DHCS/MediCal Program Update - NDC Reporting

Beginning September 1, 2008, providers are encouraged to begin using the National Drug Code (NDC) for physician-administered drugs, in conjunction with the customary Healthcare Common Procedure Coding System (HCPCS) Level I, II, or III code, on all Medi-Cal claims. Claims submitted for dates of service September 1, 2008 through March 31, 2009 without an NDC will not be denied. However, claims with dates of service on or after April 1, 2009 that do not meet the NDC reporting requirements to include a valid NDC present with a HCPCS code, will result in that claim being denied. [FPACT only] HCPCS codes X1500 and Z7610 used by the Family PACT (Planning, Access, Care and Treatment) Program do not require an NDC.

The Deficit Reduction Act of 2005 (DRA) requires all state Medicaid Agencies to collect rebates from drug manufacturers for physician-administered or dispensed drugs. This requirement also applies to Medicare crossover claims. Only those products manufactured by companies participating in the federal Medicaid rebate program are reimbursable under Medi-Cal. A list of manufacturers participating in the rebate program, which changes periodically, is available in the Medi-Cal pharmacy manual under Drugs: Contract Drugs List Part 5 – Authorized Manufacturer Labeler Codes (drugs cdl p5) or on the Medi-Cal website at: http://files.medi-cal.ca.gov/pubsdoco/publications/masters-mtp/part2/drugscdlp5_p00.doc

This email is advance notice that the Department of Healthcare Services (DHCS) will soon be publishing the details regarding NDC reporting requirements. All documentation, such as Medi-Cal Updates and Companion Guides, are currently being updated, therefore, we are providing an attachment (below) for you and your members that includes the details of this announcement. Those details include: NDC and physician-administered drug definitions; billing descriptions and examples for CMS 1500 and UB-04 paper claim forms, as well as both 837 Institutional and Professional electronic formats; and Section 340B information.

Should you have any questions or need additional information, please call the Telephone Service Center (TSC) at 1-800-541-5555 or visit the Medi-Cal Web site at the address listed above.

National Drug Code (NDC) Description
The NDC is the number that identifies a drug. The NDC number consists of 11 digits in a 5-4-2 format. NDCs printed on packages often have fewer than 11 digits, with hyphens (-) separating the number into three segments. For a complete 11-digit number, the first segment must have five digits, the second segment four digits and the third segment two digits. The first 5 digits identify the manufacturer of the drug and are assigned by the Food and Drug Administration (FDA). The remaining digits are assigned by the manufacturer and identify the specific product and package size. Add leading zeros wherever they are needed to complete a segment with the correct number of digits.

For example:

Package Number Zero Fill 11-digit NDC

1234-1234-12 (01234-1234-12) 01234123412
12345-123-12 (12345-0123-12) 12345012312
2-22-2 (00002-0022-02) 00002002202

The NDC is found on the drug container: vial, bottle, tube. The NDC submitted to Medi-Cal must be the actual NDC number on the package or container from which the medication was administered. Do not bill for one manufacturer’s product and dispense another. It is considered a fraudulent billing practice to bill using an NDC other than the one administered.

Physician-administered drugs
A physician-administered drug includes any covered outpatient drug provided or administered to a beneficiary, which is billed by a provider other than a pharmacy. Such providers would include, but not be limited to: physician offices, clinics and hospitals. A covered outpatient drug is broadly defined as a drug which may be dispensed only upon prescription and which is approved for safety and effectiveness as a prescription drug under the Federal Food, Drug and Cosmetic Act. Physician-administered drugs are not restricted to injectable drugs only; physician-administered drugs include any drug regardless of the route of administration.

Drug Identification Guidelines
There are three items to look for that will identify whether or not a product is a drug:

1. National Drug Code or NDC: the vial or the box which held the drug will have an NDC which will be used for the claim.

2. Lot and Expiration date: all drugs have both a Lot Number and Expiration Date somewhere on the vial or box.

3. Legend: This refers to the statement “Caution: federal law prohibits dispensing without prescription,” “Rx only” or similar words. All prescription drugs will have this statement.

Claims processing
Claims will continue to be priced based on the HCPCS code, with the NDC and corresponding units being used for drug rebate processing. Medicare primary claims will also require NDCs with HCPCS codes.

Reporting Quantities
Reporting instructions apply to both paper claims and electronic transactions. At this time, Medi-Cal will use only the HCPCS quantities/units for payment and rebate purposes. Sometimes it may be necessary for providers to bill multiple NDCs for a single procedure code. This may happen when two different strengths of the same drug are needed in order to administer the appropriate dose. This will also be necessary when multiple vials of the same drug are used to administer the appropriate dose and the vials are manufactured by different manufacturers. When a provider uses more than one NDC for a drug, the provider must include all NDCs on the claim. The quantity for each NDC must be reported separately by repeating the HCPCS code.

Paper claims

CMS 1500
For paper claims submitted on the CMS 1500 claim form, the NDC is reported in the shaded area above field 24a.

Box 24A (shaded area) – This area will have a combination of two values entered there: Bytes 1 and 2 will include the Product ID Qualifier. This qualifier identifies the type of number that is being provided, which is an NDC, with a qualifier of ‘N4’. Bytes 3 - 21 will consist of the entry of the appropriate number for the qualifier entered in the first two digits. The length of this additional information will vary dependent upon the type of number being provided (as identified by the previous 2 byte Product ID Qualifier).

Example: N4 as the Product ID Qualifier, followed by the 11 digit NDC - N412345678901

Box 24D – The HCPCS code will continue to be entered in 24D, with the charges in Box 24F and units in Box 24G.

Box 24D (shaded area) – In this area, enter the NDC unit of measure (two positions) immediately followed by the numeric quantity administered to the patient, which is a full ten-digit number. The ten digits consist of seven digits for the whole number, followed by the three-digit decimal portion of the number.

Note: The quantity field should be entered from left to right; do not enter a decimal. Valid Unit of Measurement Qualifiers are:

F2 = international unit
GR = gram
ML = milliliter
UN = unit

Examples: UN0000012000 for a quantity of 12 units (UN)
ML0000124540 for a quantity of 124.54 milliliters (ML)

UB-04
For paper claims submitted on the UB-04 claim form, the NDC is reported in the Description field (Box 43).
Box 43 – Enter the two-digit Product ID Qualifier ‘N4’ in the first two positions, immediately followed by the 11-digit NDC (no hyphens). Directly following the last digit of the NDC (no delimiter), enter the two-digit Unit of Measurement Qualifier as noted above. Immediately following the Unit of Measurement Qualifier, enter the nine-digit quantity. The nine digits consist of six digits for the whole number, followed by the three-digit decimal portion of the number.

Note: The quantity field should be entered from left to right; do not enter a decimal.
The Revenue Description field on the UB-04 form is 24 characters in length

Example: Unit quantity of 30 for NDC 12345678901: N412345678901UN000030000

Box 44 – Using the HCPCS/RATE/HIPPS Code field, enter the five-character HCPCS code.

Box 46 – Using the Serv. Units field, enter the corresponding service units for the HCPCS reported.

Direct Data Entry
The Point of Service (POS) device and Internet Professional Claim Submission (IPCS) system have not been updated yet. In the interim, providers using these means of claims submission shall continue to provide the HCPCS code only. These applications will be remediated and HCPCS/NDC pairing will be required beginning with dates of service April 1, 2009 and after. Please watch for more detailed information in future Medi-Cal Updates.

Electronic claims

HIPAA 837 Professional Transaction
For HIPAA-compliant ASC X12N 837 Professional electronic claim transactions, the HCPCS code is reported in Loop ID 2400.

Loop 2400:
Field SV1 – enter HCPCS code
Field SV101 – 3 – enter the UD modifier if you obtained the drug under the 340B program

The NDC is reported in Loop ID 2410.

Loop 2410:
Field CTP04 – enter quantity
Field CTP05 – enter unit of measurement
Field LIN02 – enter qualifier ‘N4’
Field LIN03 – enter NDC without hyphens

Examples: CTP****2*UN~
LIN**N4*12345678901~


HIPAA 837 Institutional Transactions
For HIPAA-compliant ASC X12N 837 Institutional electronic claim transactions, the HCPCS code is reported in Loop ID 2400.



Loop 2400:
Field SV201 – Enter the revenue code
Field SV202-1 – Enter qualifier ‘HC’
Field SV202-2 – Enter the HCPCS code
Field SV202-3 – Enter the UD modifier if you obtained the drug under the 340B program
Field SV204 – Enter qualifier ‘UN’
Field SV205 – Enter the quantity

Example: SV2*250*HC*Jxxxx**UN*1~

Loop 2410:
Field LIN02 – Enter qualifier ‘N4’
Field LIN03 – Enter NDC without hyphens

Example: LIN**N4*12345678901~

Field CTP04 – Enter quantity
Field CTP05 – Enter unit of measure

Example: CTP****2*ML~

For more detailed information, please refer to the billing instructions for electronic claim transactions found in the 837 Transaction Companion Guides (ASC X12N Version 4010A1 Companion Guides) located on the Medi-Cal Web site at: ASC X12N Version 4010A1 Companion Guides

Section 340B of the Public Health Service Act
The 340B Drug Pricing Program resulted from enactment of Public Law 102-585, the Veterans Health Care Act of 1992, which is codified as Section 340B of the Public Health Service Act. Section 340B limits the cost of covered outpatient drugs to certain federal grantees, federally-qualified health center look-alikes and qualified disproportionate share hospitals. Significant savings on pharmaceuticals may be seen by those entities that participate in this program.

Section 340B of the Public Health Service Act provides that a manufacturer who sells covered outpatient drugs to eligible entities must sign a pharmaceutical pricing agreement with the Secretary of Health and Human Services in which the manufacturer agrees to charge a price for covered outpatient drugs that will not exceed the average manufacturer price ("AMP") decreased by a rebate percentage. Section 340B also requires eligible entities to charge the Medicaid program no more than the actual acquisition cost of the drug plus the state allowed dispensing/administration fee and also requires the state Medicaid program to exclude these claims from the collection of rebates.

In order for providers to identify 340B outpatient drugs which have been dispensed, the National Medicaid EDI Healthcare (NMEH) has recommended use of the ‘UD’ modifier. This will allow Medicaids to identify those claims which are from 340B entities and exclude them from the rebate collection process. The ‘UD’ modifier should be billed on the CMS 1500 & 837 Professional and the UB-04 & 837 Institutional claims forms, associated with the applicable HCPCS code and NDC, to properly identify 340B drugs. The UD modifier is to be used only in this circumstance. All non-340B drugs are billed using the applicable HCPCS and NDC pair without a modifier.