I just had the same issue and after some research I got this bit of info below from Medicare website.....very helpful to me hope it helps you.
Jurisdiction 1 Part B
Submitting Claims for Compounded Medications, Including Medication Administered via DME
This article explains the correct method for submitting compounded drugs.
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 physicianâ€™s service.
Compounded medications do not have a National Drug Code (NDC) number, an Average Sales Price (ASP), or an Average Wholesale Price (AWP). Accordingly, the specific HCPCS J codes for the drugs in the compounded formulation may not be submitted. Instead, providers must use HCPCS code J3490 (unclassified drug) or HCPCS code J9999 (NOC antineoplastic drug) as appropriate for reimbursement of the compound.
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 or J9999 as appropriate, even though the compound is similar to or includes a drug with a specific HCPCS code (e.g. HCPCS code J2275 for preservative free morphine).
Providers who document and use the true off-the-shelf product without compounding may continue to use the specific HCPCS code. Because non-compounded drugs administered via DME are reimbursed at 95% of AWP instead of ASP + 6 percent, the HCPCS KD modifier must be used to indicate this situation. If administered pump dose exceeds MAU for particular drug, submit documentation to include expected days of therapy on pump (i.e. 18, 30, 40, 60 or 90 day pump).
Compounded medications must be submitted with HCPCS code J3490 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
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
The fax cover sheet can be found on the Palmetto GBA Web site
Enter â€˜Compound prescription, invoice attached.â€™ 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.
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