Effective May 7, 2015, Novitas Solutions will reimburse compounded drugs used in an implantable infusion pump based on a fee schedule. This change will be for any claim submitted as of May 7, 2015 irrespective of the date of service.
Compounded drugs are drugs not reconstituted as labeled in order to create a combination of drugs or vary the concentration/volume. As such, compounded medications do not have a National Drug Code (NDC) number, an average sales price (ASP) or an average wholesale price (AWP).
Compounded drugs are contractor priced.
The use of compounded drugs has been especially prevalent in the filling of implantable infusion pumps. The following methods are appropriate when billing for drugs used in implantable infusion pumps:
- When submitting a claim for compounded drug(s) for a single agent or a combination of agents, providers must use HCPCS code J7999KD. Even though the compound is similar to or includes a drug with a specific HCPCS code, providers must use HCPCS code J7999, Compounded drug, not otherwise classified, for reimbursement of the compounded drug. The KD modifier must be appended to indicate the drug will be administered through a DME.
- When a non-compounded drug is used (a true ‘off –the –shelf’ product without compounding), the specific HCPCS code for the drug may be used (see examples below). Payment for these drugs is reimbursed differently and is not subject to the fee schedule below.
Note: Any drug, compounded or non-compounded, that is administered through an infusion pump must be reported with the KD modifier.
Medicare will consider implantable infusion pumps and associated services (such as the drugs discussed here) medically reasonable and necessary for the conditions listed in the Medicare National Coverage Determination Manual Pub.100-03, Chapter 1, Section, 280.14.
This article does not define the medical necessity for use of these drugs but directs the proper billing. Refer to the Local Coverage Determination (LCD), L35112, Implantable Infusion Pump, for coverage indications and medical necessity information.
Please Note: HCPCS code J7999 has a status indicator of N in Part A, bundled no separate payment.
The billing guidance in this Article is specific to Part B.
Coding Guidelines:
- When billing for compounded drugs, report HCPCS code J7999 with the KD modifier on a single claim line.
- Place quantity = ‘1’ on the line billed for J7999KD.
- Enter the name and total dose (in mg or mcg) of each drug of the refill in Box 19 of the CMS 1500 or the appropriate comment loop of electronic claims (see examples below).
- Covered compounded single or combination drugs should be billed on a single detail line with the exceptions noted below in the examples.
- The ICD-10-CM code used on each detailed line must represent the condition treated by the drug(s) billed on that detail line.
- Drug doses used in narrative description must be in mgs or mcgs only. Do not report µgs.
Billing examples of drugs for implanted infusion pumps:
- Non-compounded Baclofen (J0475KD) is routinely used as a single drug therapy for spasticity. It is not routinely used with other intrathecal combinations for pain management. Medicare does not provide reimbursement for non-compounded baclofen combined with any other intrathecal drugs.
Compounded Baclofen
- Baclofen (J7999KD) and pain management drugs do not have the same coverage requirements. Baclofen is indicated for use in the treatment of spasticity. Pain management drugs and baclofen may have different diagnoses based on the LCD coverage.
- The compounded Baclofen is reported on a separate line item from the pain management drug in the compounded mixture. Report separately, as indicated in the examples below.
- Example of compounded mixture: Morphine 20mg/ Bupivacaine 6mg/ Baclofen 4000mcg:
- Report Baclofen 4000mcg (J7999KD) on one claim line, and report Morphine20mg/Bupivacaine 6 mg (J7999KD) on a second claim line.
- If compounded Baclofen (J7999KD), when used as part of compounded drug combination in an implantable infusion pump, is not listed on a separate claim line and the claim does not meet the requirements per the LCD; the total compounded drug line will be denied.
Compounded drug reporting
- Do not list the drug separately from the dosage, such as morphine bupivacaine baclofen sufentanil 20mg 6mg 4mcg 5mcg. This format will be denied.
- List each drug with the applicable dosing amount, for example morphine 20mg, bupivacaine 6 mg, baclofen 4 mcg, sufentanil 5 mcg.
Novitas Solutions will reimburse compounded drugs for use in implanted infusion pumps by multiplying the price per mcg or mg in the table below by the total number of mcg or mg of each drug used to refill the pump. In addition to the combined allowable amount calculated by the dosage detailed, a pharmacy compounding fee of $60 per refill will be included in the total allowable for the refill of covered compounded drugs:
| MEDICATION |
PRICE per mg or mcg |
| Morphine Sulfate |
$0.050/mg |
| Hydromorphone |
$0.130/mg |
| Bupivacaine |
$0.040/mg |
| Tetracaine |
$0.04/mg |
| Fentanyl PF |
$0.0072/mcg |
| Droperidol |
$0.0013/mcg |
| Ketamine |
$0.0048/mcg |
| Baclofen |
$0.003/mcg |
| Clonidine |
$0.001/mcg |
| Sufentanil |
$0.090/mcg |
| Prialt* |
$7.900/mcg |
*Prialt is a drug only available from its pharmaceutical manufacturer. If given as a single drug as an ‘off-the-shelf’ product, use HCPCS code J2278KD. If mixed with other drugs in the pump, consider the mixture a compounded drug and use the HCPCS code J7999KD. Wastage of portion of a vial that is not used is reported by appending the JW modifier. Prialt is the only drug from the list above where the JW modifier would be applicable.
