Compounded medications are created by a pharmacist in accordance with the Federal Food, Drug and Cosmetic Act and may be covered under Medicare when their use meets all other criteria for services incident to a physician's service. This article explains the correct method for submitting compounded drugs.
Compounded medications do not have an NDC number, an Average Sales Price (ASP) or an Average Wholesale Price (AWP).
- The specific HCPCS J codes for the drugs in the compounded formulation may not be submitted
- Provider must use HCPCS code J3490 (unclassified drug), HCPCS code J3590 (unclassified biologies) or HCPCS code J9999 (NOC antineoplastic drug) as appropriate for reimbursement of the compound
Filling Implantable Infusion Pumps
The use of compounded drugs has been especially prevalent in the filling of implantable infusion pumps. Whether a single agent or a combination of agents is used, the compounded medication must be submitted with HCPCS code J3490, J3590 or J9999 as appropriate, even though the compound is similar to or includes a drug with a specific HCPCS code (e.g. J2275 for preservative free morphine).
Off-The-Shelf Medications
Providers who document and use the true off-the-shelf product without compounding may continue to use the specific HCPCS code.
- Non-compounded drugs administered via durable medical equipment are reimbursed at 95 percent of AWP instead of ASP + 6 percent
- The HCPCS modifier KD must be used to indicate this situation
- Compounded medications must be submitted with HCPCS code J3490, J3590 or J9999 in conjunction with an invoice and the appropriate administration code. The invoice from the compounding pharmacy must list:
- The name, quantity and strength of each drug in the mixture
- The invoice cost
Claim Submission
EMC claims without the following information will be denied:
- For electronically submitted claims, the invoice must be submitted via fax with the appropriate cover sheet
- The word 'fax' must be in the appropriate documentation record
Paper Claims:
Enter 'Compound prescription, invoice attached' in Item 19 of the CMS-1500 claim form and include a copy of the invoice from the pharmacy.
In either case, the invoice cost may include a reasonable compounding fee and state tax, if applicable. Medicare will reimburse the lower of invoice cost or 95 percent of AWP of all components in the compounded mixture if administered via DME.