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Proper Billing for Patient Supplied Drugs

Drugs, including biologicals, must represent an expense to the physician or legal entity billing for the services or supplies. In some instances, the patient purchases the drug or, the physician receives the drug free-of-charge, and the patient seeks care from the physician/NPP for the administration. In these instances, the drug is not separately payable by Medicare. However, the administration of the drug, regardless of the source, is a service that represents an expense to the physician. Therefore, administration of the drug is payable if the drug would have been covered.

For Medicare Part B billing purposes, the drug code and the administration code must be submitted on the same claim. This applies to all patient supplied drugs whether they are covered, noncovered, or free-of-charge.   

We have seen billing for administration codes only; the drug code was not on the claim. This is not accurate reporting on a Medicare claim.

Please use the billing instructions below when submitting Medicare Part B claims for drugs that are no cost to the provider.

CMS-1500 Item Number ANSI 837 5010v Electronic Claim (Loop and Segment) Information Required
19 2400, SV101, 07 Name, dose and invoice price for NOC drug code
24D (line 1) 2400, SV101, 2 Drug code - established or NOC drug code
24D (line 2) 2400, SV101, 2 Administration code
28 (line 1) 2300, CLM02 Total charges = $0.00
28 (line 2) 2300, CLM02 Total charges for administration code
24D (line 1 and 2, when appropriate) 2400, SV101, 3 Modifier GY - when the drug is not covered under Part B


This instruction does not currently apply to the COVID-19 vaccine.

This article was originally sent to providers in April 2021, and at that time we offered a 60-day notice period in order to comply with these instructions. The effective date for this requirement is 6/1/2021 regardless of date of service.  Any claim received on and after 6/1/2021 that only includes the administration code, with the exception of COVID-19 vaccination administrations, will be denied.

Posted 3/1/2022