Patient-Supplied or Free-of-Charge Drugs

When a patient purchases a drug and the physician administers it, the cost of the drug is not covered because it does not represent a cost to the physician. However, the administration of the drug is a service that represents an expense to the physician. Therefore, administration of the drug is payable if the drug is covered under Medicare Part B.

Submit the drug code and administration code on the same claim and use the following instructions to ensure the claim is submitted correctly on the first attempt.

Note: Per the "incident to" guidelines explained above, and in the CMS IOM Publication 100-02, Medicare Benefit Policy Manual, Chapter 15,
Sections 50 and 50.3, providers are not allowed to instruct their patients to purchase the drug themselves and then bring the drug to the provider's office for administration. If the drug is not supplied as a donation or free of charge, then the provider must provide the drug under incident to guidelines.

1500 Claim Form	ANSI 837 v5010 Loop, Segment	Description
19	2300 or 2400, NTE02	Narrative "Patient supplied," or Provided free of charge."
24D (line 1)	2400, SV101	Covered drug HCPCS code: established or NOC drug code
24D (line 2)	2400, SV101	Administration code
28 (line 1)	2300, CLM02	Total charge = $0.01
28 (line 2)	2300, CLM02	Total charge for administration code

Posted 3/26/2024