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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.   

NGS receives large volumes of claims with only the administration code reported on the claim; and without the drug code. 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 = $0.01
28 (line 2) 2300, CLM02 Total charges for administration code


Revised 4/10/2023