by Christine Woolstenhulme, QMC QCC CMCS CPC CMRS
May 9th, 2016 - Reviewed/Updated Aug 4th
Unclassified HCPCS codes can only be used when there is not a specific HCPCS code available for the drug being billed.
Each NDC associated with an unclassified drug code should be submitted on a separate claim line following the instructions specified in the Manual for Physicians and Providers- Coding and Filing Claims-Unclassified Drugs.
All of the following information is required to be submitted for reimbursement of a compound drug
or any drug billed with unclassified drug codes:
• Valid NDC for each active ingredient utilizing the 11 digit numeric format
• NDC Description
• NDC quantity using an AWP unit price (AWPU) associated with the NDC submitted for the dose
administered to the member.
Example of information required to accompany an unclassified drug:
HCPCS Code NDC Description NDC Quantity*
J3490 00000000070 Compounding Fee 1
J3490 38779067303 Morphine 50mg/ml 2.00
J3490 38779052403 Bupivacaine 20mg/ml 0.80
J3490 38779056106 Clonidine 1mg/ml 0.04
*Two decimals.
NDC quantity is based upon the numeric quantity administered to the patient based upon the unit of measurement (AWPU).
The standard unit of measurement (UOM) codes are:
F2 = International Unit
GR=Gram
ML = Milliliter
UN = Unit
Compound drugs considered for reimbursement must meet all the following criteria:
• There must be a valid prescription order from a physician with at least one FDA approved
ingredient that has a recognized NDC number;AND
• There is no commercially available product comparable to the compound product; AND
• There is good evidence in the medical literature to support the use of all active ingredients; AND
• ALL active ingredients are prescribed for the specific diagnosis; AND
• The intended route of administration for the compounded prescription is supported by medical
and scientific evidence AND
• None of the active ingredients are addressed in another medical coverage guideline with coverage limitations disallowing it to be considered a medical necessity.
• *EXCEPTION: Bulk powders that have a valid NDC number that are used in compounding drugs
for the treatment of severe spasticity of cerebral or spinal cord origin and severe, chronic,
intractable pain for use in infusion pumps meet the definition of medical necessity.
Substances primarily utilized as stabilizing agents, that are inert ingredients, or diluents used in the compounded drug, are considered incidental to the preparation of the compound and are
NOT eligible.
About Christine Woolstenhulme, QMC QCC CMCS CPC CMRS
Christine Woolstenhulme, CPC, QCC, CMCS, CMRS, is a Certified coder and Medical Biller currently employed with Find-A-Code. Bringing over 30 years of insight, business knowledge, and innovation to the healthcare industry. Establishing a successful Medical Billing Company from 1994 to 2015, during this time, Christine has had the opportunity to learn all aspects of revenue cycle management while working with independent practitioners and in clinic settings. Christine was a VAR for AltaPoint EHR software sales, along with management positions and medical practice consulting. Understanding the complete patient engagement cycle and developing efficient processes to coordinate teams ensuring best practice standards in healthcare. Working with payers on coding and interpreting ACA policies according to state benchmarks and insurance filings and implementing company procedures and policies to coordinate teams and payer benefits.
Billing Compound Drugs. (2016, May 9). Find-A-Code Articles. Retrieved from https://www.findacode.com/articles/billing-compound-drugs-31602.html
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