Calculation of the AWP (Rev. 397, 01-03-05) Medicare Pub 100-04 Drugs and Biologicals

by  Jared Staheli
July 8th, 2015

See Business Requirements and Excel Spreadsheets at http://www.medicaid.com/manuals/pm_trans/R54CP.pdf http://www.medicaid.com/manuals/pm_trans/R55CP.pdf

Carriers must ensure that if any NDCs are added or deleted, the formulae are applied appropriately.

A separate AWP is calculated for each drug as defined by a HCPCS code. Within each HCPCS code there may be a single source or there may be many sources, or there may be no source.

• For a single-source drug or biological, the AWP equals the AWP of the single product.

• For a multi-source drug or biological, the AWP is equal to the lesser of;

° The median AWP of all generic forms of the drug or biological; or

° The lowest brand name product AWP.

A “brand name” product is defined as a product that is marketed under a labeled name that is other than the generic chemical name for the drug or biological.

NOTE: Repackagers make the status of the drug a multi-source. After determining the AWP, carriers multiply it by 0.85 or 0.95, or other percentage, as applicable, and round to the nearest penny. This is the drug payment allowance limit. Carriers round it in accordance with standard rounding procedure. Part B coinsurance and deductible requirements apply.

In applying this procedure, carriers use the package sizes that are most commonly used for the most frequently administered dosage of the drug.

Intermediaries get drug prices from the carrier for drugs not listed on the Single Drug Pricer.

References:

• Pub 100-04 Medicare Claims Processing Manual - Chapter 17