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Welcome to the Local Contractor Pricing Webpage

What is it?

The Centers for Medicare and Medicaid (CMS) provides Contractors with physicians' fees (JH) (JL) via the Medicare Physicians’ Fee Schedule Database. Resource-based practice expenses relative value units (RVUs) comprise the core of physician fees paid under Medicare Physicians' Fee Schedule. The CMS provides carriers with the fee schedule RVUs for all services except those with local codes, those with national codes for which national relative values have not been established, and those codes listed as Not Otherwise Classified (NOC).

For services with local codes, NOC codes and national codes but for which national relative values have not been provided, Medicare Administrative Contractors (MACs) must establish local relative values (to be multiplied, in the carrier system, by the national Conversion Factor), as appropriate, or establish a flat local payment amount. MACs may choose between these options (CMS Internet Only Manual (IOM) 100-04, Chapter 12, section 20).

Likewise, on a quarterly basis CMS supplies the Contractor with an Average Sales Price (ASP) file for drug pricing. Drugs and biologicals not listed on the quarterly ASP files are the responsibility of the Contractor to price based on 106% of the Wholesale Acquisition Cost as reflected in published resources (e.g. Redbook, Price Alert, etc.).

The absence or presence of a HCPCS code and the payment allowance limits in the ASP Drug Pricing Files does not indicate Medicare coverage of the drug. Similarly, the inclusion of a payment allowance limit within a specific column does not indicate Medicare coverage of the drug in that specific category. These determinations are made by the local Medicare contractor.

Who is involved?

At Novitas Solutions, the Local Contractor Pricing Committee develops fees based on the CMS IOM guidelines. The Pricing Committee consists of clinical staff and Contractor Medical Directors.

How does it work?

Pricing requests are received by the Pricing Committee from various departments. Here are ways in which a pricing request is received by the Pricing Committee:

1. A claim enters the MCS system with a procedure or drug code in which the Contractor is not supplied a fee from CMS. In these cases, the Claims department sends the claim information, along with the procedure or drug code needing a fee to the Pricing Committee. The Pricing Committee sets a fee based on the CMS IOM guidelines and sends the fee back to the Claims department. A fee can either be set for that specific claim or for that procedure or drug code for all jurisdiction localities. If a fee is set for all jurisdiction localities, the fee will either be added to Novitas’ internal claims processing guidelines or loaded in to the MCS system so that future claims billed with the same code will automatically be priced.

2. A request is received from the Appeals Department. Typical requests received from Appeals consist of cases that have been received from an Administrative Law Judge or Quality Improvement Contractor and need a fee for a service that has been determined to be payable. The majority of the time these services are NOC services that do not have a fee in the system. A fee is established by the Pricing Committee using the CMS guidelines based on RVU values and the fee is sent back to Appeals for pricing for that single claim.

3. Pricing Request is received from one of the Research Analysts in the Medical Affairs Department. Typical requests are due to an inquiry (from a Medicare provider, drug manufacturer, or other Novitas customer) that is received requesting current fees for a procedure/drug or an inquiry that is requesting that a fee be changed, i.e. increased reimbursement. In these cases, all submitted documentation is presented to the Pricing Committee and is taken into consideration. Once a decision is made (i.e. setting of a procedure/drug code fee, increasing reimbursement of an already Contractor Priced code, or decision to not change the fee) this decision is sent back to the Medical Affairs Research Analyst who responds to the inquirer with the decision.


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Last modified:  10/24/2018