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directly with Medicare or the insurance company.4 Thus, most
bills were submitted to Medicare or private insurers.
In accordance with Medicare regulations and private
insurers’ requirements, the submitted bills reflected the
specific drugs, and amounts thereof, administered to each
patient. Each compensable service and drug provided in the
course of chemotherapy treatment was assigned a specific code for
billing purposes. The billing code for a particular chemotherapy
drug was referred to as its "J-code", which corresponded to a
specific drug and a specific amount of that drug. A
miscellaneous J-code was used for drugs that had not been
assigned a specific J-code.
Petitioners' charges for chemotherapy drugs were based on
the drugs' average wholesale price (AWP), which was determined by
reference to the "Red Book", a publication that PC received
annually. To determine the amount charged for each drug, the
billing department multiplied the AWP by a certain multiple,
which varied depending upon whether the bill was being submitted
to a private insurer or Medicare. On the other hand, although
AWP was the starting point used to calculate the charges made for
4Only "Medicare providers" may bill Medicare directly.
Prior to 1995, petitioners were not "Medicare providers" and,
therefore, billed the patients directly. The patients then
submitted their bills to Medicare for reimbursement. In 1995,
petitioners were “Medicare providers” and billed Medicare
directly for medical services provided to covered patients.
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Last modified: May 25, 2011