or words of similar meaning (such as “Rx only”). Bulk chemicals, medical food supplements, and nutritional additives not approved for dispensing by prescription are not considered federal legend drugs.

National Drug Code (NDC)

A unique 11-digit, 3-segment number assigned to each medication listed under Section 510 of the U.S. Federal Food, Drug and Cosmetic Act. The number identifies the labeler or vendor, product, and trade package size.

Wholesale Acquisition Cost (WAC)

The manufacturer’s official “list price” or published catalog price for a prescription drug or biological product when selling directly to wholesalers.

Policy Statement

Our health plan requires the NDC number, NDC units, and units of measurement to be placed on the claim to determine the standard reimbursement amounts for therapeutic and diagnostic drugs and biological products reimbursed under medical coverage. The order of the methodologies employed in determining the proper reimbursement amount are:

CMS Part B ASP/AMP base + 15%.
WAC pricing – For codes without an ASP/AMP rate, pricing is set at WAC + 5%; except for Immunizations, Immunizations without an ASP rate, pricing is set at WAC + 7.5%.
AWP pricing – For codes without an ASP rate or WAC, pricing is set at 85% AWP.
Noridian Jurisdiction F – Medicare Part B Radiopharmaceuticals Fee Schedule – for radiopharmaceuticals without an ASP/AMP, WAC or AWP.
Invoice pricing – any invoice pricing is at 100% of the supplier invoice for the cost of the drug only. Fees such as shipping and handling will not be reimbursed unless specified in the provider’s contract.

Compounded Drugs

Compounded drugs even with multiple ingredients are considered a single product and should be billed on a single line with the compound billing code J7999 or an appropriate unlisted code such as but not limited to J3490.

Please refer to reimbursement policy Med 108 - Discarded Drugs and Biologicals.

References

Cross References

Adm 113 - Pricing Codes Without RVUs
Adm 114 - Medicare-Based Fee Effective Dates
Med 108 - Discarded Drugs and Biologicals

Disclaimer

Your use of this Reimbursement Policy constitutes your agreement to be bound by and comply with the terms and conditions of the Reimbursement Policy Disclaimer.

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