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J Oncol Pract. 2005 September; 1(3): 96–98.
PMCID: PMC2794391

CAP: Making the Decision to Participate in Medicare's Alternative to Drug Purchasing

The Centers for Medicare & Medicaid Services (CMS) has proposed a new system for physicians to acquire Part B drugs for administration to Medicare patients in the office, the Competitive Acquisition Program (CAP). The CAP program was originally scheduled for implementation on January 1, 2006. On August 3, 2005, CMS suspended the program to allow CMS to more fully review public comments to the CAP Interim Final Rule. CMS now expects that drugs will be delivered through the CAP by July 2006. As you and your colleagues in practice decide whether to participate, JOP offers answers to some of the most frequently asked questions about the program as published in the Interim Final Rule on July 6, 2005.

Overview of the CAP Program

What is the CAP program and who can participate?

According to the Interim Final Rule, under CAP, physicians may elect annually to receive drugs that will be administered to Medicare patients from a vendor under contract to CMS. The vendor will be responsible for billing Medicare and the patient for the drugs. Those physicians who choose not to enroll in the CAP program will continue to purchase drugs directly and will be paid under the average sales price (ASP) system.

CAP is currently available only to physicians who administer drugs in the office setting.

Drugs to Be Included in CAP

What drugs will be covered by CAP and how would our practice acquire drugs not covered by CAP?

Vendors will be required to furnish drugs covered by 181 Healthcare Common Procedure Coding System (HCPCS) codes that include but are not limited to cancer drugs. Each vendor must agree to furnish at least one CAP drug for each HCPCS code. Most drugs used in cancer treatment are included in the CAP drugs. For a comprehensive list of oncology drugs included in the CAP go to

Drugs excluded from CAP include

  • drugs without permanent J-codes (e.g., Not Otherwise Classified [NOC] drugs)
  • oral anticancer and oral antiemetic drugs covered by Medicare Part B
  • drugs administered through infusion pumps and covered under the durable medical equipment benefit
  • opiates and other controlled substances
  • orphan drugs approved exclusively for the treatment of orphan indications such as oprelvekin (Neumega), aldesleukin (Proleukin), arsenic trioxide (Trisenox), and denileukin diftitox (Ontak).
  • intravenous immune globulin
  • leuprolide (Lupron) because of issues related to the least costly alternative policy adopted by many carriers)
  • vaccines

Practices will continue to acquire drugs that are not included in the CAP under the ASP system.

I have heard that the vendors will use a strict formulary. Is this true?

No. Vendors cannot establish a formulary but, instead, must supply all drugs subject to CAP. In the case of multiple source drugs covered by the same J-code, a vendor is required to supply only one version of the drug.

Will new drugs be available through CAP?

The vendor will have the option to add new drugs to the CAP list as they are introduced. If the vendor chooses not to furnish such drugs, the physician participating in CAP will be able to order the drug directly and receive payment under the ASP system.

Can a vendor reject a drug order because of uncertainty about Medicare coverage?

No. Vendors must furnish the drugs ordered by the physician even if they believe that Medicare will not cover the drugs. Vendors may call the physician to discuss the order and may issue an advance beneficiary notice to the beneficiary requesting the beneficiary to pay for the drug if Medicare denies coverage. If the physician does not change the order or the beneficiary does not agree to pay for the drug, the vendor must nevertheless supply the drug.

Ordering and Supplying Drugs

What information will I need to provide the vendor when we order drugs through CAP, and must these data be submitted with each drug order?

Information that would be included in the first order for each patient new to the vendor are:

  • date
  • beneficiary name, address, phone number
  • physician identifying information (including shipping address)
  • drug name
  • strength
  • quantity ordered
  • dose
  • frequency/instructions
  • anticipated date of administration (to allow flexibility, the physician can specify a range of dates over a 7-day period)
  • beneficiary Medicare information/number
  • supplementary insurance information (if applicable)
  • Medicaid information (if applicable)
  • patient information: date of birth, allergies, height/weight, ICD-9
  • patient sex

Abbreviated information may be sent on all subsequent orders for the same patient, unless the information has changed. Portions of this information will not have to be submitted to the extent prohibited by state law.

Shipment and Delivery of Drugs

How often will vendors ship drugs and how far in advance would we need to order the drugs?

Vendors must ship drugs at least 5 days per week. Routine delivery of drugs must be made within 2 business days and emergency delivery must be made within 1 business day. For example, if the physician places an order by 5:00 p.m. on Monday, the physician must receive the drugs by 5:00 p.m. Wednesday under the standard schedule.

The physician may order an entire course of therapy at the same time. The vendor, however, could divide the order into “appropriately spaced shipments” based on the physician's description of the anticipated dates of drug administration. If shipment of the order is divided, the subsequent parts of the order must arrive at least 2 business days before the expected date of administration as stated by the physician in the order.

We are concerned about the safety of drugs obtained through CAP. What measures will be taken to assure the integrity of drugs?

Vendors will be required to demonstrate to CMS that they can meet quality assurance standards set by CMS before they are accepted into the program. Vendors must ship drugs unopened and in the manufacturer's packaging. If the manufacturer's packaging contains multiple individual units (e.g., vial trays), the vendor may split the package into quantities appropriate for shipping.

Physicians may return a drug to the vendor if the physician has reason to question the drug's integrity.

Submission and Processing of Claims

How will claims be adjudicated and what is the role of our practice in this process?

The vendor will send the drugs to the physician with an identifying prescription number for each shipment. On or after the anticipated date of drug administration, the vendor will submit a claim for the drugs to a specially designated carrier, also by using the prescription number.

CAP drugs will not have to be stored separately from other drugs. Physicians will be required, however, to maintain a separate electronic or paper inventory for each CAP drug obtained. When the physician administers a drug, he or she will submit a claim to his or her local carrier showing the drug administration codes, the J-codes for the drugs administered, and the prescription number supplied by the vendor for the drugs administered.

The local Medicare Part B carrier will adjudicate the claim as usual and will determine whether it was a Medicare-covered service, applying local coverage determinations as applicable. If the service were covered, the local carrier would notify the carrier that handles vendor drug claims of the prescription number involved, at which time the drug carrier would pay the vendor and the vendor would be permitted to bill the patient, or the patient's secondary insurer, for the coinsurance. If Medicare were the secondary payer, the vendor would first bill the primary insurer and then Medicare.

Using Drug from Inventory in Emergency Situations

What if we have a patient who needs a drug immediately and we do not have enough lead time to acquire the drug from the vendor?

In emergency situations, a physician could use a drug from his or her own inventory and seek replacement drug from the vendor. This would be allowed only if (1) the drugs were required immediately, (2) the physician could not have anticipated the need for the drugs, (3) the vendor could not have delivered the drugs in a timely manner, and (4) the drugs were administered in an emergency situation. An emergency situation is defined as an unforeseen occurrence or situation determined by the physician, in his or her clinical judgment, to require prompt action or attention.

Unused Drug

Sometimes a patient comes in for scheduled chemotherapy but for clinical reasons we are unable to use the drug that was ordered for the patient. How would unused drugs be handled?

When a drug is not administered, or when a physician administers a smaller amount of the drug than originally anticipated, the physician must notify the vendor. The physician and the vendor will then work together to determine how best to handle the unused drug. If the vendor and the physician agree that the drug could be used at a later time for another Medicare patient, the physician would generate a new order for that other patient but note on the order that the vendor need not ship the drug.

If there is some drug remaining in a vial, CMS states that the CAP vendor has the responsibility to accept return of the unused portion for disposal and to pay for the shipping involved. This process of returning partial vials to the vendor for disposal could not be used for empty or nearly empty vials.

Because the vendor retains title to the drugs until they are administered to a patient, vendors are responsible for shipping costs associated with the return of drugs.

Beneficiary Education and Financial Assistance

We are concerned that beneficiaries who have difficulty paying their co-insurance for drugs could face access problems if we enroll in CAP. What steps will vendors take to assist beneficiaries with these issues?

To help patients with co-insurance issues, vendors are required to offer assistance such as referral to independent charities, a payment plan, or waiver of co-insurance based on the individual patient's financial assistance.

The vendor is permitted to cease shipping drugs for a beneficiary when the beneficiary has failed to pay any balance owed to the vendor within 45 days of being billed. If the beneficiary requests assistance from the vendor (such as locating an independent charity or waiving co-insurance), the vendor must wait 15 days from the beneficiary's request for assistance before terminating drug shipments.

Will beneficiaries be informed about the CAP program? Also, what information will beneficiaries receive about dispute resolution?

Physicians who enroll in the CAP will be required to provide a CMS fact sheet to each Medicare beneficiary during the beneficiary's first visit to the office after the physician has enrolled in CAP. Physicians can add information specific to the patient.

CMS has stated its concern that beneficiaries receive proper information regarding dispute resolution. CMS is currently creating educational materials that would inform beneficiaries of their rights. All vendors will also be required to provide participating physicians with information on how beneficiaries can use the grievance process.

Reimbursement for CAP

Will CMS provide a payment for the additional administrative work associated with participation in CAP?

No. CMS takes the position that physicians can evaluate any increased administrative burden against the benefits of CAP when deciding whether to elect participation in CAP.

Annual Election Process

How would we elect to participate in CAP?

Physicians can elect annually whether to obtain their drugs under CAP or instead continue to purchase them and seek reimbursement.

The Interim Final Rule stated that the annual CAP election period will run from October 1 to November 15 each year. These dates will be modified if the CAP is implemented in July 2006, as now proposed by CMS. Physicians can decide during that period whether they want to enroll in CAP and, if so, they will select their vendor. Group practices must enroll or not enroll as an entire group. Before the election period, CMS will make available on its Internet site a directory of the CAP vendors (there will be up to five, all of which will be required to provide service on a nationwide basis for the first year) and the NDC numbers of the drugs each vendor will be providing. The CAP election form can be downloaded, completed, and returned to the physician's local carrier.

In the event that no vendors bid to participate, then the program will not go into effect.

Where can we find additional information that will help us make our decision?

Interim Final Rule: Competitive Acquisition of Outpatient Drugs and Biologicals Under Part B. Federal Register. July 6, 2005.

The ASCO Web site features a detailed summary of the Interim Final Rule and will include the Final Rule and more information about CAP as they become available:

Articles from Journal of Oncology Practice are provided here courtesy of American Society of Clinical Oncology